Over the years we have often noted that there is great confusion about the orders execution models used by forex brokers.
ECN… STP … DMA … Dealing or Non Dealing Desk… Market Maker…
Understanding all the differences is not that easy, especially for the beginner.
With our Top 10 list (also specifically for UK and Australia), we have tried to simplify things a little bit.
The ECN brokers (Electronic Communication Network), the STP (Straight Through Processing) and DMA (Direct Market Access) can be grouped in the great family of NDD brokers, No Dealing Desk, opposed to the Market Maker brokers, which have a dealing desk.
Many users search for true ECN STP brokers because they don’t want the broker to be the counterpart of their orders. In other words, they do not want to have conflicts of interest where the broker might “hope” for your losses, that for them would mean gains, since they are the counterpart.
From our experience, when people search for the best ECN STP brokers, in essence they are looking for a Non Dealing Desk broker, without really knowing what the difference between what ECN and STP are.
With an STP ECN broker you’re choosing a broker that will not be the counterpart of your orders, but that will simply work to find another counterpart to satisfy it. Basically, an ECN STP broker will not be interested in the success (or failure) of your operations, but they will only act as an intermediary in order to satisfy them.
Among the various execution models, the differences perceived, on the user side, actually are really low, especially for those who simply want to do forex trading with no particular operational needs.
However, the major point of any NDD broker is certainly the spread. This is usually lower (sometimes even zero) than the Market Maker one, and often has the ability to operate at extreme speed, even in scalping mode. It’s not a coincidence that almost every broker in our forex broker with lowest spread article is an ECN-STP dealer.
Table of contents
Best ECN STP Forex Brokers 2021
Here’s our list of the ECN STP forex brokers. In this listing you will also find the best Australian and UK ECN brokers.
What is a Real ECN Forex Broker? How does it work?
This is the first question for many people when it comes to ECN forex brokers. What exactly is ECN?
Well, ECN stands for Electronic Communications Network. Essentially, what an ECN broker does is connect users within this network so they can trade assets in this network, and directly with the financial markets. It effectively expedites the order execution process, and makes it much more direct at the same time.
Due to this, a real ECN forex broker is considered as being both an STP (Straight Through Processing), and NDD (No Dealing Desk), all thanks to the fact that ECN execution provides no interference with the trading process whatsoever.
Added to this high speed, no interference efficiency, real ECN forex accounts also always provide a great combination of very low spreads, and some of the most lightning fast execution speed in the industry.
What are ECN Liquidity providers? Why are they so important for ECN Trading?
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. This 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: what’s the difference?
When it comes to comparing the differences between a true ECN account, and a standard account, you will find many of them. Here we have created a detailed list of some of the key differences you are likely to find:
- Low Forex spreads: ECN spreads usually start from 0 pips. While many of the top forex brokers may also supply very low and competitive spreads on a standard account, the standard account spread usually starts from 1pip or higher in many cases.
- No requotes and Slippage: The very deep liquidity which ECN brokers have, combined with the speed of execution for orders across the networks, mean 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 at all in completing the order. It makes 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. This means they are a very safe, and transparent way to trade.
- Minimum Deposit: The minimum deposit can be a little higher. This means you are usually looking at a $200 or more minimum deposit though there are some exceptions.
Why are ECN brokers perfect for scalpers?
We mentioned that ECN brokers are ideal for scalpers. This is the case since scalpers rely on very small market movements. They must get in and out of the market very quickly, so the lightning fast execution is a huge benefit. The tight spreads are also necessary as is stability that the deep liquidity can provide.
ECN accounts then, 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 and ESMA 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. An example here is Australia or South Africa where well-regulated brokers can provide to their clients up to 400:1 leverage on major forex pairs.
If you want to open an ECN scalping account, check our opinion on the best ECN scalping forex brokers before making your next move.
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 of our top ECN brokers on the listing offer cTrader as an option.
With that said, if the execution speed is not your biggest concern, and you just want to trade forex with an ECN broker and tight spread, then MT4 is an ideal forex trading platform for you to choose.
If you need an ECN broker with this specific feature, here’s our personal top 10 of the best MT4 ECN Forex Broker choices that may suit your needs.
ECN-STP 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|
|Admiral Markets||$100||0.60 pips||$6|
|FP Markets||$100||0.09 pips||$6|
Pros and cons of the ECN-STP brokers
To round off, here are some of the key pros and cons we have found when it comes to ECN-STP brokers to look out for:
- 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.