What Is ECN Trading? And What Are Its Advantages?

Thanks to technological advances, small investors can trade on the financial markets. They are now able to compete with larger financial institutions. For smaller players, the Forex market is a popular place to trade currency pairs. You might make a profit by fluctuating currencies’ prices. It is the most liquid and largest market worldwide, which is why it is so popular. Forex trading can be done over-the-counter between buyers and sellers around the world, rather than using a controlled exchange like stocks or other assets. To access this market, however, it is best to use a broker.

This market is decentralised and you will quickly see that you have the ability to choose between different rates of exchange or trading conditions depending on which broker you choose. Finding the right broker to suit your trading strategy is crucial for professional traders. There are many brokers that offer similar services and products, but there are a few things you need to consider before you choose one.

First, ensure you’re dealing with a licensed broker. They adhere to strict laws that protect customer funds and security. They are therefore highly regulated. They use wholly separate client accounts and provide security for negative balances. Apart from checking the legal status and verified customers review of your broker, make sure it provides the right trading platforms and forex ecn account to suit your trading strategy. Trading conditions, spreads and minimum deposits, payment options, account currencies and technical support are all important.

Video Credit – UBK Markets Official Channel

The type of broker you are choosing is also important. There are many types of brokers, including Market Makers and ECNs.

ECN Broker vs Market Maker

A Market Maker is a broker that “creates markets” through setting bids and asking for prices. Investors can then open trading positions and settle them by looking at the prices. Market Maker brokers are not able to hedge their clients’ jobs with other liquidity providers, unlike an ECN broker. Market makers, on the other hand pay customers who have won successful trading positions with their funds. This also means that Market Maker brokers suffer when clients have a profitable trading position. ECN broker is an electronic communications network broker. This network allows stock market sellers and buyers to find a counterparty for trading positions. This broker gives traders instant access to other market participants through the interbank trading price.