Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.

What is ECN

Author: Patrick Dresdner
Patrick Dresdner
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Abbreviation ECN stands for "electronic communications network" and in its essence is an electronic exchange platform. Through this network Best Forex ECN Brokers can provide direct access to market liquidity providers, enabling the trader to become a supplier of liquidity through Forex banking. One of the main advantages of ECN for users is low spread, which ensures high consolidation quotes from different suppliers. Applications bidders can be automatically combined for the best price, thereby providing a high speed of execution. Most of the applications in the ECN, as well as in the real market - limit orders, although there is a possibility of exhibiting and market orders.

Trading in the ECN is available not only during the trading sessions of stock exchanges, but also after their closure, as well as Forex trading is available. There are different types of ECN networks that can adapt to the requirements of certain bidders. For those, who only started their work in the stock market, it will be very useful to review the ranking to review the ranking  "CFD trading Forex brokers".

The popularity of trading through ECN due to the transparency of trades directly between the members of the network that provides high-speed execution of transactions. In addition, participants in the network remain anonymous, that completely eliminates the possibility of interference by anyone in the formation of prices, which are formed solely on the basis of supply and demand in the market. This eliminates interference in the trader's trade.

Private trader must be the participant of the net in order to make transactions in ECN, Forex trading companies give access to it.

When accessing ECN trader can see the book of online orders and place it in his applications. Orders are executed at a time when buying and selling orders on the price of the order price are the same and therefore the two sides implement their transaction volumes

Due to ECN a trader can trade in the real market, being anywhere in the world, not only in the exchange building, as it was before. Earlier in ECN could trade only institutional market participants, such as banks, major brokers and so on. In additions, they can participate in various markets like futures and binary options through this system. In order to make transactions in the private ECN trader must be a member of the network, access to which is provided from the company's ECN Brokers List.

Thus, ECN system works as follows:

  • Trader puts trading order in one of Forex Trading Platforms.
  • The request passes through a broker's server.
  • Broker automatically places an order in a glass ECN network prices where the trader can see his application and the application of other market participants with price and volume.
  • Within the ECN network consolidated purchases and sales quotes.
  • Due to the volume of liquidity network of the trader executed when a market order. If it was put a limit order, the order will be executed or when the fixed price and volume or if the order has been selected for the implementation of other bidders in ECN. The network ECN bidder can choose his opposite transaction, place a pending limit orders.

Many customers of Forex market prefer to use so-called “Direct processing” and regularly monitor which brokers’ data is serviced by STP Forex Brokers list.

With regard to the fee for participation in the network, most of ECN Forex Brokers charge a commission. The amount of commission among Most popular Forex ECN brokers varies from 3 to 7 USD per 1 trading lot. That is from 6 to 14 dollars for a full circle. If we consider the minimum spread, which can swim from zero, then this commission is more attractive for traders. Also, it turns out that by trading through a broker, a trader pays a proportional fee, the size of which depends on the size of the trading lot.

In gerenal, trading through ECN is a new step in the development of e-commerce, which allows you to make the market more transparent and tradin more stable. Advantages of ECN are indisputable, which makes connecting to these networks more and more bidders. For those who want to change a broker, the system provides all information at the current moment in the section "How to choose a Forex Broker"?


Now, here is ECN explained in under a minute:

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Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.