ECN trading really is a stage which connects traders directly to interbank liquidity providers with no aid of any coping desk. With the coming of new services and advanced platforms in foreign currency trading, professional traders quickly started to realize the benefits of trading within an ECN platform. ECN and direct market access are two important theories in Forex trading which can be regarded to have no conflict of interest between a broker and its own clients. Trading on an ECN platform makes it possible for traders to send their own orders directly to the liquidity pool, which can soon be full in marketplace states and in line with the existing volatility. ECN trading account is regarded as the most straightforward form of currency forex trading which allows a trader to interact directly with industry without worrying about any intrusion in any third parties.
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In the majority of situation, traders really do enjoy a great deal of anonymity at the liquidity markets, as as brokers do not usually show the source of the sequence for their own liquidity providers. ECN Forex brokers are becoming incredibly popular with modern traders thanks to the great number of benefits of an ECN account. In the business’s perspective, brokers prefer to be market maker broker due to the limitless profit potential by losing dealers. As stated by verified statistics done in the marketplace participants and real live FX trading accounts, it is estimated that nearly 90% of traders eliminate money in foreign exchange markets. Consequently, brokers can offset the costs of paying their winning traders by receiving close to 90 percent of the revenue from dealers that lose consistently. ECN brokers are entirely opposite to advertise manufacturers, since there is not any coping desk between a trader and the market.
All orders are passed directly on the liquidity providers, where orders have been lapped up by the liquidity in the markets. ECN agents connect their dealers to different liquidity providers, where the process of order matching is done at the inter bank level. Liquidity providers may take the counter part of an arrangement in market priceor pass it to other customers if there’s enough liquidity from the markets. There is a less probability of an order being refused by an ECN network, as an liquidity provider should have the ability to offer at least a partial fill according to the current volatility and volumes. The drawback is that there may be significant slippages between the quoted price and the entry price since markets are known to move somewhat with the span of a few seconds. ECN Forex brokers simply function as a middleman to such transactions, where all the fees of trading are paid as mark-up spreads and commissions.
Due to the amount of liquidity from the ECN markets, traders gain use of the best pricing which promises as much as 0 pip spreads. For that reason, ECN agents can only sustain their business model by charging a small commission per order. Some agents might also opt to include their commissions as mark up spread, that makes it possible for dealers to enjoy complete ECN requirements without factoring in any additional costs of trading. ECN brokers support all types of trading plans without any reservations. As an ECN broker doesn’t act as some other counter party, traders may hedge, and practice total freedom over their trades. Be aware that the agents are required to follow all the rules of trading as prescribed by the regulatory agencies.