subject: Benefits And Demerits Of Utilizing Ecn Account [print this page] Two types of brokers exist in the Forex market, the ECN brokers and the market markers. In full, ECN means Electronic Communications Network. An ECN broker thus allows several different clients orders to directly interact between each other. ECN account is thus the type of account that such Forex brokers provides their customers for daily trading activities. This kind of direct interaction of trade orders is additional and has proved to have several benefits to the trader. By using the ECN platform, the Forex broker is able to provide the traders with a special marketplace. It is this marketplace that makes it easy for different traders to trade against each other.
Benefits of using ECN account
1. Secrecy of trades
The foremost benefit of using ECN account is the opportunity to maintain secrecy of your Forex trades. There are many players in the Forex market and every participant needs to enjoy utmost privacy and safety of their funds. This high level secrecy is possible because the broker would only be acting as a middleman in the market rather than a market marker. Therefore initiating a trade on an ECN network makes the trader very secure and his trades can neither be traded nor distinguished by others.
2. Continuous trades
Continuity of trade is another great benefit by many traders who are using this type of account. There is no break required or experienced between trades. Using ECN account allows you trade continuously during news and events. Price volatility significantly increases due to continuous trading. This ultimately creates more opportunity for the trader to be highly profitable trading Forex.
3. Enhanced execution
The trader benefits from effective execution of trades orders when using an ECN account. This is because this method does not require the client to trade with broker but rather use his network to place orders. This way, the ECN broker is by no means responsible for executing orders but rather matching them to other market participants. This is done as soon as possible allowing every trader to enjoyed enhanced trade execution.
Disadvantage of using ECN account
1. High fees
The high levels of fees and commissions charges are the greatest disadvantage of using ECN account. The design of ECN network is to charge commission on every trade. When these commissions are accumulated it becomes too expensive as more trades are executed every day. The profit level is thus lowered by the high commissions making it less preferred by many traders.
2. Knavery
Sometimes the market markets can practice dishonesty. The design of this account allows everyone to be his own market maker. This promotes the practice of dishonesty to crop in the market. There are chances that dishonest people would start influencing the market by introducing massive volumes of trade. Some people would decide to deceive others that they are ECN brokers while they are not.
Conclusion
Due to the great connectivity and interactive features of ECN accounts, it becomes one of the best and most recommended for all traders in the Forex market. You have better opportunity to be highly profitable using this type of account even if you are new to the Forex market. This makes it very popular with starters and inexperienced traders in the market. If you want to be successful and enjoy trading in the Forex market, this is the best type of account to hold. In addition to these benefits, using ECN account also enable you enjoy trading features offered by the brokers.
