Last update: 16 March 2020
5 min read

Best MetaTrader4 ECN Forex Brokers

ECN Forex brokers are a big improvement for traders because they bring a level of transparency to the Forex market. An ECN Forex broker passes on prices from multiple market participants, for example market makers and banks, as well as other traders connected to the ENC, and displays the best bid/ask quotes on their platforms, based on these prices.

ECN stands for Electronic Communications Networks, and have a big advantage over dealing desks, where trades are often against their clients, which is an obvious conflict of interest. MT4 ECN Forex brokers are a fast emerging section in the Forex market and new brokers open their doors on a regular basis.

ECN Forex brokers give traders and market makers a marketplace where they can place bids against each other. Deposit requirements are usually higher than with a standard Forex broker, but there are a number of advantages. Scalping and lower spreads being just a couple of examples.

ECN’s work by taking out the middle man

An ECN works by passing on prices from a number of different participants, such as market makers, banks, and other traders connected to the ECN. The best bid/ask quotes are listed on their trading platforms based on these prices. An ECN broker serves as the counterpart to the transaction. However, the difference is they operate on a settlement, rather than pricing basis. Spreads of currency pairs vary on an ECN, and depend on the trading activity of the pair. Sometimes there will be no ECN spread at all. For example, when trading is very active, and particularly very liquid currency pairs and some currency crosses.

A fixed commission is usually charged to customers by ECN Forex trading brokers, and this is how they make their money. They also play no role in making or setting prices. And for this reason the risk of price manipulation for retail traders is greatly reduced.

There are two types of ECN:ecn Forex brokers

  • Retail ECN – These offer quotes from a few banks and other traders on the network to the retail trader.
  • Institutional ECN – These convey the best bid/ask price from a number of institutional market makers like banks, to other banks and institutions. For example, large corporations and hedge funds.

The advantages of using MT4 ECN Forex brokers

  • Anonymity – ECN trading is completely anonymous. This allows traders to deal on neutral prices that are a reflection of real market conditions only. They are not biased against the client based on tactics, current market positions, or Forex trading strategies.
  • Trade execution is instant – MT4 ECN Forex brokers trade instantly via live streaming. This means a trader gets the best executable prices and confirmation is immediate. There is no dealing desk, and no re-quotes.
  • Trading client-to-bank – Traders are able to trade on the global liquidity of big name banks and expert financial institutions.
  • Automated trading and market data – Traders can make use of various plug-ins, indicators, and expert advisors help make a semi- or fully automated Forex trading system.

Best and most trusted forex brokers in April 2024

What does ECN mean?

ECN stands for electronic communication network, and is a type of computerized network that allows the trading of financial products, outside the usual stock exchanges. ECN’s have been around since 1969, when Instinet, the first, was created. Currency trading via ECN didn’t begin until much later, 1999 in fact. There are a number of companies currently providing access to an electronic trading system. And they provide streaming quotes from top tier banks and other institutions across the globe.

Choosing the best ECN Forex broker

ECN Forex brokers are different to market makers in that they never trade against their clients. This has made trading with this type of broker, especially MT4 ECN Forex brokers, a very popular option. Especially long-term traders who want solid trading conditions.

It’s only fair to mention that some of the so-called ECN brokers are not what they seem. Ask a few simple questions, and you’ll be able to determine the true ECN brokers.

Is the broker offering variable or fixed spreads? A true ECN broker only offers variable or floating spreads.

Does the broker have a dealing desk? Any mention of a dealing desk on the broker’s website and you can be pretty certain it’s not a real ECN broker. If there is no mention of a dealing desk you can still check whether the broker uses one by opening a real and a demo account. If there is a difference in pips being offered during news reports the broker is not a true ECN broker.

Is there negative slippage during trading? The answer should be no if you’re looking for a real MT4 ECN Forex trading broker.

Does the broker offer flexibility? A true ECN broker allows you to place a trade bigger than 5 standard lots.

Does the broker charge a commission? When trading with an ECN Forex broker there will always be a commission. Depending on the broker, it usually ranges from $5 to $12 per $100,000 of volume per side.

Now you’ve found a bona fide ECN Forex broker you need to be sure it’s the right one for your trading needs. Don’t settle for the first name you find, but pick a few and compare spreads, trading conditions, and regulation. Only then will you be certain to pick one that meets your needs. We’ll be featuring some top rated ECN Forex brokers so keep our site as one of your favorites. And keep revisiting for the latest information.

Choosing the right type of broker will make a big difference to trading performance. A brilliant trading opportunity will quickly turn into a loss if the broker executes trades slowly. And if the price isn’t the one you want, dollar signs will quickly turn to dust. It’s vital to carefully weigh up all the pros and cons of each broker before signing on the dotted line and starting to trade. Our aim is to provide all the best advice for you to make an informed choice.

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