ECN Brokers and News Trading

Top ECN Brokers and News Trading
ECN Brokers and News Trading Broker Comparison Table
Online BrokerMinimum FX SpreadFX CommissionECN Account Minimum DepositMT4MT5cTtraderJForex
0.0
Minimum FX Spread
$2.0
Commission
$10
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$3.0
Commission
$500
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$3.5
Commission
$200
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.1
Minimum FX Spread
$3.5
Commission
$100
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.3 (Typical)
Minimum FX Spread
$10
Commission
$300
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$5.0
Commission
$300
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$2.0
Commission
$200
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$3.5
Commission
$200
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$6.75
Commission
$500
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.1
Minimum FX Spread
$4.0
Commission
$3000
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$2.0
Commission
$100
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$3.5
Commission
$200
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$3.5
Commission
$500
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
1.2
Minimum FX Spread
$0
Commission
$100
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex
0.0
Minimum FX Spread
$3.5
Commission
$100
ECN Account Minimum Deposit
MT4
MT5
cTrader
JForex

News Trading, Spreads and ECN Brokers

It is possible to trade the news at a dealing desk broker. The time around a major news release can be time of amplified volatility in the markets, however. So brokers, even with fixed spreads, may widen spreads considerably around release. This can make trading into the news problematic, as it means that the trader can potentially start with a large deficit to make up, if the order goes through.

Spreads and news trading

Some brokers do not change their fixed spreads, but here problems may emerge for those who trade into the news if the broker does not support this type of trading. However there is always the time before release and after, but again, spreads can widen at these times as well at both fixed and variable spread brokers.

One possibility is to use a broker which does not have any restrictions on trading styles, and in particular one which bypasses the dealing desk and looks for the best prices, such as an ECN broker. It should be noted that even though ECN spreads can be very low, there is normally a fixed commission charged, and spreads can also widen to some extent especially around news events.

The commissions in the table above are per lot per side and at some brokers can vary depending on volume traded. The minimum deposit is for the ECN account types at the broker (there may be different minimum deposits for other account types at some brokers).

ECN and news trading

Ideally a news trade should be executed fast at the best possible price. When trading with a dealing desk broker, the trade may not be fast enough, there may be liquidity issues in placing an order and in all events the order has to clear the dealing desk, creating potential hurdles for some kinds of news trading. An ECN broker on the other hand, can in theory process orders fast, at the best possible price from the increased set of prices it receives, without dealing desk intervention.

Some ECN brokers aim to provide rapid order processing by locating their trading servers in data centres and using technology such as fibre optical cables. To actually make the news trade, the trader can use the online trading platform provided, and the table above lists the platforms offered by each broker, all of which can be used by news traders.

Before, during and after release

This article has mentioned that there can be different phases to trading the news (typically this news is economic data related to the currency pair, in the case of Forex). Trading the news is based around trading on a known factor (that the data will be released at a certain time) but with a range of unknown factors, such as what the value of the data will be and how the market will respond. The trader can speculate on what the data will be and the way the market will respond, with the caveat that these speculations can be wrong. However the market may show different types of behavior to news releases, if the market is considered before and after news release, as well as at release.

Before the release of the potentially market moving news is a relatively flexible time frame, as major news releases can see 'pricing in' action for an extended period up to release. This can produce trends. However as the release approaches, then increased volatility may be seen. The more immediate time frame before release can be quite volatile, but still with trends perhaps visible on shorter time frames. Closer to release, there may be a quiet time, but there can also be very strong volatility.

The time of release can see the actual data being digested by the market very rapidly. Thus a very strong move may be seen up or down, especially if there has been a significant deviation from the expected value of the data and the real value of the data. However this move can rapidly change and oscillate in a very short time frame. Even if there has been a deviation, oscillation can happen, as the market deals rapidly with broader consequences of the data. Sometimes the result has been priced in to the extent that the market does not react that strongly (for example if there has not been a significant deviation from the expected and real value).

The time after release is also a flexible time frame, as it can cover the more immediate time after release, which may show moves counter to the original move at release or continuation of the direction of the move, and the next sessions where the market may show renewed reactions to the data.

How might the trader approach news trading

One way to approach news trading is to examine an Economic Calendar, typically available on the broker's website or from the trading platform. This will show upcoming news releases normally with affected markets and expected values for the data (the actual values may and can be different). Thus the trader can pick a market and trade it on the news. The Forex market is open continuously during the week and therefore will be usually be ready to trade when the release happens, but the trader can choose other markets. As noted above, there are different times to trade the news. The market may behave in an unexpected manner at any time, but around a news release moves can be amplified by volatility.

Best ECN Broker For News Trading

The news trader may be interested in a pick on this site of 'Best Broker' and the pick is between Pepperstone and Dukascopy, both of which allow news trading (with the caveat that other brokers may suit different traders). This is because they offer cTrader (in the case of Pepperstone) and JForex (in the case of Dukascopy). Both of these platforms are relatively user friendly and optimised for ECN trading. When news trading, the trader may want a platform which is user friendly and fast, as they attempt to narrow down a choice of when to trade and how to trade. Both brokers also offer MT4 which the trader may prefer using and in the case of Pepperstone the successor to MT4, MT5, which is a platform with a number of enhancements on MT4 including potentially more optimised performance for ECN based trading.

What if the trader does not want to trade with an ECN broker but wants to trade the news ?

Some traders may not wish to trade with an ECN broker. For these traders there is a possible solution, as FOREX.com is a well established Forex broker with 90+ Forex pairs as well as a range of other markets, which offers MT4, a user friendly Web Trader and its Advanced Trading Platform. However the trader can now also open a Direct Market Access (DMA) account, a type of ECN account, in addition to FOREX.com's other accounts. Full DMA trading is available on FOREX.com's user friendly web trader and its Advanced Trading Platform. DMA trading is an advanced type of trading which provides increased visibility to the trader in terms of liquidity and the trader may wish to trade on FOREX.com's other accounts or on a demo initially. When they sign up, the trader can add FOREX.com's range of accounts and can try out FOREX.com's platforms and practice news trading on a demo account.

Another potential solution for traders who want to news trade but do not want to trade on with an ECN broker, is to trade with Plus500. Plus500 offers a user friendly platform with a relatively wide range of markets to trade (allowing different types of news trading, from Forex to Stocks CFDs). The reason Plus500 is picked is because it offers specific support for news traders, in the shape of an Economic Calendar which is available off the platform (on its website) and offers from the platform data about news events which may affect a particular market to be traded (as information about each market), including past results for the news data, expected (projected) results and then the actual results. The trader may sign up for a demo account below and test out the platform, and try out news trading, before continuing to a live account. The trader may wish to compare news trading later on an ECN broker, but as noted trading the news with a market maker broker is both possible and supported.

Plus500

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