The concept of ECN broker at Forex market, appeared not so long ago. It induces an ambiguous attitude to both experienced and beginner traders. For some it may seem as a dramatic change, while the others see more financial opportunities using this service. To dispel pessimistic doubts and not deceive optimistic expectations, below you will find explanations about the real advantages of this brokerage service.
Like any other Forex brokers on the exchange market, ECN broker executes instructions of their clients. ECN Forex system was not as claimed by players a while ago, as it is now.
With the advent of a new type of customers to an exchange market, wishing to start trading with small amounts of $500, Forex ECN services have become more popular. This form of trading in Forex refers to No Dealing .
This does not change the basic principles of Forex trading, furthermore it allows a trader to trade on the exchange market, based on their personal preferences.
At ECN Forex trader gets more freedom of choice, however, it does not mean that profits will be guaranteed. Obviously there are advantages as well as disadvantages. At ECN Forex, the spread is low, there are no "antiscalpings " and " hunting stops." Due to this services, ECN brokers charge commission.
Low spreads on ECN Forex are profitable only for a successful transaction. When successful trade is made, the profit rate covers all small expenses, which beginners have to face, while trading using ECN brokers. A wide choice of quotes increases the probability of a successful trade. This is the main advantage of ECN trading. Not a single person is immune from making losses in Forex, including the traders, who choose the services of ECN brokers.
Using the services of an ECN broker, trader is able to interact with the orders of other players. In addition, the ECN brokers allow trading to all participants within the system, who can offer each other any prices and lead an active trade. Within the system, brokers allow their clients to disclose the size of their orders, in order for other bidders to cut off their bets. Another advantage of ECN broker services is that their clients have access to information about liquidity, which plays an important role for transactions.
It is important to note, that the ECN trading is not conducted against the broker and the client, unlike trading when using the market maker services. For this, there is a special contractor which is represented by another ECN broker. Client may also use the information on liquidity, which is provided by partners of an ECN broker.
ECN broker can connect the client with any banking institution, therefore it saves the time it takes to search for contractors. Client of an ECN broker has the opportunity to bid on the inside and outside of system to any contractors. The attractiveness of such proposals are good liquidity and low spreads.
In addition, knowing that many traders are not used to changing their brokers even with better deals and conditions, ECN Forex does not seek to force and impose services of ECN brokers. Customers simply have the possibility of independent decision-making while choosing where to trade on Forex.