PepperstoneVisit Pepperstone74-89% of retail investor accounts lose money when trading CFDs
AdmiralsVisit Admirals76% of retail investor accounts lose money
FP MarketsVisit FP Markets74-89% of retail CFD accounts lose money
VantageVisit Vantage74-89% of retail CFD accounts lose money
RoboforexVisit Roboforex61.41% of retail CFD accounts lose money
FBSVisit FBS74-89% of retail CFD accounts lose money
GO MarketsVisit GO Markets62% of retail CFD accounts lose money
HF MarketsVisit HF Markets70.51% of retail investor accounts lose money
ECN brokers refer to a type of brokerage that uses Electronic Communication Networks (ECNs) to provide its clients with direct access to other participants in the markets.
An ECN is a computer-based system that facilitates trading of financial products outside of traditional stock exchanges. ECNs bring together buyers and sellers and make it possible for them to execute trades directly with each other without the need for an intermediary, such as a broker or dealer.
ECN brokers are primarily used in the Forex (foreign exchange) market, which is decentralized and lacks a central exchange.
In forex trading, ECN forex brokers connects traders directly to liquidity providers, allowing for immediate and automatic trade execution without dealer intervention. ECN brokers aggregate multiple price feeds, offering tighter spreads, faster execution, and reduced trading costs, while charging a commission for their services.
ECN brokers are often confused with STP (Straight Through Processing) brokers, with whom they share many similarities but also distinct differences. ECN brokers connect traders directly to multiple liquidity providers and show an order book with available bid and ask prices, usually offering tighter variable spreads but charging a commission. In contrast, STP (Straight Through Processing) brokers send client orders directly to selected liquidity providers without intervention and don’t provide order book visibility.
In this article we have collected and analysed the best ECN brokers and ECN forex brokers specifically.
In order to rank the best ECN brokers, we took a multitude of factors into consideration:
- The presence of ECN accounts
- The quality of order execution
- The number of trading services offered
- The number of liquidity providers
- The trading platforms offered
- The possibility of using EAs and use scalping techniques
What are the best ECN brokers?
Below our curated list of the most popular and favourable true ECN brokers and ECN forex brokers in particular, with details of features and characteristics.
What is an ECN forex broker?
ECN stands for Electronic Communications Network. Essentially, an ECN broker connects users within this network so they can trade assets directly with the financial markets. It effectively expedites the order execution process and makes it much more transparent at the same time.
Due to this, a real ECN forex broker is considered as both an STP (Straight Through Processing) and NDD (No Dealing Desk) broker, due to the fact that ECN execution provides no interference with the trading process whatsoever. In this sense, ECN brokers are considered opposite to Market Maker brokers or DD (Dealing Desk) brokers, which provide both buy and sell quotes, essentially “making the market” by taking the opposite position of their clients’ trades
ECN forex brokers provide high speed, no interference efficiency and a great combination of low spreads with some of the fastest execution speeds in the industry.
What are the differences between ECN and STP brokers?
Both ECN (Electronic Communication Network) and STP (Straight Through Processing) brokers offer a form of direct market access and aim to reduce the potential for conflicts of interest. However, they operate differently:
- ECN: Connects traders directly to liquidity providers, showing the order book with available bid and ask prices.
- STP: Sends client orders directly to liquidity providers without intervention, but doesn’t provide the order book visibility.
- ECN: Offers variable spreads, often tighter, but may charge a commission.
- STP: Usually offers no-commission trades but with slightly wider spreads.
- ECN: Trades are executed against multiple market participants like banks, funds, and other traders.
- STP: Trades are executed against selected liquidity providers only.
Depth of Market:
- ECN: Provides a view of market depth, showing volume and prices available.
- STP: Doesn’t typically offer a view of market depth.
Potential for Conflict of Interest:
- ECN: Reduced, as brokers profit mainly from commissions, not from traders’ losses.
- STP: Generally reduced, but depends on the broker’s relationship with its liquidity providers.
In reality, the differences between ECN and STP brokers can be subtle, with some brokers offering a combination, sometimes labeled as “ECN/STP brokers”.
What are ECN liquidity providers?
ECN liquidity providers are those who provide the prices to the broker which in turn can be offered to traders. Forex brokers will typically choose the best of these prices from their multiple liquidity providers to supply in their Electronic Communication Network.
It is not uncommon for a top forex broker to have multiple liquidity providers, which allows them to have an increased level of liquidity, and in turn, offer the most stable, consistent, and lowest pricing on the forex market to their traders.
Overall then, we can see that ECN trading relies not only on the brokers to create a great experience, but also on the performance and offerings of each liquidity provider.
ECN account vs standard account
There are several key differences between an ECN and a standard trading account:
- Low Forex spreads: ECN spreads usually start from 0 pips. While many of the top forex brokers may also supply low and competitive spreads on a standard account, the spread usually starts from 1 pip or higher in many cases.
- No requotes and slippage: The deep liquidity offered by ECN brokers, combined with the speed of execution for orders across the networks, means there are no requotes needed and occurrences of slippage are extremely rare.
- Commissions per lot: Since they often offer a considerably lower spread, ECN brokers usually do charge a small commission per every standard lot traded. This typically starts from around $3 per lot traded with many major forex brokers still staying very competitive on this point.
- Order execution delay: As mentioned, the ECN order execution is lightning fast. This means there is no delay in completing the order making it the perfect model for clients like scalpers.
- Safety and transparency: ECN brokers, thanks to their own STP and NDD nature, cannot manipulate the market. They are almost completely uninvolved other than facilitating the network meaning they are a safe and transparent way to trade.
- Minimum deposit: The minimum deposit can be a little higher for ECN broker accounts. This means you are usually looking at a $200 or higher minimum deposit, though there are some exceptions.
Why are ECN brokers recommended for scalpers?
ECN brokers are ideal for scalping technique due to scalpers relying on very small market movements. They must get in and out of the market quickly, meaning ECN’s lightning fast execution is a huge benefit. In addition, the tight spreads are also necessary along with the stability that the deep liquidity can provide.
ECN accounts therefore, have all of the key components that a scalper will look for and need if they are to operate successfully. Another key requirement for a scalper to exploit the small market movements is the availability of trading with brokers with high leverage. Typically, a leverage amount between 10:1 and 20:1 is enough to balance risk and reward for many.
Obtaining leverage in Europe and the UK under the FCA, ESMA and ASIC regulations, brokers can offer a maximum leverage of 30:1 on major forex pairs. If you are trading from outside this area though, that amount can increase. One example of this is South Africa where well-regulated brokers can provide their clients up to 400:1 leverage on major forex pairs.
If you want to open an ECN scalping account, benefit from our analysis of the best ECN scalping forex brokers in the industry before investing.
What is the best ECN forex trading platform?
The final component to consider, and a key ingredient when choosing your ECN forex broker, is the ECN forex trading platform. If you are a scalper, then generally speaking, cTrader is the best for this. It is usually favored as a top ECN trading platform by brokers and traders alike.
cTrader brings all the positive points of MetaTrader but is generally considered, for scalping, to be more efficient in order execution. This is the reason that many top ECN brokers offer cTrader as an option.
That being said, if the execution speed is not your biggest concern, and you just want to trade forex with an ECN broker and benefit from a tight spread, then MT4 is an ideal forex trading platform for you to choose.
If you need an ECN broker with this specific feature, you can utilise our round-up of the best MT4 ECN Forex Broker choices that may suit your needs.
ECN forex brokers list
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money
|Broker||Min. deposit||EUR/USD Avg Spread||Fee/lot|
|HF Markets||$200||0.30 pips||$6|
|Admiral Markets||$100||0.60 pips||$6|
|FP Markets||$100||0.09 pips||$6|
Pros and cons
Here are some of the key pros and cons to consider when it comes to using ECN/STP brokers:
- The trading costs with these ECN/STP brokers is generally lower overall.
- Lightning fast order execution speed is always on offer with these ECN brokers featured.
- Due to their minimum involvement, they are often some of the safest, and most transparent brokers to trade with.
- Trading is highly influenced by the liquidity providers quality, how many liquidity providers they have, and the prices they can provide.
- Minimum deposits for ECN accounts may be higher than the average you would find with a standard account. This can limit availability for newer or casual traders.
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