The Foreign Exchange Market is the largest and most liquid financial market of the world, allowing traders the chance to take advantage of the numerous opportunities given. One way to gain more access to these opportunities is to work with an ECN broker. ECN stands for Electronic Communication Network, which links traders with various liquidity providers, allowing them direct access to the market.
Read more on the different benefits when working with an ECN broker instead of a market maker broker:
1. Less interference
One of the benefits of working with an ECN broker is less interference. Based on the list of the Best ECN brokers in the world updated review, one can deduce that the majority of ECN brokers have more or less cultivated a reputation of being reliable, knowledgeable, and trustworthy. The reason for this is because ECN brokers do not operate on a dealing desk, which means they have much more flexibility when dealing with the client’s orders on their end.
As such, this flexibility enables them to fill out the client’s orders without interference, unlike market makers who more or less make their opinion known to their clients in an attempt to make more money for their own sake. They may have ulterior motives for doing certain trades in certain ways, and they may be using it for their own gain without regard for the client’s money.
2. Allows clients to work on market prices
Market prices are constantly changing and most clients would want to have direct involvement with the market. Electronic Communications Network market brokers allow traders to get direct access to the actual pricing of various financial instruments. Market maker brokers, on the other hand, determine the price themselves in an attempt to get a cut of the trade to make profit.
While some market makers may offer attractive market prices, spreads, and fast trade execution speeds, ECN brokers still have the upper hand here since they enable sophisticated direct market access or DMA technology, which ensures that no re-quotes are necessary, allowing traders to get the most value out of their investments.
3. Are generally more trustworthy
When dealing with finances and investments, most people prefer entrusting their hard-earned money to brokers that are honest and trustworthy because money doesn’t grow on trees and you would want the most out of your investment. Here are some reasons why ECN brokers are generally more trustworthy than their counterparts:
- ECN brokers offer the best available market price, affordable spreads, and utilizes the latest technology to ensure that trade execution stays fast and seamless even after hours.
- Many of these brokers often charge fixed commissions instead of using mark-ups so clients will be able to calculate their expenses carefully.
- They also provide clients direct access to the market so traders gain access to the real pricing of financial instruments, unlike market makers who determine the price themselves.
- Additionally, the ECN trading model provided makes sure that brokers never have to trade against their client, making them one of the most client-friendly brokers to deal with.
Because ECN brokers are more trustworthy, there’s a higher demand for them.
4. Offers various options for different traders
A lot of people want to go for variety when it comes to investments. ECN brokers are not just limited to one kind of investor. In fact, in order to establish more investors from other industries, various companies have made it a point to provide an array of different ECN brokers. Some of these brokers may exclusively serve retail traders, others institutional traders, and sometimes even a combination of both.
5. Traders enjoy complete anonymity
Traders who work with an ECN broker can enjoy a higher degree of anonymity compared to those who are working with market makers. The reason why ECN brokers provide a higher degree of freedom is because an entrepreneur’s trading model allows investors to only deal on neutral prices that reflect only real market conditions. In short, these brokers will neither manipulate nor slant the market price against the trader’s favor based on whatever strategies, tactics, or current positions they may be holding.
In fact, most ECN brokers may not even be aware of what strategy you are trying now since they are mostly there to carry out orders, no more, no less. You just send out the instructions and the brokers carry them out without thinking about their own personal gain or without thinking of an opportunity to double cross you with scheming tactics.
6. Offers Instant Trading
Despite ECN brokers working beyond the hours of when the Forex market closes, many of them are still able to provide the necessary products and services required of them. Considering that many of these companies are investing in the latest software technologies, many of these trading sessions actually occur live, which is also known as instant trading. This means that as soon as a trade is dealt with, it is final and confirmed in record time without interference or requotes, ensuring that investors keep a tighter lock on their profits, as well as reduce any network issues.
7. Offers Automated Data
All ECN brokers have access to the same feed and trade at the precise price that it was displayed and provided for. Additionally, this feed also keeps tabs on the history price, which allows traders to analyze and ponder on its future trends. This means that each trader working with an ECN broker has an equal amount of opportunities and risks laid out before them where their successes are only determined by their skill and strategy beforehand.
Using the Electronic Communication Network allows you to practice your own trading styles without interference or possibility of being double-crossed. If you’re the type who just needs someone to do something for them, then you might benefit from such a system. Not every Forex broker in the market provides the same opportunity, which is why it is important to pick your broker wisely.
To understand which broker works best for you, remember to weigh in their pros and cons, and research their company reputation to understand their overall service quality.