Therefore, as a result, ECN trading is becoming a significant deal for traders. Moreover, they are looking for ECN brokers who offer excellent trading experience. The article highlights a complete guide regarding ECN trading.
What is ECN trading?
ECN stands for Electronic Communication Network. It is a computerized system where forex traders access large liquidity providers more effectively and efficiently. Besides, the network automatically matches the orders between different buyers and sellers across the market. The sole purpose of creating ECN was to remove the intermediaries. Hence, the trade is conducted between the two parties, and there is no room for the third party, the middleman. Thus, there is no broker involvement, and the trades are carried on effectively and efficiently.
ECN forex broke
An ECN forex broker is a platform where small market traders can meet the large liquidity providers. These brokers take orders from their clients and offer them excellent market conditions. The ECN brokers use non-dealing desks and provide direct access to the ECN model. As no intermediary is involved, the traders get a reasonable market price for their orders. Additionally, the brokers also offer the most prominent liquidity providers.
Working of ECN trading
As compared to the other trading methods, ECN trading is highly beneficial, and forex traders typically prefer ECN more than the other methods. Here are the steps that illustrate the working of the ECN trading system. Take a close look
- The major liquidity providers contact the ECN systems and send them their Bid and Ask prices of different forex currencies.
- The ECN brokers take this detail and share the information on the different trading platforms like MT4 and MT5.
- The prices are highlighted to the trader. As per their trading needs, the trader can decide whether to invest or not.
- Once the trader agrees to transact, the same request is shared with the ECN server. Therefore, the comparison is made with the offers offered by the liquidity providers.
Why is ECN trading famous?
The primary reason behind the extreme popularity of ECN trading is that the trades are carried on at the most affordable market prices. Therefore, there is no room for the spread. If the spreads do not exist, the forex traders need not incur extra expenses. Hence, it turns out to be highly economical.
Benefits of ECN broker
As told before, many forex traders prefer ECN trading over the other trading forms; the traders derive several benefits. These are as follows:
- As the spreads are almost nil in the ECN trading, the forex trader incurs fewer expenses.
- The forex brokers in ECN trading are the platforms and not the middleman. Therefore, as a result, they don’t interfere in the comprehensive trading transaction between the traders and the liquidity providers.
- ECN trading is well-known to be highly speedy and efficient. Hence, the trades are conducted swiftly.
The Bottom Line
Therefore, in a nutshell, it is fitting to mention that several traders across the globe highly recognise ECN trading. It is an ideal revolution because it leaves out the middleman. Thus, the comprehensive trading experience improves.