For you to determine which the best ECN Forex Broker is, you should first understand what ECN is. It stands for electronic communication network. It is a term used in the field of finance to refer to a system being used in computers to facilitate in the trading of products other than stock exchanges. Initially, the products used for trade in ECN are currencies and stocks. Historically, the first electronic communication network broker was created in 1969 and known by the name of Instinet. As time passed by, more and more ECNs came to compete with the pioneers.
In order to pick the best ECN Forex Broker, one should look which of the trading firms are offering low cost of transaction. Another issue is the trader’s access to order books – this should not be limited in any way. Competitive ECN Forex brokers offer matching of orders even if it is outside the scheduled hours of exchange.
Many traders believe that ECN is the future of trading in the foreign exchange markets. It basically bridges all market participants – small or big through a designated forex broker. The process of linking uses an advanced technological setup named Financial Info Exchange Protocol (FIX Protocol). The best ECN Forex Broker knows how to obtain liquidity from major financing institutions like banks and the availability is passed on to the smaller traders. The broker should also be able to deliver the order of the clients or traders.
What benefits does the best ECN Forex Broker reap? Basically, the benefits come in the form of fees from commission and payment from each transaction handled. The profitability of the forex broker increases as the volume of trading generated by broker’s client goes higher.
At the traders’ end, what benefits can be expected?
- The activities like trading are completely anonymous. With the anonymity provided, it is easier to trade and close deals with all the neutrality that is due. Only by being anonymous can a trader become unbiased and behave in accordance to the rules set by the real market conditions.
- With an ECN forex broker, you can actually see how deep the market is. From ECN, you have a better view of all the prices of the products and the quantity of each. With this knowledge, traders and clients can have a better idea on the liquidity at varying levels of prices. This way, executing the trade can be done in the best manner possible.
- The trade can be executed instantaneously via live streaming. With this manner of trading, all transactions can be immediately confirmed. There is no space for re-quotes due to the fact that with the best ECN Forex Broker, there are no dealing desks that might bring some lag into the process.
- The client or traders get to trade directly with the bank. In this scenario, ordinary clients get to have their share of exposure with banks of world-class quality and institutions with impressive achievements.
Finding the best ECN Forex Broker has a lot of benefits because you get to have a more direct reach or access to the prices in the market. It is the nature of market prices to reflect such fluctuations based on the interaction of demand and supply alongside other conditions like volatility.