Here you will find the best list of ECN brokers
Below is a complete list of ECN brokers:
Broker Features Open Account Pepperstone
FCA, ASIC, DFSA and SCB
MetaTrader 4 + MetaTrader 5 + cTrader
CySEC, ASIC and FSA
MetaTrader 4 + MetaTrader 5 + cTrader
Webtrader + MetaTrader 4 + MetaTrader 5 + cTrader + Mobile App
CySEC and ASIC
MetaTrader 4 + MetaTrader 5 + IRESS
CySEC and IFSC
MetaTrader 4 + MetaTrader 5 + Mobile App
FCA, CySEC, FCSA and FSC
MetaTrader 4 + MetaTrader 5
FCA, CySEC, FSA, FSCA and LFSA
MetaTrader 4 + MetaTrader 5 + cTrader
This is a complete list and it is important to note that we have tested the vast majority of brokers personally, so we do not recommend opening an account with an ECN broker beyond those recommended.
What is an ECN broker?
An ECN broker provides the most competitive price for buying and selling a currency pair to its users and does so dynamically. In other words, it performs the same process that its users receive from their liquidity provider, but much faster.
To begin with, it should be noted that ECN brokers have the facility to link directly and electronically with recognised liquidity providers and other market participants such as banks, financial institutions, other platforms with similar services to the broker in question, platform users and others.
This issue becomes more relevant as this joint work allows for a much more agile and constant negotiation in the market.
Thanks to this, platforms can offer investments with low spreads, although we must also consider charging a service fee according to the number of transactions made.
Even taking into account the collection of commissions in the case of ECN brokers these continue to be very low costs, as are the spreads.
ECN brokers are part of a larger group known as “Non Dealing Desk” (NDD). This refers to a group of brokers who only act as intermediaries and do not get involved in user negotiations as counterparties.
How does an ECN broker work?
The logic of an ECN broker starts with locating a user to act as a counterparty in the trades of its clients.
As an example, let’s think of a user who has decided to buy a currency pair. The ECN broker will match this user with the highest bidder. In the case of a sale, the broker will be responsible for finding the appropriate buyer to complete the transaction.
Thanks to this method, a large number of conflicts of interest that can arise between the broker and its users are avoided. The broker is responsible for transferring these market orders to the right person and from there asking for a percentage commission.
The question of whether the trader is making a profit or a loss on this transaction is already external to the operation of the ECN broker. This is in contrast to the action of “money desk” or Dealing Desk (DD) brokers.
ECN brokers make this common complaint on the part of their users, as the platform makes a profit even when their users are losing money.
This usually occurs as a result of them proceeding with murky order strategies or is the result of simple denial of use related to certain trading techniques that are beneficial to the trader. In this field there are issues such as scalping, hedging, among others.
The point is that the more trades traders make, the more profit ECN brokers make. This is why the ECN broker is not interested in the techniques used by its users or their efficiency.
ECN brokers are currently the smartest choice for many professional traders, especially daytraders.
Advantages of ECN brokers
ECN brokers ensure full price and trade execution transparency, as they are fed from liquidity providers to the trader (prices and trade execution) and from the trader/investor to liquidity providers (trade orders), without any interference from the broker.
In addition, the DMA technology of direct access to the market, allows you to access the prices of various liquidity providers, thus ensuring that there are no re-quotes and that the execution price is exact to that of your order.
Some of the additional advantages of ECN brokers are
- Investors and traders can choose the bid and offer price they are most interested in before executing their orders, as prices are provided by various liquidity providers.
- All trading strategies, including scalping, are accepted on ECN platforms. This is due to the fact that ECN brokers make more money the higher the trade flow, without depending on whether the client wins or loses from their trades.
- ECN brokers are perfect for trading much larger orders, as the trades are directed to several liquidity providers and not to a single buyer or seller.
- Traders and investors on an ECN platform have access to the order book, so they can view the bid and offer prices at which other market participants are trading. This will give you some idea of where the order flows are going and will provide you with a view of the future direction of the market.
Characteristics of ECN Brokers
These are the main aspects to consider when choosing an ECN broker:
- Minimum deposit: As a general rule, ECN brokers usually require higher minimum deposits. While with a Market Maker broker you can start trading with a minimum deposit as low as $0/$, in most cases an ECN broker’s minimum deposit can be between $100 and $500/$.
- Execution time: ECN brokers usually offer excellent execution speed and sometimes the spreads are even non-existent or negative for a few moments. It is important to bear in mind that during certain periods of very low liquidity, execution time can be significantly delayed, as there may be no market maker accepting the trade if no client wishes to do so. Thus, there are occasional slippage phenomena in which a trade can get stuck for longer than it should and it is at that point that market maker brokers stand out. These events usually occur during press releases, or presentation of company results where it is announced that their results differ from market expectations.
- Spreads: These are probably the most attractive feature of ECN brokers. Even so, at certain times, spreads can be significantly higher than those of market-makers. Spreads fluctuate according to the law of supply and demand, so only Market Makers brokers can offer fixed spreads (although they are rarely the best option).
- Volume Requirements: ECN brokers usually have higher volume requirements for trading non-Forex instruments. This means that, if you want to diversify your portfolio, it is a good idea to consider a market maker broker as a complement or replacement for an ECN broker.
- Maximum volume: ECN brokers have the advantage of not having to worry about managing a trading desk, so they can trade at much higher volumes than Market Makers. The vast majority of brokers with trading desks usually restrict the volume per trade to a maximum of 5 lots.
- Minimum volume: ECN brokers have higher minimum volume requirements than Market Maker brokers. Thus, ECN brokers usually require a minimum volume per trade of 1 mini-lot (i.e. 0.1 lots) for the 0.01 lots (1 micro-lot) required with a broker without a trading desk. If you are a novice investor who wants to start trading, keep this in mind, as very few ECN brokers allow micro-lot trading.
How do you detect whether an ECN broker really is one?
In addition, in your day-to-day business, you may have noticed how more and more brokers are advertising themselves as “ECN brokers” or at least offering ECN accounts. There is a lot of controversy surrounding the question of whether many of these brokers are true ECN brokers or is it pure marketing.
So how do you distinguish a real ECN broker from one who claims to be one?
These sopn some of the bad practices of brokers who pretend to be ECN brokers, but do not actually offer a real ECN account:
- They do have a trading desk. You want an NDD broker (without a trading desk).
- They offer a minimum stop loss. For example, you cannot place it with less than 5 pips. Why would they need to control you?
- They hunt your stop loss orders. They manipulate the price so that you are stopped.
- If you are trading with a Market Maker, you are not even trading in the market! You never reach it, you just trade with the broker! So, if your broker is on the other side of your transactions, you can bet that he wins on your losses and also loses when you win. There is an obvious conflict of interest here.
- Scalping techniques or other trading strategies are not allowed. This is very crazy, why wouldn’t they want you to trade often? Because it’s harder to control you!
- They don’t provide you with spreads from 0.0 pips. This is an obvious fact that you are overpaying.
- They have a conflict of interest with you because of their association with liquidity providers.
- One of their liquidity providers belongs to the same company as your broker.
- They direct your order to someone special or sell it, leaving you with additional slippage.
- They do not let you benefit from positive slippage but only in the negative, taking your slippage profit as their own.
- They manipulate the spreads, usually to activate your stops.
- They change the margin requirements on the weekends, forcing you to change your positions.
- They re-quote.
- They apply a high margin on swaps.
Now you can think, where in the world will I find a TRUE ECN broker?
STP vs ECN Brokers
Unlike ECN brokers, an STP broker is a “Market Maker” type of broker. This broker, most of the time, displays its own quotes (which are correlated to the current interbank rate).
Now here’s the real complexity: sometimes this broker directs your orders to the market (acts as an STP broker) but sometimes he doesn’t (acts as a “Market Maker”).
For example, successful traders or successful trading algorithms will automatically be directed to the market while smaller or losing customers will not. In this way the broker benefits twice: one by the losses of the clients and another by not losing money with the successful traders (of course this never works 100% but it does most of the time).
Thus, STP broker’s commission comes from 2 sources: clients’ losses and commissions on directed orders – when you traded at 2 pips with this broker for example, direct your order to another broker or to the interbank market thus making 1 pips pórex without assuming any risk.
This model is also responsible for all re-quotes and order rejections. When you open a large order the broker directs it to the market, but the prices there may have already changed (the market moves very fast sometimes) – so the broker is exposed to 2 options: reject the order by asking you to adjust the prices or complete the order by taking the risk that it could end up in a successful trade which means that the broker will have to pay you from his exchange.
So how do you go about being a trader to distinguish between a MM, STP or ECN?
Well, it is easy to recognize an ECN broker: the minimum capital required and the ability to see not only the bid and ask price but also the amount on either side of the price (depth levels) is the most remarkable feature of an ECN.
Can you tell the difference between MM and STP? Probably not.
It is very difficult to distinguish between these 2 and most of the time brokers use a hibrid model anyway. Most regulated brokers in the US and UK will not trade against you in a way that will cause you to lose money, not because they are moral but because it may cause them problems with their license.
How do you choose the best ECN broker?
Choosing an ECN broker is not much different from choosing any other broker, so here are the main factors to consider so that you can choose the best ECN broker for your needs.
Regulation and Location
You may feel more comfortable investing with a broker located in your own country or in a country that speaks the same language as yours.
If you are a US resident, there are special issues to consider, as the US is usually quite restrictive in Forex and CFD trading.
On the contrary, if you live in Europe, Latin America or the UK, you have it easy to get started as quickly and easily as possible with a secure broker, as European regulations are the safest and most protective of investors.
The next aspect to consider is the regulation and security of your capital.
If you’re going to invest a small amount of money it’s probably not the most important thing for you, but if you’re going to invest a large amount of money, it’s an extremely important aspect.
Investing with FCA or CySEC regulated brokers helps combat the presence of fraudsters and provides great peace of mind.
Another aspect to consider is the protection of your money.
The UK Government currently protects the deposit of investors from around the world who trade with an FCA-regulated broker up to a maximum of £85,000. More info: FSCS: Financial Services Compensation Scheme.
This means that if you deposit that amount or any lower amount with a regulated broker in the UK, if you were the victim of a robbery, a scam or even if the broker went bankrupt, your money would be protected by the UK government.
This is a key advantage and provides a lot of peace of mind for the vast majority of investors, which is why the UK is considered the most reputable financial centre.
Another important aspect to consider is trading fees.
One of the best ways to compare spreads between platforms is to open several demo accounts at each of the brokers you may like to see what their spreads really are.
What is your trading style?
Another important aspect to consider when choosing a broker is your trading style and frequency.
Are you a day trader, a swing trader or a longer term investor?
If you make few trades but leave them open for several days, weeks or months, you should consider how competitive a broker is in terms of their funding rates for leaving your positions open for long periods.
On the other hand, if you’re only going to trade for a few minutes or hours a day but you’re going to be doing a lot of trading, the spreads will become the most influential factor for you.
Another factor to consider is the trading platforms offered by a broker. You can ask yourself all these questions:
- Does it work smoothly?
- Is it fast to execute orders?
- Is it a proprietary platform or do you offer MT4, MT5 or cTrader?
- Is it easy, intuitive and pleasant to use?
Vouchers and Promotions
Welcome bonuses and other similar promotions can be interesting, but you should always look at the small print.
Accepting a bonus, a deposit or anything else may mean that you cannot withdraw a certain amount of that bonus until you have made a minimum number of transactions.
The best ECN brokers in the market sometimes have a fairly regular marketing team, but when it comes to trading, they may offer the best ECN offer in the market.