Top 5 ECN Brokers

Top 5 ECN Brokers

Top 5 ECN Brokers Comparison Table
Online BrokerMinimum DepositOnline Trading PlatformsMarkets
$200MT4, cTrader, MT595+
$200MT4, cTrader, MT5230+
$50MT475+
$1000MT4, JForex500+
$200MT475+

Top 5 ECN Brokers - What is ECN Trading

These brokers offer ECN trading. But what is ECN trading ?

What does ECN stand for ?

ECN stands for Electronic Communication Network.

What does Electronic Communication Network mean ?

Strictly speaking every online broker is on the Electronic Communication Network. But it means allowing the trader to access prices in the Interbank market. Forex is not traded on exchanges, it is traded in a decentralised manner, between banks, institutions and other participants. So the idea of ECN is to let the trader buy and sell in the Interbank market, with the broker acting as an aggregator of liquidity providers in this market and providing a platform to let the trader buy and sell.

However ECN is about more than this. ECN means fast order execution, and ECN brokers use technology to ensure that orders can be made very quickly (typically on in milliseconds). This can include co-locating the broker servers with banks, exchanges and liquidity providers and using fiber optical interconnects and other technology. It should be noted that all these brokers offer CFD trading, where the trader does not own the asset being traded, but is rather speculating on its price movement, expanding the range of markets offered beyond Forex.

What is a commission charge ?

ECN brokers typically charge a commission. The reason is that they are bringing prices which can reflect the price in the Interbank market. For liquid markets, in particular major Forex pairs, these can be very low. However, in return for allowing the trader to access this market, a commission charge is added to this price. So the total price is the commission charge plus the spread.

What trading platform are available ?

As can be seen from the table these are all MT4 ECN brokers which may also offer MT5, cTrader and JForex. These platforms are all associated with both Forex trading and ECN trading. MT5 is an updated version of MT4, and can include an expanded range of markets to trade.

Do these brokers allow styles such as scalping ?

All the brokers in the table say they allow scalping. In general, ECN brokers do not tend to restrict trading styles. The idea is that orders are bypassing the dealing desk, thus how the trader trades, is up to them.

Can an ECN broker offer markets such as cryptocurrencies ?

Yes they can, though not all do, however all the brokers in the table offer Cryptocurrency CFDs. When trading a CFD, the trader does not own a cryptocurrency, but can speculate on the price movement of the market with no wallet required. Some brokers, including those in the table, offer Bitcoin CFDs and online trading platforms which can support Bitcoin algorithmic trading.

What then are the characteristics of ECN brokers ?

ECN brokers will provide infrastructure, through technology which enables orders to be filled with, to all intents and purposes, almost no delay. There will still be a delay as it is not feasible to transmit electronic signals in zero time, but it can be on the order of milliseconds. This makes possible a wide range of trading styles, particularly automated strategies which may require rapid order transmission.

These orders are filled by liquidity providers, which the ECN broker aggregates (though they may also fill orders). These liquidity providers will have low prices, depending on liquidity. However the ECN broker will add an extra charge, the commission, to this price.

As orders are being filled effectively from the trader to the market, the broker will not intervene in the order process, which is known as 'no dealing desk', or more generally 'no dealing desk intervention'. Some ECN brokers may offer direct market access, where the trader can directly sell and buy to other market participants. ECN brokers can have a focus on Forex, but can also offer CFDs for a range of other markets. Finally an ECN broker will provide a platform which supports both discretionary and automated trading. Which means that both types of trader can use an ECN broker.