Electronic Communication Network (ECN), even with its definition, is a puzzling term. A standard definition of ECN is a market network of +15 major banks’ liquidity providers, ECN brokers, corporations and traders. Forget about that. To really understand this term, I will start with Forex brokers.
Most Forex brokers are money makers. They are the counterparty of your trade. They buy the currency pais that you sell or sell the currency pair that you buy. They are like the banking intermediary, who absorb deposit and make loans at the same time. Just like the bank will earn money through interest, money makers in the Forex market make money through spreads. An ECN acts like the matchmaker for your trades.
ECN brokers have quite some advantages. They are able to offer robust charting and signal services. They provide liquidity to the Forex market by trading themselves. They disadvantage is that ECN brokers can reserve the right by acting counterparty of your trades.
ECN can be a very good choice for Forex brokers. ECN platform is easy to use and it offer better signal and charting services. Better charting and signals can especially help Forex beginners in getting an idea of what’s happening in the Forex market, and also help to develop their own trading strategies.
http://www.ikonfx.com/forexblog/what-is-ecn-forex-broker/
Many traders complain about the size of the spread offered by the broker on the pairs, and their stop loss that keeps getting hit, and sometimes disappearing trades. These are all legitimate concerns, and should be addressed through a Forex trader's individual broker. If you are unhappy with your broker, there are others out there.
ReplyDeleteECN Broker