What is an ‘ECN Broker’?
ECN broker is the appellation for a forex financial expert who gives unmediated access to others taking part in currency marketing to its clients with the use of electronic communications networks (ECNs). Generally, ECN brokers offer tighter bid/ask spreads to their clients than are usually provided to them. This is as a result of price quotation consolidation from several participants in the market.
‘ECN Broker’ IN DETAIL
Because an ECN broker only performs trade matches between different participants in the market, trade against the client is not possible. This is an accusation directed very often at some retail forex brokers of suspicious activity. Because of the narrower nature of ECN spreads in comparison with those popularly used by brokers, brokers making use of electronic communication networks demand a standard commission per transaction from their clients.
An ECN Broker makes trading easy for investors who are interested throughout the ECN. Because of the functioning methods of the ECN, there are often low fees combined with the availability of extra trading time when engaged with ECN brokers.
Comprehension of the Electronic Communications Network
The electronic system of the ECN offers buyers and sellers a platform on which they can all execute together. The ECN achieves this by making information about entered orders very accessible and facilitating the orders’ execution. The design of the network assists with the matching of current buy and sell orders in the exchange. In the absence of specific information on the orders, prices on the open market that give a detailed sense of the listed highest bid and lowest ask are provided.
Electronic Communications Network benefits
Using the ECN gifts investors a medium through which their trade can be made at hours different from the normal hours for trading, providing an amazing option for people without the ability to actively participate during traditional trading hours or those who enjoy wider flexibility margins in availability. Also, the wider spreads very common with traditional broker users are avoided while generally providing lower fees and commissions. For individuals with privacy concerns, the ECN has options of anonymity levels provided if desired. These options can possibly attract investors with the interest of making high-value transactions.
Thanks to the transmission method for information, transparency of the price feed is a byproduct considered by many as a bonus. All ECN brokers are given access to exactly the same feed and trade made available at the specific price provided. Price history is very accessible to an extent, to facilitate particular trend analysis within the marketplace. Price manipulation is limited as past and current information can be easily accessed by all, preventing unscrupulous activity. Furthermore, no specific inbuilt advantage is provided to any trader over the others since the same information is equally made available to them all.