Commentary on the latest action in the market.

What are the Advantages of an ECN Broker?
- Variable Spreads: There are always variable spreads offered with an ECN broker. This is due to the fact that they’re unable to control bid/s as a dealer can.
- Automated Data: The personal risk management and trading model system of a trader can be connected with the broker’s data feed and matching engine, which provides access to the best prices and best bid, as well as a nice range of additional data. Before starting to trade see ECN brokers reviewed to make sure your broker is regulated and offers a diverse range of bids.
- Instant Trades: You can see trades occur instantly through live streaming, along with immediate confirmations and the best final prices. Once a trade has been dealt, it’s confirmed and final. There’s no dealing desk to interfere and no requotes either.
- 100% Anonymity: Any trades that are made with an ECN broker are entirely anonymous. So a trader can deal on neutral prices that only reflect actual market condition.
The Disadvantages of Trading with an ECN Broker
While there aren’t many downsides when it comes to using an ECN broker for your Forex trading, there are a few we should mention. One is the fact that each transaction comes with a fixed commission fee, which is how they make a profit. The likelihood, however, is that it’s more transparent and far cheaper than the costs associated with a market maker. Market makers profit through unfair prices and larger bid/ask spreads. Another disadvantage is that calculating targets and stops can be a challenge. This is due to the variable spreads and the fact that the price constantly changes. Finally, there’s a chance of slippage. This is particularly possible with session overlap, as clients and other factors influence price ticks simultaneously.ECN Brokers Vs Dealing Desk Brokers
An ECN Broker is regarded as being superior to a dealing desk broker, as the ECN offers a direct connection between traders. A dealing desk broker, on the other hand, executes trades by either passing the order on to a market maker or by themselves taking on the other side of the trade. There are two criticisms of a dealing desk broker. Firstly, if they take on one side of a trade, they are basically investing against their client, which creates a potential conflict of interest. Secondly, if they pass on orders to a market maker, order execution is slower, which can lead to client orders being filled at less attractive prices.Choosing an ECN Broker
If you’re seeking reliable and solid trading conditions, and you’re a long-term trader who’s serious about Forex, it’s definitely worth considering an ECN broker for the simple reason that they never trade against their own clients. You should exercise caution, however, as many entities referring to themselves as ECN brokers aren’t that. When you’re looking for a broker who in actual fact deals in ECN trading, you should ask the following questions:- Is there any negative slippage? If so, it’s not a genuine ECN broker you’re looking at?
- Is there a dealing desk involved? If the website mentions a dealing desk, it isn’t the website of a bona fide ECN broker. When you open an account (either demo or real), you should be able to see the difference in pips offered in news reports. There won’t be a difference with a legitimate ECN broker.
- Are the spreads variable or fixed? A genuine ECN broker will offer only variable or floating spreads.
A Word of Caution
There are dozens of forex brokers out there. Many aren’t governed by a financial authority. Unfortunately, some brokers that are unregulated call themselves ECN brokers, while, in fact, they are dealing desk broker. To verify that an ECN broker is legitimate, make sure that they’re regulated. A regulated broker will provide details concerning its regulated status right there on their website. Another way to feel confident you’re dealing with a bona fide ECN broker is that you won’t experience a problem regarding requotes. Requotes only occur as a result of the slow execution associated with dealing desk brokers.
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