ECN Forex_Brokers

Meaning Of An ECN Forex Broker And Its Advantages

Forex Trading

You can find various types of forex brokers in the market who offer their services to the customers, such as ECN brokers, STP brokers, DD brokers and many more. STP brokers are the regular brokers who act as a middleman between the traders and market players. However, ECN brokers are different from these regular brokers as they connect traders directly to the liquidity brokers without coming in between them. ECN brokers are the platforms for forex traders and market players to contact each other directly.

Evolve markets review platforms offer price quotes from various liquidity providers, creating a platform for traders to choose the best ask and bid prices per their preferences. They also help to reduce spreads to the maximum and charge commissions in exchange for their services rather than taking spreads. As the investors and liquidity providing companies get directly connected, the ECN brokers do not interfere. Additionally, they never trade against the clients.

When people enter into forex trading, they require the assistance of various financial companies that offer trading assets. These companies are known as liquidity providers without whom trading is impossible. However, in most cases, the investors and liquidity service providers do not interact directly. For their interaction to happen, there are certain middlemen called STP brokers who connect both the parties and present them under a single platform. STP brokers offer everything needed to trade except the trading assets they indirectly offer by connecting them to liquidity providers.

Meaning of ECN Brokers

Although STP brokers tend to be much more prevalent in the forex market, it does not mean that the investors and liquidity service providers cannot come in contact with each other directly. In case they wish to maintain a direct interaction without any interference, they can opt for ECN brokers. They are a hub for numerous liquidity providers such as commercial banks, mutual funds and more. These liquidity providers are brought together at a unified platform (via ECN brokers) to represent price quotes to the traders. Therefore, ECN brokers offer uninterrupted communication between the investors and liquidity service providers and never interfere in agreements and negotiations. KuCoin is a very simple-to-use platform and offers various features to traders. Read kucoin review and ratings to find the right broker platform.

Forex

Advantages Of Working With ECN Brokers

There are numerous benefits related to ECN brokers. A few of them are:

  • ECN brokers offer high bid and low ask prices.
  • ECN brokers have tighter spreads.
  • ECN brokers provide direct forex trading and excellent liquidity.
  • Instant trade executions are possible with ECN brokers.
  • ECN brokers never trade against clients.
  • They never interfere in negotiations between the trader and liquidity provider.

Direct Trade Executions

ECN brokers never interfere between the traders and financial institutions or other market players. STP brokers record positions of traders and negotiate with the market players themselves, however, ECN traders negotiate directly with the liquidity providers. Thus, the currency pairs are exchanged without any significant delay between the trader and the liquidity provider. This is why assets are highly liquid, as no middlemen are involved. Coinmama offers a fine trading experience as the users can only buy crypto or sell Bitcoin. Read coinmama review in detail who is interested in crypto trading.

Conclusion

There are two types of brokers in forex trading: STP and ECN brokers. STPs act as the middlemen between the investors and liquidity providers; on the other hand, ECN brokers connect traders directly to the market players without coming their way. One of the significant benefits of the ECN broker over the STP brokers is that ECN brokers offer numerous price quotes from different liquidity providers. Therefore, the traders can easily select the highest bid and lowest ask prices, which minimizes the spreads. Moreover, brokers cannot trade against the customers, whereas STP brokers actually benefit from their clients’ losses. These advantages make ECN brokers quite attractive to forex traders.