Best ecn forex broker,cfd indices forex online trading,best online day trading sites,mt4 help guides - Easy Way

12.03.2014 admin
A true ECN with tight spreads, and receiving positive reviews across the board means that you should try it out. When it comes to ECN brokerages, Dukascopy is one of the better known names with many traders opting for the Swiss regulated Forex and Precious Metals broker. XM formerly known as XEMarkets and Trading Point, are a controversial addition to the list with the brokerage’s regulatory licence stating that the firm is licensed as a Market Maker.
Market Makers or Dealing Desk brokerages in contrast do not pass all trades onto liquidity providers or other traders, but on occasion take the other side of traders position. Brokerages that operate an ECN can often go a step further and allow trader’s to benefit from Spreads starting at 0 pips, with the brokerage matching up traders who want to take opposite positions in a particular instrument.
STP stands for straight-through-processing, which means when a trader places an order with the brokerage they will simply pass this trade onto one of their liquidity providers.
ECN stands for Electronic-Communication-Network, just like an STP brokerage an ECN broker will send some of its trades to the various liquidity providers used by the brokerage. An ECN brokerage gathers quotes from several different sources, this means spreads with ECN brokerages are often considerably tighter. Typically Foreign exchange brokerages make their money off the spread with all costs being included within the spread, ECN brokerages however make their money by charging commission to their clients.
ECN brokerages only matches traders with various liquidity providers, meaning that the interest of the customer and the brokerage are aligned.
Again due to the fact that ECN’s make money off commission, they rarely place limitations on the kind of trading activity that clients can undertake allowing both hedging, trailing stops, and unlimited scalping.
ECN brokerages do have some disadvantages, for instance many ECN brokerages have much higher minimum deposit requirements. ECN brokerages are generally considered to be superior to STP brokerages, with many ECN’s being better value even when commission isn’t taken into account. When trading with an ECN brokerage you will likely find that the majority of your trades are passed onto external liquidity providers rather than matched up with other traders. The IronFX group operates companies regulated in a number of different jurisdictions and has been one of the fastest growing Forex brokerages since the firm launched back in 2010. XGlobal Markets launched back in 2012, is a pure STP brokerage meaning that all trades are passed onto one of the brokerage’s liquidity providers.
FxNet is relative newcomer with the brokerage being launched back in 2012, the brokerage is interesting in respect to the fact that it offers fixed spreads on currency pairings during periods of low volatility. The brokerage offers both Dealing Desk and Non-Dealing Desk accounts, for those looking to trade FX. The brokerage aggregates liquidity from a number of different FX brokers and also allows traders to trade with one another on via Deltastock. Despite this brokerage claims that over 99% of orders received by the brokerage are passed onto the firms liquidity providers. These brokerages simply act as agents for their clients either passing trades straight through to their liquidity providers (known as Straight-Through-Processing) or are matched up with other traders using the brokerages ECN (Electronic Communication Network.


These brokerages then profit by charging the traders involved commission for taking advantage of the brokerages Electronic-Communication-Network (ECN).
The reason why STP and ECN brokers are often talked about as if they are the same thing is due to the fact that both brokerage models operate without a Dealing Desk.
These liquidity providers will vary broker to broker and may include other brokers, banks, and other specialist liquidity providers.
However the difference between the two models is hinted to in the name, as an ECN will also internally match orders placed by users of the network. While the commission does an extra cost, such brokerages still tend to offer better value for money overall.
As the brokerage makes money regardless of whether the trader is successful or not, there is no reason for the brokerage to engage in any unscrupulous activity in order to maximize profits. Which means some traders may not be able to open an ECN account at the brokerage of their choice, however their are a number of ECN brokerages which cater to clients who have limited capital at their disposal. It is important to be aware that not all brokerages advertising themselves as ECN’s do in fact operate as such and are really glorified STP brokerages. STP brokerages simply pass client orders onto liquidity providers at the currently available best price, often aggregating quotes from a number of different sources including Tier 1 Liquidity Providers, Prime Brokerages and often other FX brokerages. The brokerage has quickly built up a reputation for providing competitive spreads and fast execution on a range of FX pairings and precious metals. This ensures that traders know in advance what Spread they will be likely to get the majority of the time, but does mean that the brokerage is not particularly competitive in regards to spreads. This has led to an increase amount of interest in the brokerage which is regulated in both Cyprus and the United Kingdom. FXTM remains very competitive in regards to spreads and also offers Islamic accounts for those who want to ensure their trading activity is compliant with Sharia Law. Many of the brokerages listed on this page source some of their liquidity for the brokerage and for those looking to deposit in excess of $2000, the brokerage is definitely worth consideration.
This means that traders can often enjoy very tight spreads on major currency pairings, as well as enjoying significant liquidity through the brokerages liquidity providers.
XM is regarded by many as a reputable brokerage, with the firm being particularly popular with those looking to open micro accounts.
This is thought to introduce an unpalatable conflict of interest, which many traders believe could lead to brokerages using manipulative tactics in order to remain profitable. This means the brokerage doesn’t interfere with a traders order but simply place the trade with a counter party. It is these liquidity providers who are the ultimate counter party, not the brokerage that the individual is trading with. For instance, if one trader using the ECN wants to go long, the brokerage can often match the order with another trader who wants to go short.


For instance a genuine ECN brokerage will never be found to be trading against their clients. Another minor gripe some traders have with ECN brokerages is that it can be more difficult to work out stop-losses and break even points in advance. Generally true ECN brokerages will provide traders with Depth of Market information which will allow users to see the liquidity available on the Electronic Communication network at different prices. If they both place orders at the same time or at the same price the brokerages ECN network will match these two traders together. One downside for many is that the brokerage requires traders deposit a minimum of $500 to try out their services for real, though clients can take advantage of a free demo account. While offering STP execution the Spreads offered by the brokerage are not the most competitive with a number of brokerages being able to offer tighter spreads. The ECN accounts offered by the brokerage are very competitive in regards to Spreads, and should be considered by those looking for a regulated ECN brokerage.
Many traders favour brokerages using a no dealing desk model as the interests of the brokerage and the customer are fully aligned. An STP brokerage makes a profit by marking up the spread or by charging traders commission.
This means that users of Electronic-Communication-Network Brokers can often take advantage of 0 pip spreads when the brokerage successfully matches user’s orders. With this being said there is nothing inherently wrong in using a brokerage which operates as a STP, with their being many brokerages which provide their clients a great level of service.
This often means that ECN brokerages can match up trades with no spread between the Bid-Ask, though traders are likely to be charged commission. This means that the more the trader trades the more money the brokerage can make, which means it’s in the brokerages interest for clients to make money.
Just as there are ECN brokerages that do not truly operate as such, there are a number of STP brokerages which do not straight-through-process all trades which is why it is important to check out a brokerages execution policy before depositing. It is for this reason why STP brokerages are seen to avoid the conflict of interest inherent in the traditional dealing desk model.
The reason why many traders prefer ECN brokerages is that ECN’s can often provide traders with tighter spreads though it is important to work in the costs of any extra commission.



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