Electronic Communications Network brokers, commonly referred to as ECN Brokers, have been high on the preference list of many active Forex traders (both veterans and novice alike). Many would most certainly ask themselves why a large number of traders would opt to use this form of brokerage, in a bid to understand what attracts traders to their preferred Forex brokers and brokerage firms. Attraction to preferred Forex brokers by traders has been proven over time to be directly related to the benefits that they would enjoy from working with them. Clients are mostly interested in brokers who will assure them of profits that will accrue from the trade in currency and bonuses that they would possibly get from opening live accounts with them.
Who is an ECN Broker?
In definition, an ECN broker in the Forex market is a financial guru who puts the electronic communications network (ECNs) into use with the aim of providing their clients with a direct access path to other players found in the currency market. These types of brokers are known to provide their clients with tighter bid or ask spreads. This is made possible by the brokers agglomerating the price of the quotations made by several market players at any given time.
The Forex Brokerage frontier is usually awash with news about situations where some unscrupulous retail Forex traders decide to go ahead and trade against the same clients who had enlisted their services if they in some way view them as a risk. This is not the case when using an ECN broker as spreads that are found here are narrower than those used by retail Forex Brokers. It is also important to note that these types of Forex brokers have a charging system that is definite, with a fixed commission that is charged per transaction made.
Forex traders in the past were very much interested in penetrating the real Interbank Forex market, knowing that it was only through such a move that they would be able to ensure higher benefits in the form of bonuses and wider profit margins. ECN Forex brokers have thus over the years been credited with ensuring that the live accounts that they manage for their clients do not become counterparties to their own trade to rule out any possibility of a conflict of interest scenario and increase the profits for their clients in so doing.
An ECN broker is tasked with ensuring that their clients are able to trade on an institutional grade liquidity level with connections that are directly linked to the largest banks in the globe and with institutions where spread-mark ups are non-existent. Trades are executed in the platforms that they provide for both the buyers and sellers through a system of information dissemination on any orders that are entered into their system. The orders are perfectly matched by the network and when specific information about the orders is missing, the network runs searches through the open market to look for the prices that would show the highest bid made against the lowest ask price that has been listed.
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