⭐ ECN Forex Brokers
- ECN is essentially a Network - (Electronic Communication Network) - where ECN participants trade with each other
- There is No Dealing Desk (NDD), all orders go straight to the Market (STP), every ECN participant gets Direct Market Access (DMA) - access to Top-tier liquidity - by default
- ECN is distinguished by Direct Market Trading (DMT) - ability to trade directly on ECN level, e.g. send orders directly to ECN liquidity pools and interact directly with ECN participants. See ECN vs DMA Forex brokers for detailed comparison.
- With ECN traders are able to analyze DOM (Depth of the Market) - see liquidity, place own Bid/Ask offers - create liquidity, and trade inside the spread - take advantage of it
- Trading on ECN requires an average deposit of $50,000. Now, can you create a meaningful liquidity or place a single trade at ECN level with a $100 deposit? No.
*ECN - true ECN broker
*ECN-style pricing - broker offers Best pricing from Top-tier liquidity providers, yet is not a true ECN
*ECN marketing - liquidity source is unknown and/or trading conditions don't match ECN, the broker is not a true ECN
** Commission per standard lot Round Turn
🔥 "ECN pricing" NOT equals "ECN dealing"
As the term "ECN pricing" gains momentum, it's important to understand the message behind it.
Yes, it is the best pricing (best Bid/Ask price quotes) delivered from Top-tier liquidity providers, but this is where the word "pricing" ends.
ECN pricing = ECN-style pricing ≠ ECN dealing
For many Forex traders seeing the word "ECN" triggers expectations of getting onboard of ECN trading.
In fact "ECN pricing" should be called "ECN-style pricing". This way it sets clear expectation that it is all about matching the ECN style, not being an actual ECN.
"ECN pricing" means a Broker does not make own pricing (like Market Makers do), but instead sources best price quotes from liquidity providers (PLs) and passes them to clients. High quality LPs + more LPs = best possible pricing.
"ECN pricing", however says nothing about "How the broker handles client orders", e.g. nothing about the dealing model.
This is where many traders would be surprised to learn that a broker with "ECN pricing" could be a Market Maker or STP or DMA
ECN with ECN pricing
ECN Brokers offer true ECN pricing.
STP and DMA with "ECN pricing"
STP and DMA brokers promoting "ECN pricing" offer "ECN-style pricing"
- STP and DMA brokers with "ECN pricing" will send all orders to their LPs (A-book).
- STP and DMA brokers can choose to add mark-up to price quotes and/or charge commission.
- DMA brokers will have better LPs, and more LPs, which improves overall trading experience for clients.
Market Makers with "ECN pricing"
Marker Makers promoting "ECN pricing" offer "ECN-style pricing"
Such Market Makers would be Hybrid = A+B-book dealing type, where A-booked orders are passed to LPs (No Dealing Desk model), while B-booked orders are held in-house and processed internally, e.g. countertraded by the broker (Dealing Desk model).
As we can see, it is "Business as usual" for all Forex brokers.
Just that little fancy word "ECN" mentioned by a Broker tends to receive more attention from traders, and thus higher client conversion for the Broker.
It's a pure marketing power in action!
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