When it comes to trading, ECN (Electronic Communication Network) and STP (Straight-Through-Processing) are very similar but the main real difference is routing. Deepen your understanding of ECN brokers by reading our in-depth article on the subject. And now, let’s see the top ECN brokers one by one, starting with the winner, Fusion Markets.
While most ECN brokers need to be regulated to be able to offer trading services to clients, not all of them are. As an Australian, we strongly advise you to choose a trusted ECN broker that is regulated by ASIC (the Australian Securities and Investments Commission). As Australia’s top regulator, ASIC is responsible for regulating Australian brokers and enforcing laws to protect Australian consumers, investors, and creditors. IG uses a DMA (Direct Market Access) model to execute a client’s transactions, which means orders are submitted directly to the Interbank market.
And when you want to buy a currency pair in the Forex market, you do it in a split second, because there are a lot of sellers offering at the price you are interested in. If a broker utilizes the ECN, it costs much more than other order execution modes. Since an ECN broker earns commission from the volume of transactions, there is no point in providing accounts with deposits of $10 or $20. For this reason, ECN brokers set a minimum deposit for an ECN account, which is significantly higher than for other types of accounts. Slippage occurs when a forex trade is executed at a different price from the expected execution price. This movement can cause the price at which a trade is executed to be different from the rate at which the order was placed.
However, the combination of both the spreads and commissions charged by ECN brokers is lower than the fees most desk dealing brokers charge. The low cost of trading and the lack of conflict of interest make ECN brokers attractive to most traders. Together with Straight Through Processing (STP) and Direct Market Access (DMA) brokers, ECN brokers are classified as non-dealing desk types of brokers. They execute the clients’ trades by matching them with other clients and third parties who act as counterparties. HFM has spreads that start as low as 0.1 pip across its account selection. HFM provides an excellent selection of popular trading accounts, including cTrader.
This feature is something that Forex dealers usually can’t afford to make compromises on. ECN brokers guarantee that efficient trade performance is very much certain at every go. This specific technique of trading does not need the client to trade with the broker, but ecn broker instead uses its network to place orders. This different method really does let anyone enjoy improved trade execution. Due to its decentralized status, choosing the right broker could mean the difference between success and failure in your Forex trading endeavour.
Of course, this can hardly be called a serious drawback since everyone understands what it is for. You can study all types of Forex brokers in detail and their principles of work in the article “Forex Broker Types. In addition to STP and ECN systems, there are other types of order execution, such as mm, dma and mtf. Positive slippage is favorable for traders as it results in improved profit margins, while negative slippage exacerbates losses. Though slippage cannot be eliminated completely, traders can place limit and stop-loss orders. Exinity Limited is a member of Financial Commission, an international organization engaged in a resolution of disputes within the financial services industry in the Forex market.
All ECN brokers have access to the exact same feed and trade at the precise price that is provided. A certain amount of price history is also readily available, allowing for easier analysis of particular trends within the marketplace. This helps limit price manipulation, as current and past information are readily available to all, making it more difficult to act unscrupulously. One of the biggest drawbacks to using an ECN is the price to pay for using one. Access fees and commission charges can be costly and are difficult to avoid.
Finally, the wider spreads may complicate the process of calculating break-even and stop-loss points for some investors. We collect, retain, and use your contact information for legitimate business purposes only, to contact https://www.xcritical.com/ you and to provide you information & latest updates regarding our products & services. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
The only significant difference is the way the commission is charged. In STP mode, the commission is often a part of the spread while in ECN it is charged separately. But this does not always mean that there is a difference in the commission size for a trader. This processing method implies a direct transfer of your order to different liquidity providers that are partners of your broker. The more direct partners your broker has, the better the final execution price of your order will be.