⭐ ECN vs DMA Forex Brokers


ECN and DMA Forex brokers: what is the difference?

ECN DMA
VS
NDD + STP + DMA + DMT + ECN pricing NDD + STP + DMA + ECN-style pricing
ECN (Electronic Communication Network)
NDD - No Dealing Desk
STP - Straight Through Processing
DMA - Direct Market Access to the Top-tier liquidity
DMT - Direct Market Trading within ECN liquidity pools
ECN pricing - ECN bid/ask quotes
DMA (Direct Market Access)
NDD - No Dealing Desk
STP - Straight Through Processing
DMA - Direct Market Access to the Top-tier liquidity
ECN-style pricing - competitive bid/ask quotes
resembling ECN pricing
ECN is a Network with the Top-tier liquidity DMA is an Access to the Top-tier liquidity
Trading is done inside the Network
Direct Market Access to some of the Top-tier liquidity (via contracted LPs), but no direct trading inside the Network
Unlimited number of Network participants Limited and known number of participants
Unlimited number of liquidity providers of all Tiers 1-3, including top banks, hedge funds, investment companies and individual investors
Fixed number of liquidity providers under a direct contract with the DMA Forex broker (mostly Top-tier 1 & 2)
Anonymous & wild trading environment Well-defined & balanced trading environment
Everyone is for themselves, prone to market manipulation, price rejection etc.
It's a cooperation between companies under the contract (Forex Brokers and their LPs), based on mutual interest
Raw ECN pricing from ECN pools Aggregated ECN-style pricing from multiple LPs
Access to Raw prices from various ECN pools
Raw prices from known limited number of Top-tier LPs are aggregated to identify the best Bid/Ask offer, which is then given to clients
ECN broker is an Agent DMA broker is a matched Principal
ECN broker doesn't fill client orders, all orders are forwarded to the ECN liquidity pool
DMA broker acts as a matched Principal, where it fills Clients' orders itself, and at the very same time places a matched back-to-back order with its Liquidity Provider(s)
Traders trade for themselves DMA brokers aggregate Clients' orders
Each order is sent directly to the ECN liquidity pool, and is filled at the current market conditions. An order appears under ECN broker's name (to preserve anonymity), but is nonetheless an individual order.
DMA brokers combine orders from several clients into a one large order before sending them (in its own name) to own LPs. Orders are filled by the LPs with the best Bid/Ask offer.
Strictly professional clients Available to retail & professional clients
High requirements towards experience level and capital
No requirements towards experience level for Retail clients, lower capital requirements
Higher deposit requirement Lower deposit requirement
Average minimum deposit is $50,000 (but no less than $10,000 USD)
DMA accounts can start under $1000 USD
Leverage less than 1 : 100 Higher leverage possible
Due to the nature of ECN trading, leverage above 1 : 100 is unsustainable
No leverage limits, though most DMA brokers won't go above 1 : 500
Minimum trade size from 0.1 standard lot Minimum trade size from 0.1 standard lot
ECN brokers don't offer micro lots. The 0.1 minimum lot size cap is the requirement set by liquidity providers
DMA brokers which allow micro lots (0.01 lots) need to aggregate clients' orders into a larger size orders before sending them to the LPs
Maximum trade size unlimited Maximum trade size can be capped
No limits on trade size and volume
If the limit is set, it will still be very high & comfortable. Orders up to $50 million USD per trade can be accepted without any issues.
Low commission Commission
Low commission, goes even lower with higher trading volume
Commission is higher, volume discounts possible
Raw spreads Raw spreads + mark-up
No spread mark-up ever, ECN brokers profit from commission only
DMA brokers add own small mark-ups on top of Raw prices, which becomes their profit. DMA brokers who offer Raw spread accounts (without any mark-ups), compensate this with higher commission
Trade inside the spread no
Traders can place orders between the highest Bid and the lowest Ask price, e.g. become "price makers"
Trading on given spreads only, e.g. "price taking"
Trade against other traders no
Traders can trade against other traders, market makers or anyone else in the ECN network
Although DMA broker can choose to match clients' trades against other clients, it will be inside their own ECN-like trade matching system
Unlimited access to Market Depth (DOM) Limited access to Market Depth (DOM)
Traders can see true ECN liquidity
Traders can see liquidity from DMA broker LPs only. Other times DOM might be unavailable

"ECN account" or not?

It's worth mentioning that term "ECN account" is generally overused among brokers domiciled in countries with limited regulation.

While Forex brokers operating from countries with strict regulation, are able to use at most such terms as: "ECN-pricing", "ECN-like trading" or "ECN-style accounts".

Keep in mind that while "ECN" always feels like more... it can be less suitable for an average Forex trader.

The choice comes down to trading experience, investment amount & long term trading strategy.

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