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:
- 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.