ECN broker: what does it mean? What conditions does it offer and what are the main advantages and disadvantages of operating on a broker of this type? Here are the answers and the list of top operators to more easily choose the top ECN broker where to trade at real market conditions.
ECN broker: what does it mean?
The term ECN , acronym for ” Electronic Communication Network “, indicates a broker that offers its customers with direct access to interbank markets without operating any price intervention.
Brokers may be classified into two macro categories: Dealing Desk and No Dealing Desk. The Dealing Desks are those that operate an intervention on market prices, while the No Dealing Desks are those that don’t operate any type of price intervention.
ECN brokers are a part of the No Dealing Desk type, which implies that the prices they will show to their customers are the real ones of the market, without re-quotes and with generally lower variable spreads than those of Dealing Desk brokers (ie the ” brokers market maker “). ECNs are therefore the brokers with the lowest spreads and the only ones to offer the zero spread condition (which occurs when market activity and trading volumes increase).
In essence, ECN brokers are pure intermediaries, and in turn, they earn through only 1 method, that of commissions, that’s by applying commissions on transactions.
Advantages and disadvantages of ECN brokers
The main advantage of an ECN broker is to provide real-time information on the status of order processing, in a market where all traders trade against each other, with the aim of capturing and benefiting from the best offers available at that time. Trading on an ECN broker has advantages, but also disadvantages. Here is a summary table.
Advantages
- Direct access to the market
- No re-quote
- Reduced spreads or in some cases non-existent
- Possibility of scalping
Disadvantages
- Upper margins
- Trading volume fees apply
- Price gap (an order may remain unfulfilled if a counterparty is missing from the market)
So, which are the best and safest ECN brokers to trade?
Aware now of what it means to operate on a broker of this type, here are the 5 best ECN brokers where you can trade with direct access to the market, with the guarantee of operating on safe, regulated intermediaries and under the real conditions that the market offers.
Pepperstone
Platform : MT4
Max leverage : 1:30
Demo account : Yes
Spread : variable
Minimum deposit : AUD 200
License : ASIC, CySEC
Products: Forex, CFDs, Commodities, Indices, Metals, Energies, Stocks, Cryptocurrencies
Execution: STP
Suitable for: Beginners, Professionals, Advanced
Pepperstone is one of the best brokers in the world for trading volumes, professionalism and trading conditions. It offers the Metatrader 4, Metatrader 5 and cTrader platforms, 3 of the most complete and used platforms ever, provides the possibility of using a demo account and offers a good number of assets to trade on forex first of all, but also on CFDs, metals and raw materials, with a minimum deposit required of AUD 200.
Pepperstone offers the possibility to trade 24/24 for six days a week with extremely competitive spreads starting from 0.0 pip (zero spread) and an active assistance service 24 hours a day, is regulated by ASIC, FCA and CySEC and is among the most respected and recognized for their high operating standards.
Pepperstone is a broker structured to support and offer high levels of service for traders of all levels, from private to professional.
IC Markets
Based in Australia and regulated by ASIC, IC Markets is one of the best ECN brokers currently in business, one of the most trusted brokers to trade on whatever your level of experience, expert, intermediate or novice.
Platform : MT4
Max leverage: 1:30
Demo account : Yes
Spread : variable
Minimum deposit : AUD 200
License : ASIC, CySEC
Products: forex, CFDs, indices, futures, commodities, stocks, cryptocurrencies
Execution: ECN
Suitable for: beginners, intermediates, advanced, professionals
IC Markets offers transparent and advantageous trading conditions, great execution speed and high level professionalism.
Minimum deposit of AUD 200, 4 trading platforms including MT4 and cTrader, two types of true ECN accounts, spreads starting from 0.0 pips with commissions of $ 3.50 per lot and a maximum leverage of 1:30 for personal traders and 1 : 500 for professionals.
Tickmill
Tickmill is among the most competitive ECN brokers to operate in the forex currency market, has a solid reputation in the industry and offers a good set of dedicated tools for analysis and insights. Tickmill may be a particularly good choice for volume traders looking for low spreads and a broker that enables the application of all trading strategies.
Among the most important functions, Tickmill offers the functionality Autochartist , useful for identifying patterns and generating trading signals, functionality Autotrade Myfxbook for social and copy trading and, unlike many brokers, the power to prevent orders and limit near the market price.
Tickmill is an ideal choice for investors mainly oriented to the forex market, with a competitive global offer and different types of accounts with specific and diversified conditions for private and professional traders.
Interactive Brokers
For professional and advanced level investors, INTERACTIVE BROKERS is probably the best ECN broker to consider, the most comprehensive choice for trading forex, stocks, options, futures, bonds, ETFs and CFDs.
It offers access to around 120 markets on which to trade and a first-level platform, the TWS , low commissions and diversified solutions for different investment profiles, also as valid research and training support.
TWS is one of the most advanced in the industry, with over 60 order types available and a wide range of other tools such as Algo trading, Options Strategy Lab and Volatility Lab, Risk Navigator and Market Scanner.
Interactive Brokers may be a reliable and competitive broker, regulated by several regulators and with high operating standards, recommended for experienced traders and large capital.
