The forex financial expert by using electronic communication networks (ECNs) provides direct access between client and other participants in the currency market is mostly known as ECN Broker. Actually, these experts combine assets, liability or financial items into one entity for price quotation from other market participants. Because of this it generates a tighter bid or asks spreads.
Who are ECN brokers
This is a broker who charges a fixed commission to client for per transaction since; there is no middle man in ECN trading technology. Hence the work of Broker is to match trades between market participants only; they are not permissible to trade against client. They provide trades across ECN for the interested investor and we someone work with broker it invest less money on them instead of they give valuable time for trading, this is how ECN function work and creates a surety to be no middle man in between this new trading technology. Usually higher minimum deposits require for ECN broker.
Instead of 1microlot, 1minilot is considered as minimum trade size which is now a day becomes more standard in the foreign exchange market. Typically they provide an excellence performing speed and sometimes non-existence of spreads identifies. When there is low liquidity, the execution denies due to no client want it as there is no market maker. This phenomenon is called as negative slippage event, which is considered as a frustrating thing in for trade market.
Advantages of ENC broker
This broker provides trading activity in totally unknown manner that means traders get neutral price in order to reflect real market condition only. This provides a facility of instant trade, via live streaming, which benefits in best final price. As there is no dealing desk no resistance between main liquidity market and no possibility of re-quotes. If a trader having personal trading model or risk management system, he can use it as a booster by mixing it with broker’s data. Because of this traders are having best bid, best price along with a range of other data. The uniqueness in the terms of variable spreads it can’t control bus/s. This entire scenario refers to a good quality of market environment but if someone choose to deal with ECN broker then he needs to take care that broker demand for a fixed commission which could be cheaper or more transparent than cost for market maker.
If someone looking for this kind of broker, you need to ask some question in order to check broker’s honesty. They are, are the spreads fixed or variable? Because we know that a true broker can only offers floating or variable spreads. Secondly, one should know is there any dealing desk? Obviously not! Because we know ECN Broker provides us the direct access to liquidity market. Lastly we should have information about is there negative slippage or not, if it say yes then you are not looking for a true ECN broker.