ECN Forex Brokers
Electronic Communication Networks (ECN BROKERS) How is an ECN Better or Worse than your normal forex broker.
Most brokers on the internet today that let you trade Forex are called Market Makers. Even though you’ll probably never see this term used on your broker’s website, its important to note that if you had chosen an ECN broker instead, you would have had a few extra advantages on your side, not the least of which would be the Forex broker’s inability to make the market go against you either unintentionally because they are slow to react to price variations or intentionally because they are operating a true bucket shop designed to work against you in one way or another during your forex trading. On the other side of the industry there are brokers that are ECN brokers that are, in essence, directly hooked into a network of banks with clients all looking for the best rates (cutting out the middle man essentially). What is ECN? ECN stands for Electronic Communications Network. ECN brokers connect you a worldwide exchange of banks and other financial institutions where you can directly make deals. An ECN broker allows you to enter a bid inside or outside the spread allowing for tighter spreads and more liquidity. In a way, you become the market maker when dealing with an ECN Forex Broker because they are routing your order to the best possible match elsewhere in the world, eliminating the third (or fourth) party called the Dealing Desk. The following is a mixture of facts and generalities because every broker is different and will not offer the same things exact.
Advantages of using an ECN:
