Guide on ECN Broker and Its Advantages Against Fixed Spreads

Guide on ECN Broker and Its Advantages Against Fixed Spreads

Generally speaking, there are two major classifications of firms in the forex trading industry. One is called the Market Maker and the other can be classified as ECN. ECN stands for Electronic Communications Network. Amongst the two classifications, perhaps you may have already heard of Market Maker broker rather than an ECN broker.

Although not too many forex traders have been using ECN, this classification is being introduced now in the market and is being made popular because of the wonderful advantages that it can bring. Unlike the Market Maker, the Electronic Communications Network broker does not have a spread that is fixed. This means that the spread will greatly rely on the selling and buying rates in the market. This is the main advantage of ECN over Market Maker broker.

For sure, you may have already met and dealt with forex brokers that only offer a fixed spread, which is good if the buying and selling rates are good. But the main problem with fixed forex brokers is that the rates remain the same no matter how high or no matter how low the selling rates are. On the other hand, a forex ECN broker can guarantee and assure investors a larger percentage of success due to its flexible characteristics. It can greatly adapt to the rates in the market which is even better for traders.

Another great thing about forex ECN broker is that you don't have to go in dealing desks. This means that your money will not have to go through different processes and will head directly to the Interbank Market. This process or method is also known as Straight Through Processing or STP. This is actually a lot easier since there are no dealing desks, and you are dealing with the banks in the market directly.

Why should I choose ECN broker?

With a forex ECN broker, you can easily determine the market's depth since the orders that had been made and sold can be easily seen. Although the person who did the trade will remain anonymous, all the transactions made in the market and the corresponding amount can be found. This means that the status or the ratio of supply and demand is transparent to everyone and dealing isn't going to be a huge problem at all.

How to Get Started with ECN?

An account with a forex broker needs to be opened. Opening of an account in the United States of America usually starts at $5,000.00. This is because the main quarters of these ECN brokers are either on USA, UK, or Britain. There can be various channels in Electronic Communications Broker and all of these channels are all connected to the interbank trading. Depositing and withdrawal of amounts can be easily done through your credit card, although this is the only method that ECN brokers accept.

The best thing about ECN brokers, is that they do not compete with their clients or even trade against them. What these brokers do is accept the payment from your credit card, and forward your deal to the interbank market directly. That's it! No questions asked!

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