Abstract：In the Forex world you would always wonder if you can use an ECN account instead of a Standard or Cent account. First, what is an ECN account? A Real ECN account is a pure order-matching execution system that charges a premium commission per trade, rather than causing the raw spread to artificially inflate in the natural order-matching process. With this type of account, you get access to more reliable and cost-effective trades.
Initially, opening a forex trading account is a quite simple process these days given the growth of online forex solutions and applications. It requires downloading a trading platform and following a few security steps, such as identity verification, and all can be done online. Typically, this process can take minutes and you are ready to deposit funds and start trading.
Eventually, choosing the account type can be a tricky process and requires an understanding of different types and trading conditions. ECN account is one of the most advanced account types in the trading world and in this article we will list down all the guidelines and explain the different definitions.
The ECN account (Electronic Communications Network), is one of the forex account types commonly provided direct access to the market. ECN is an electronic system of order-matching execution by providing accessibility to orders being entered.
ECN account is one of the most popular account types for forex traders due to the price transparency and ability to directly access the market. Typically, forex brokers provide this type of account as additional services to standard accounts and charge a premium as commission fees per lot with a minimum deposit limit and lower leverage.
The ECN system is a straightforward and easy-to-understand steps. Heres how it works:
Banks (liquidity providers) communicate with the ECN system and forward their BID and ASK price proposals to the ECN server;
Connecting with the ECN server, Forex brokers pick up market quotes and transmit them to their clients trading platforms, including MT4 or MT5.
Upon reviewing the provided prices, the client selects which transaction they would like to proceed with.
Upon the clients request, the ECN account instantly broadcasts it to the server and then contrasts it against numerous liquidity providers.
Professional Tip: Make sure that the provided ECN account is real! Sometimes there are claims of accounts that doesn't provide direct access to the market.
There are several advantages of an ECN forex account that can highly benefit forex traders.
Brokers dont control the bidding: By acting as an intermediary, ECN quotes will always be accurate price data in real-time when trading currencies. The brokers will try to find the best deal for the client. There is no conflict of interest since the account charges a commission fee for the service.
Less restriction: Pending orders are becoming increasingly popular, given that most trading robots and algorithmic scripts rely on them. ECN systems allow you to place pending orders as close to the market price as possible – in certain cases even between Bid and Ask prices. This incredible opportunity grants traders with almost unrestricted prospects for profitable trades.
Tighter spreads: Since the ECN instantly matches orders from traders with the best available buy and sell prices, the ECN provides lower spreads. During an ECN system, all traders and brokers compete to create the best conditions for executing orders. As transactions are executed, it is natural that both traders and brokers aim to gain financially; often this means setting minimum spread sizes of 0.1 – 0.2 points when trading during busier European or US sessions where spreads could be zero.
Faster Execution speed: With ECN accounts execution can be relatively faster than other trades since all trades are carried out immediately without requotes. Liquidity providers are motivated to deliver the best prices and lowest possible rates beat the competition and attract traders.
Fixed commission: It is highly beneficial for some trading strategies to execute trades with the commission at the lowest spread possible. Therefore, some traders prefer commission-based trades. In this case, it is crucial to choose the broker with the lowest commission per lot.
When trading with ECN brokers, ensure that they are legitimate and prevent yourself from the struggle of requotes. Requotes happen when a trader attempts to make an order at the current market rate but instead receives a price quote for different market values. This delay in getting your trade executed can be costly or even worse; you may not be able to do any trades due to rapidly changing markets.
AximTrade provides one of the best ECN accounts in the forex market. The ECN account offers one of the lowest commissions per lot which is $3. The minimum deposit for ECN accounts by AximTrade is $50 and this is highly competitive as the majority of ECN requirements can be relatively very high for regular forex traders. The minimum trade volume is 0.01 lots while the maximum tradable lot is 50 lots. The average spread on major pairs is as low as 0 pips. Traders can open up to 200 orders at a time. This account offers flexible leverage up to 1:1000.
ECN Forex Account
|Currency Pairs||All Currency Majors|
|Leverage||Up to 1:1000|
|Spread||as low as 0.0 Pip on Majors|
|Negative Balance Protection||Yes|
|Minimum Trade Volume||0.01 Lot|
For investors looking for the most cost-effective option, in the long run, an ECN account is ideal due to its low spreads and ultra-fast execution. That said, STP accounts should not be overlooked as they offer top-notch speed of trading plus a reliable ecosystem.
ECN commission is the fixed amount of fees charged by the broker per transaction. Mainly, the commission amount is provided in the account details for traders to be able to measure the trading costs. There are different formulas traders can use to calculate the amount of commission they will pay per order.
To calculate ECN commission, simply multiply the fixed commission (3 USD) by your trade volume. As an example of how this works in practice: With AximTrade, a one-lot transaction for any major currency pair will incur 3 USD in a fee. Notably, some Forex brokers may opt to charge their commissions as a percentage of the total transaction volume instead.
Another example of commission:
ECN account commission = (Contract Size × USD-to-base-currency Exchange Rate / 1,000,000) × Commission amount in USD × 2.
Fundamentally, the real ECN account matches and executes orders without placing premiums on the raw spread. Initially, the ECN orders are commonly charged based on trading volume and these are a certain amount of commission per lot. While the standard account is usually a type of account where the spread includes the premium of the market marker without adding extra commission to the trading volume.
The cost of an ECN account tends to be cheaper when the trade is above of certain trading volume. Eventually, some might assume that long-term traders can benefit from ECN to avoid premiums on the quotes, but the reality is that it isnt highly beneficial for longer-term traders they tend to not worry about the cost of the spread so much.
Basically, the standard account is can come with a fixed spread or floating spread. Each type of spread can have its advantages and disadvantages. The EURUSD pair is usually the lowest spread, but it can get more expensive than an ECN during news releases. Yet, the standard account can provide more stable execution and better cost for day traders. Although getting the best quotes is a considered major factor in choosing a forex broker and account type, they do not represent execution quality, slippage, commission fees, or any other trading conditions that might affect your trading strategy in the forex market.
Dealing Desk brokers (DD Brokers), are commonly known as “market makers” due to the fact that they typically take the opposite side of traders transactions. Market makers make money through spreads, and by supplying liquidity. When a client orders something, these brokers will try to find an offsetting long or short order from their other clients before going against it themselves or giving it on to another supplier of liquidities. Furthermore, market makers are recognized for providing false quotes and filling orders at their own discretion.
Rather than Dealing Desk brokers, No Dealing Desk brokers leverage technology that bypasses the dealing desk while directing transactions directly to liquidity providers. This means clients can access the real markets with quicker and better fills. It connects customers with liquidity providers without having any re-quotes when an order needs filling. We divide NDD Forex brokers into three distinct categories:
Straight Through Processing (STP) Broker
Electronic Communication Network (ECN) Broker
Hybrid Forex Broker (ECN+STP)
STP (Straight Through Processing) technology eliminates the need for a dealing desk, allowing orders to go directly to liquidity providers such as hedge funds, banks, and investors. This results in trades being filled at the real-time bid/ask pricing provided by these counterparties. Most STP brokers have access to internal liquidity pools comprised of different liquidity providers who compete against each other for better spreads on broker orders.
By using an STP broker, the company serves as a quiet connection between traders and the market rather than acting as a dealing desk. One of the advantages of working with an STP Broker is ‘DMA’, or Direct Market Access. This means that orders are routed directly to their liquidity pool so clients can get access to fill them at the best prices, plus any small markup spread by brokers.
For maximum trading flexibility, always opt for the broker that offers the most variable spreads. This is because such a broker can select from its own pool of liquidity providers to get you not only the best bid spread but also the best ask spread. Plus, with Straight Through Processing (STP) execution and lightning-fast speeds ideal for news trading. however, it still has its own risk.
ECN, or Electronic Communication Network, is a central hub of the Forex market where investors and institutions can trade with each other through an ECN broker. By bypassing the traditional dealing desk model, ECN forex accounts offer faster order processing and lower spreads, while also connecting to multiple liquidity providers to ensure that orders are filled at the most competitive rates.
Professional traders tend to execute their orders using an ECN Forex account to benefit from the fast order execution and access to a wide range of liquidity providers. With ECN accounts, forex traders can be confident that the orders will be filled quicker at the best trading conditions. Additionally, ECN brokers have access to a wide range of liquidity providers, so you can be confident that your orders will always be filled at the best available prices.
While many features of STP and ECN Forex brokers are similar, the primary difference lies in the different routing. An STP system can select from multiple sources within its liquidity pool to execute trades; conversely, an ECN acts as a hub that interconnects banks, hedge funds, and other big-time market players. Thus, it is no surprise that the ECN has become one of the most crucial sources of liquidity for traders in the Forex markets.
The global financial market is constantly evolving, and more sophisticated systems like Straight Through Processing (STP) and Electronic Communication Network (ECN) are replacing the traditional interaction between clients and brokers. STP & ECN have been at the forefront of Foreign exchange trading, although they share certain similarities there remain some essential differences that set them apart.
To get in-depth with the two different mechanisms, we need to outline the two systems in more detail.
STP, or Straight Through Processing, is an efficient way to have your order quickly sent to the brokers partner liquidity providers. This could be one large bank or many smaller banks combined. The more direct partners a broker has will lead to improved overall execution prices for you! With STP processing in place, you can rest assured that your orders are being handled with precision and care.
ECN, or Electronic Communication Network, is distinct from STP in that it does not display the customers order on the interbank market for all participants to view and assess its size before executing.
As illustrated in the definitions above, these two systems are quite alike. To gain a better understanding of their distinctions, take a look at the table below:
|Acting as a central hub, the ECN is an integral source of liquidity with representation from banks, hedge funds, and all significant market players.||STP has the freedom to select from a variety of liquidity providers in their liquidity pool.|
|Your order is instantaneously processed and sent to the interbank market, where it will be fulfilled at the highest available rate without any involvement of a dealer.||Orders are transmitted to multiple potential market partners, such as interbank institutions, STP brokers, ECN brokers, and market makers.|
|An ECN broker executes trades for potential investors through the ECN, ensuring ultra-fast order execution.||Depending on the order, how quickly it is processed will be determined by its precise route.|
|ECN brokers offer a minimal commission for every trade and the best price.||STP brokers can receive both commissions and spreads – whether variable or fixed.|
When it comes to ECN or STP, which is the best？ While ECN brokerages often offer the tightest spreads paired with a more cost-effective overall trading experience in busy markets, STP can provide an equally effortless and inexpensive transaction process without suffering from increased fees due to employing a dealing desk.
Trading with an ECN broker offers you the utmost privacy and improved market conditions. With no bias whatsoever, you can take advantage of fast-paced trades while also enjoying much lower spreads – all of which result in a higher potential for profit and less trading costs. ECN is a better trading account for professionals and traders with good knowledge.
The standard account type is mostly associated with the fixed spread. The broker will take on any position you open and usually thats the case. For instance, if you are trading in EUR/USD pair then its spread could be around two pips which may look more expensive than an ECN but can be quite helpful during news-related events.
Unfortunately, if you frequently trade, the costs of execution could add up over time. People often overlook these expenses and underestimate their long-term impact on profits! However, for those with a position in place for days or weeks at a time, this is less likely to be an issue as there are comparatively fewer trading fees involved.
Follow these steps to open an ECN forex Account with AximTrade, one of the leading ECN brokers in the industry.
First, visit the AximTrade website and click on “Register an Account” or download the trading app via Google Play Store or Apple Store to get started.
You will be required to provide some basic information, including your email, phone number, and personal info.
Continuing with ID verification is where you need to provide the initial information for your account security and fund transaction preferences.
To open an ECN forex account, log in to your member area, click on “ + Open Extra Account” and select ECN account type.
You will be asked to set up a username and password for your new AximTrade ECN account. Be sure to keep this information in a safe place for future reference.
Once your account is set up, you will be ready to start trading on the ECN platform with AximTrade. Simply log in to MT4 and start placing orders on the ECN marketplace using a variety of trading instruments, including forex pairs, stocks, commodities, and cryptocurrencies.
Standard Account: The minimum deposit required to open this account is $1. The maximum leverage is 1:3000. The minimum lot that can be traded is 0.01 lots while the maximum is 50 lots. There is an average spread of 1.0 – 1.6 pips on major forex pairs. There are no trading commissions on this account and clients can open up to 200 orders at a time.
Cent Account: The minimum deposit for this account is $1 while the maximum leverage of 1:2000. The minimum amount of lots that can be traded is 0.01 lots while 150 lots are the maximum. There is an average spread of 1.0 -1.6 pips on major forex pairs. There are no trading commissions and clients can open up to 200 orders at a time. As a cent account, the lot size is 1,000.
Demo Account: AximTrade Demo accounts are also available with virtual funds for trading practice and learning. The forex demo account can always be a good way to trial the AximTrade platform and services before committing to a real live trading account. The company also offers several promotions and contests for demo accounts which can allow traders to earn prizes and gifts.
Islamic Account: Swap-free accounts of the AximTrade accounts are available for customers from certain regions including Ismalic and Arabic-speaking countries.
Infinite Leverage Account: The infinite leverage account takes traders to the next level by allowing them to borrow a limitless amount of trading capital from AximTrade, the leading best broker. The account exclusively offers the opportunity to trade more and maximize the potential for profitability. This one-of-a-kind forex account type helps you to fulfill your trading potential by trading larger positions using borrowing funds.
Take your time searching for a reliable forex broker so your money and trades will be handled appropriately. The main features of a reliable broker include efficient customer support, real-time market execution, suitable trading conditions, a wide selection of account types that suits different traders depending on their financial capabilities, providing advanced software for successful trading, secure and fast money depositing and withdrawal, competitive spreads and finally but not least is offering multiple trading options with various currency pairs.
Choosing an ECN broker requires extensive research to establish a reliable, trustworthy, and long-term investment plan. While the majority of broker provides ECN account, the conditions might be inefficient in the long term. You will have to consider several factors besides the commission rate and quotes, such as the deposit required, margin levels, execution quality, and slippage.
Another major feature to focus on is the brokers regulatory compliance. You have to choose a regulated forex broker, which keeps you safe from scams and fraud. Remember that the safety of your money and personal information is highly crucial when you open a forex account as brokers can get hacked or go bankrupt.
Check Top 10 Tips: How to Choose The Best Forex Broker？
Always choose the account that matches your investment style and trading strategy. As a leading investment platform, AximTrade is the ideal choice for professional traders and investors who are seeking the best conditions to access the market and start trading with ECN accounts. Traders who prefer flexibility and fast process registration consider AximTrade one of the best choices, as it is allowing traders to start with lower capital. Additionally, the platform is continually expanding its capabilities to serve all types of traders by providing flexible leverage, low opening balance requirements, tight spreads, and effective payment methods.
Enjoy favorable trading conditions with the AximTrade ECN brokerage services; especially when it comes to margin and leverage levels. Open your trading account in a few easy steps, verify your documents and enjoy premium trading services. With minimum deposit requirements and a diversity of trading tools, explore luxury trading with the leading best broker.
Disclaimer: This post is from Aximdaily and it is considered a marketing publication and does not constitute investment advice or research. Its content represents the general views of our editors and does not consider individual readers personal circumstances, investment experience, or current financial situation.