The best ECN forex broker will tell you what ECN is and how it actually works. So before actually considering the option of subscribing or having an account with and ECN broker, you should first look into the nature of ECN forex trading.
First, your ECN broker should provide you the direct access trading capability. ECN actually stands for electronic communication network. ECN subscribers can actually place their orders and trading decisions via a terminal in a custom computer or through the network protocols. The electronic communication network will then do its duty to match orders that need to be placed for execution. Orders that were not matched will be available again to other subscribers. In general, all traders do the deals without giving out their identity to prevent bias. Generally speaking, the best ECN forex broker should make sure that all trading activities are done anonymously.
In some cases, ECN brokers can give additional command features to its traders. Some of these are pegging, reserve size, and negotiation. It is best to choose an ECN broker who gives access to the whole ECN book which gives market data on the trading interest’s depth. In general, ECNs are facilitated by a kind of communication between traders that give way to competitive and cooperative sharing of pertinent information that can help in determining the proper price. This is done via electronic negotiation.
You might be asking how the best ECN forex broker works. Top electronic communications network forex brokers collect data on prices from varied contributors of the market. These data are then presented to the clients so that it can receive the best quote or bid. Market contributors can be anyone among organizations, traders, market makers, and banks. In addition, the traders subscribing to a certain ECN broker can also be considered as a market contributor. To optimize operations, ECN forex brokers allow the orders of the clients to interact with other orders within a definite period of time. This way, the orders of parties that compete can be compared and best deals can be arrived at. Prices cannot be manipulated if you’re with the best ECN forex broker. They do not allow manipulation or setting of prices.
There are other roles played by ECN forex brokers. For one, they do not work to change, set, or manipulate market prices. Instead, they settle things at the proper venue with the participants. However, there are perceived advantages with subscribing to the best ECN forex broker.
The following are among the long list of pros:
- Since the prices are volatile, then scalping can be done efficiently.
- The broker cannot really compete with its clients because the broker provides direct interaction between banks and clients.
- There are instances wherein the best ECN forex broker eliminates the spreads while an active market takes its course.
- The prices and bids are a result of several sources.
- All subscribers have the right to be called a market maker.
- The spreads provided by ECN brokers are very precise and competitive.
With these information, you can now consider subscribing to an ECN forex broker.