Trade Forex CFDs from 0. Vantage is ASIC regulated and client funds are segregated. Open an account less than 2 minutes. Reliable and affordable trading since Review XM. Review Forex. Regulated in the UK, EU, US and Canada they offer a huge range of markets, not just forex, and offer tight spreads on a cutting edge platform. The simple definition is that Electronic Communication Network ECN brokers enable traders to place competing bids against each other.
They are Non-Dealing Desk NDD brokers, meaning that instead of passing orders to market makers who take the opposing position in a trade, they connect buyers directly with sellers. When they cannot match two counter-parties, they reflect the highest bid and lowest ask price listed in the open market. ECN forex brokers act as a major source of liquidity for retail traders versus major market makers like large banks, hedge funds and other financial institutions.
They are the fastest-growing brokerages globally and are particularly popular for forex trading, offering greater transparency for investors. STP brokers also have no dealing desk. The broker effectively acts as a silent facilitator, connecting the trader with its internal liquidity pool and taking its fee from a mark-up in the spread.
Whereas the STP broker provides access to different providers in their liquidity pool, the ECN plays the role of a hub. The hub essentially acts as the primary liquidity source, formed of the different hedge funds, banks and market players. The other notable difference is position size. ECN brokers typically cap minimum position sizes at 0. This is a result of few liquidity providers being able to cater to smaller position sizes, which can prove challenging for beginners.
Both ECN and STP models offer fast executions and tight spreads which lend them to a range of strategies, including scalping trading. In fact, many ECN, STP or hybrid brokers offer zero-pip forex spreads, though they may charge a fixed commission per lot. Transparency — ECN brokers prevent price manipulation as everyone uses the same feed and trades at a defined price.
No investor enjoys a built-in advantage over other traders on the ECN. Trading hours — ECN providers generally let you trade beyond traditional trading hours, allowing investors to react to after-market news announcements, for example.
Leverage — Top ECN brokers typically offer leveraged forex trading. It is usually specified in lots or contracts. Many brokers offer trading in so-called microlots, i. Therefore, this point is also less interesting for professional traders, but rather for beginners who initially want to trade in smaller positions in order not to risk such a large amount of capital.
Spread as a value factor Spread is essentially the only commission that is charged when trading forex, how important this criterion is depends mostly on your trading strategy. Traders who tend to hold their positions for long periods of time can overcome slightly higher spreads.
For clients who make many trades on the same day, so-called intraday traders, this factor can mean the difference between profit and loss. When making a comparison, you should pay attention not only to the spread. As we have already learned, some forex brokers charge a fee for an order to buy and sell a foreign currency in addition to the spread, depending on the type of broker market maker, ECN or STP broker.
Therefore, sometimes it takes a little time to compare individual spreads of providers with each other. Number of currency pairs traded and margin The number of traded currency pairs still varies considerably from one broker to another. The best providers in this area provide their clients with over currency pairs. Another trading condition directly related to the maximum leverage is the margin.
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