Table of Contents Hide
- What to Keep in Mind When Looking For the Best ECN Brokers
- Checklist of Reputable ECN Brokers
- Why is it necessary to regulate ECN brokers?
- Commissions and Fees for ECN Forex Brokers
- Funding and Withdrawal Methods for ECN Brokers
- Brokers who provide ECN services 24 hours a day, 7 days a week
- Understanding the Differences Between ECN, STP, and ECN+STP Brokers
- Best ECN Brokers for UK, Australian & US Clients
ECN brokers (Electronic Communication Network) are one of the newest types of Forex brokers in the USA and across the globe. In a nutshell, ECN Forex brokers provide a marketplace where traders (including US Clients) and market makers can compete for trades—sometimes as part of a hybrid ECN/STP execution strategy.
The options below are some of the best ECN Brokers out there for traders including US Clients. But before them, let’s go through some important details you should know.
What to Keep in Mind When Looking For the Best ECN Brokers
The ideal ECN trading account forex broker for you will be determined by your location, the size of your trades, what you trade, and how frequently you trade. Basically, all of these factors will influence your trading costs.
Furthermore, different pricing structures will be more cost-effective for different types of traders. So, when considering broker options, keep your trading style in mind. Reading the fine print is always a smart idea because a low spread can equal a higher commission and vice versa.
Making a choice amongst ECN brokers is similar to choosing any other broker. There aren’t many specific concerns to keep an eye out for with ECN brokers that aren’t already standard.
So when making your pick from Forex ECN brokers, consider how much money you want to deposit, the types of products you want to trade, how frequently you want to trade, and where you live. You should be able to eliminate several ECN brokers from your list of candidates based on these three criteria.
The good news, however, is that ECN brokers who fail to meet minimum acceptable standards in one area are likely to fail to meet required standards in other areas as well. This makes it easier to eliminate them.
You may prefer a broker based in your own country (or a neighboring country), or one based in a country that speaks your native language or has a similar legal system. If you live in the United States, you have additional considerations to make when it comes to ECN brokers. This is because the US is quite restrictive in terms of Forex trading, and if you must trade onshore, you have limited options. However, it does make your decision and other US Clients’ easier when in search of ECN Forex Brokers.
On the other hand, if you live in the United Kingdom, you may want to look for a UK-based broker that offers spread betting as a tax-efficient option. This is because you will likely not have to pay any tax on any winnings.
This is probably the simplest place to begin. It will basically help you narrow down your options quickly when selecting a Forex broker.
#2. Regulation and Security
If you only intend to deposit a small amount of money that is not very important to you, this may not be a big deal. If not, this is a major problem.
Some countries have a well-developed culture of financial regulation enforcement, which is always reassuring. They are simply not conducive to large-scale fraud. Another important factor to consider still, is whether your money is protected.
For example, the United Kingdom government insures everyone’s deposit with all regulated ECN Forex brokers up to a limit of GBP 75,000 at the time of writing. This implies that if you deposit that amount or less with a broker regulated by and based in the United Kingdom, and they steal from you, scam you, or even go bankrupt, you should be able to get your money back from the British government. This is a huge advantage and provides a lot of reassurance.
On the other hand, for some weird reason, the odds are often not in favor of US clients when it comes to forex. In other words, if you are in the USA, chances are scams from ECN Forex brokers are not insured.
So, the bottom line is, if your deposit is a considerable sum, you should seriously some important questions like;
Will it be wise to put it someplace that does not offer government-backed deposit protection? But in any case, you should also lean toward reputable financial centers and avoid small islands you’ve never heard of!
#3. Cost of Trade
There’s no reason why someone with a large deposit should accept a total spread and commission of more than 1 pip on the benchmark EUR/USD Forex currency pair these days. Opening demo accounts with each of your prospective ECN Forex brokers to see what their spreads are truly like is one technique to compare spreads. However, one drawback to this method is that brokers have been known to make conditions on their demo accounts, especially spreads, significantly better than in their real money accounts. Fortunately, there are a few websites that compare the spreads of real money accounts across a variety of ECN Forex brokers in real time, so checkingout those platforms is a smart idea.
#4. Your Trading Style
Another important consideration when picking a broker is your trading style or projected trading style. In other words, how many transactions you typically make. Ask some relevant questions like;
- Are you a scalper, day trader, swing trader, or position trader?
- Do you plan to be one?
If you just make a few trades but leave your positions open for several days, weeks, or even months, you should look into how competitive your ECn Forex brokers’ overnight financing costs are.
In most cases, they are levied each day on positions left open at 5 p.m, New York time. These rates, to a large extent, can make a bigger difference in overall profit and loss for position traders than the spreads charged.
On the other hand, if you’re only planning to leave transactions open for a few minutes or hours but making a lot of them, the spreads become more important, and overnight funding may not be an issue. This means that if you’re an intraday trader, one of two ECN Forex brokers might be the most cost-effective option. It is a different twist entirely if you’re a longer-term trader holding positions overnight.
#5. Trading Platforms of ECN Brokers
The trading platform of the broker is the next factor to examine. Is it smooth to use, or does it occasionally freeze? Is it simple, intuitive, and enjoyable to use? Does the Forex broker’s execute work in a way that shows it is a true ECN broker or something close to it?
#6. Check for Loopholes
Consider the difficulties that brokers like to emphasize in their advertising, but which are actually the least of your concerns. Bonuses and other helpful promotions may be appealing but read the fine print. For the most part, accepting a bonus, whether deposit or otherwise, may include you being unable to withdraw a portion of your deposit until you complete a certain number of transactions.
One advantage of using ECN brokers, however, is that they provide a more advanced market than market-making brokers. This means that you won’t have to deal with any misleading jargon or hard pitches.
Even the most professional brokers can have terrible advertising and customer service, yet they may be able to offer you the finest ECN brokerage deal.
Checklist of Reputable ECN Brokers
These questions and tips serve as a checklist for any trader looking to make a pick from the tons of ECN brokers out there, including their prospective US Clients.
- Is the broker regulated anywhere? The finest financial centers are those with excellent regulatory protection for retail traders.
- Is there a good reputation for the broker? Do some internet research and see what customers have to say. However, don’t take anything you learn at face value without double-checking it. Furthermre, pay special attention to whether or not they’ve been penalized or sanctioned by any regulator or judicial system.
- Is the broker a newcomer or has he been around for a while? Basically, the longer a broker has been in operation, the better. A minimum of two years in business is a solid starting point.
- Is it apparent that the broker has the ability to handle withdrawals quickly? Anything that takes more than three business days should be considered a red flag.
- The broker should provide prompt customer service that answers quickly to any major issue raised by a client within 24 hours.
- If you’re dead set on finding “true” ECNs, keep in mind that this type of broker will occasionally offer inverted spreads. For a few moments, the bid prices are lower than the ask prices in inverted spreads.
- Examine the broker’s full selection of assets, as well as the typical spreads, commissions, and overnight costs.
- Check if a broker’s required minimum deposit (if any) is less than the amount you are willing to put.
- If you have a preferred trading platform that you are dead set on using, you should see if a broker supports that platform. Alternatively, you might want to make sure that the platform or platforms being supplied are suitable for you.
- If you’re looking for an Islamic or Nano account, make sure the broker provides it.
- Examine the ECN Brokers’ funding options: Do they accept e-payments, debit cards, credit cards, or bank wire transfers?
- Is your ECN broker able to provide local training and seminars?
Why is it necessary to regulate ECN brokers?
It is critical that any broker be regulated in order to safeguard your assets and prevent fraud. Basically, because reputable brokers are typically multinational, they are regulated by multiple regulatory bodies. You will be assigned to the legal entity of the broker that is best suited to your country of residence. This implies that policies may differ amongst geographical branches of the same broker.
Commissions and Fees for ECN Forex Brokers
Low spreads are provided by an ECN broker. They will, however, charge commission in addition to spread, unlike non-ECN brokers who do not normally charge commission.
FXCM, for example, provides a non-ECN “regular account.” The EUR/USD currency pair has a minimum spread of 1.3 pips, but no fee is charged. FP Markets offers an ECN account with an average spread of 0.1 pips in EUR/USD. But it also charges a 0.3 pips commission for every transaction (entry and exit). This indicates that each trade would cost 0.4 pips under these conditions (0.1 pip spread plus 0.3 pips commission).
Funding and Withdrawal Methods for ECN Brokers
Each broker will have its own procedures for depositing and withdrawing money. E-payments, debit cards, credit cards, and bank wire transfers are all possibilities. Some brokers have minimum and maximum withdrawal and deposit amounts that must be met. And depending on the method you choose, they may charge a fee. In most cases, the procedure might be completed immediately or take up to a few business days.
Unless there are exceptional circumstances, no withdrawal should take more than three working days to process.
Deposits and withdrawals are often subject to minimums or even maximums imposed by many ECN brokers. Simply put, deposits are often subject to minimums, while withdrawals are subject to maximums.
The ECN broker FP Markets, for example, will only take deposits of at least $100 or the equivalent. And due to anti-money laundering regulations, they set maximum daily deposit limits using some payment systems. But, when it comes to withdrawals, FP Markets has no maximum limit as long as the account balance is sufficient.
Brokers who provide ECN services 24 hours a day, 7 days a week
If you decide to deposit with an ECN broker, be sure they provide round-the-clock customer service. Reason being that ECN brokers allow crypto CFD orders to be placed 24 hours a day, seven days a week. Forex markets, on the other hand, are only open around the clock from Monday in New Zealand to Friday late in New York. Weekend trading is available in only a few Forex companies.
Understanding the Differences Between ECN, STP, and ECN+STP Brokers
Once you’ve decided what you want to achieve as a trader, you’ll need to learn about the several types of brokers and what each one has to offer.
Meanwhile, the type of network they provide is the first thing you should consider. These could be ECN, STP, or an ECN+STP hybrid model.
Brokers can be classified according on the network on which they operate, with varied prices, trading hours, and execution times. ECN, STP, and ECN+STP are the systems that are available.
#1. Dealing Desk
A dealing desk is a network that is run by a group of brokers. Your broker will take the other side of your trade when you place an order through a dealing desk. To put it another way, the broker hires experts or uses an algorithm to develop a currency inventory that it sells to customers at various prices depending on their needs. There will normally be relatively set spreads that are not reliant on a third-party liquidity pool. Market makers are another term for dealing desk brokers.
#2. No-Dealing Desk
The market order does not go through a market maker in this case. Purchases and sales are made to the liquidity provider directly. STP or ECN brokers are major participants of no-dealing desks.
#3. STP Brokers
In simple terms, STP is an acronym for “straight-through processing.” It is a broker that does not have a dealing desk. Prices and market conditions will be set by STPs on the basis of some factors. These include; the customer’s trade volume, performance, and account type. They have lower commissions and wider spreads than other brokers.
#4. ECN Brokers
In order to give the lowest spread, an ECN broker will aggregate their pricing after evaluating expenses from different market suppliers. They will make money by charging a predetermined commission.
#5. Hybrid Model
When both ECN and STP methods are combined to offer a better deal for both the broker and the client, it is called a hybrid model. They can automate trades, modify spreads and commissions, and interact with diverse markets. They achieve this by combining ECN and STP characteristics.
Best ECN Brokers for UK, Australian & US Clients
The following are some of the best ECN Brokers for UK, Australian and US Clients, entirely based on reviews from users across the net.
#1. FP Markets
FP Markets is an Australian brokerage that first opened its doors in 2005. They have built out a solid place for themselves as the best Forex / CFD broker under ASIC regulation, with headquarters in Sydney, Australia’s financial capital. Australian authorities are far more lenient on leverage than their counterparts in the USA, the United Kingdom, and the European Union. As a result, FP markets can provide a maximum leverage of 500 to 1.
The incredibly wide range of tradable assets offered by this broker, which allows traders to trade over ten thousand individual stocks and shares, is the broker’s standout unique selling point for most traders. These go beyond the standard of the United States of America and the United Kingdom when it comes to ECN Brokers. As you’d expect from an Australasian-focused broker like FP markets, there’s a good range of publicly traded shares on the Hong Kong and Sydney exchanges. Also available are over 60 Forex pairings and crosses, 11 equities indices, key commodities, and 5 cryptocurrencies, including Bitcoin.
Pepperstone, the world’s most well-known ECN Forex broker, was founded in 2010 and is headquartered and regulated in Australia, the United Kingdom, and Dubai. ASIC’s delicate regulatory touch, paired with local experience, has made Australia a refuge for technology-driven broker firms that promise ultra-fast, frictionless execution and extremely high maximum leverage. Pepperstone provides geographically qualifying clients with a maximum leverage of 500 to 1, which is more than enough for most traders’ needs.
Furthermore, as an ECN broker, they offer raw spreads and cheap commissions. And when combined, Pepperstone’s “Razor” account offers one of the lowest and most affordable Forex brokering trading costs available for ECN traders across the globe including the USA.
FXTM, or “ForexTime,” has a long history, with its inception in 2011. They have consistently expanded their business over the years, with high-level regulation in the United Kingdom, Cyprus, Mauritius, and South Africa. Private corporations in the United Kingdom, Cyprus, and Mauritius hold the brand.
Furthermore, FXTM is one of the few ECN brokerages where customers can trade over 57 different currency pairs and crosses, as well as precious metals, major commodities, equities indices, key cryptocurrencies, and a few specific USA stocks. When it comes to equities, FXTM is a one-of-a-kind brokerage that allows direct stock trading through true legal ownership rather than CFDs, as practically every other similar brokerage does.
It also provides traders with the option of choosing between two popular execution models. These include;
- An ECN account or
- One that trades using “straight-through processing.”
Clients can choose between two trading platforms, MetaTrader 4 and MetaTrader 5, which are both available.
FXTM offers leverage of up to 1000 to 1 through their Mauritius regulator. In the United Kingdom, They are prohibited by law from offering more than 30 to 1 in both the United Kingdom and Cyprus.
#4. BlackBull Markets
BlackBull Markets is a relatively young Forex broker, making its first appearance around 2014 in New Zealand. Over the years, it has become some sort of sanctuary for innovative Forex brokerages, along with Australia. BlackBull Markets, like many other antipodean brokerage companies, is an ECN broker that offers raw spreads and low commissions. They are regulated by the Financial Services Providers Register (FSPR) in New Zealand and offer up to 500:1 leverage on specific Forex currency pairs.
The ECN Broker has branch offices in New York, USA, and Malaysia, in addition to their worldwide headquarters in New Zealand.
BlackBull Markets has a limited number of tradable assets. They include 27 Forex currency pairs and crosses, gold, silver, crude oil, natural gas, and six main stock indices. The average trader, who is more concerned with having a normal range of markets to trade without being particularly concerned about diversification, should not be concerned.
BlackBull Markets has a quiet confidence. In other words, they don’t make grand claims. Instead, the New Zealand broker focuses on offering the essentials for ECN trading and at a fair price.
They have a $200 minimum deposit requirement. This puts it out of reach for traders looking to make lesser investments.
#5. IC Markets; Best ECN Forex broker in Australia
IC Markets focuses mostly on Forex trading, although it also offers CFDs on Futures, Stock Indices, Shares, Bonds, and Commodities. Three strong trading platforms – MetaTrader 4, MetaTrader 5, and cTrader – provide access to a real ECN trading environment.
International Capital Markets Pty Ltd Australia conforms with the Australian Securities and Investments Commission’s (ASIC) high regulatory criteria, making it a safe and reliable broker for Australian traders.
ECN Trading Spreads at IC Markets
As a true ECN broker, IC Markets electronically matches its clients’ trades and forwards trade orders to liquidity providers. This system uses an NDD execution paradigm, which implies it doesn’t have a dealing desk.
Because it uses a diversified liquidity mix, the broker can offer Forex traders the lowest spreads – as low as 0.0 pips on several major currency pairs – via its MetaTrader 4 ECN account. IC Markets has one of the world’s tightest spreads on FX pairs like EUR/USD (0.1 pips) and can offer tight spreads throughout its entire product offering.
#6. TD Ameritrade; a good ECN broker for US Clients
Only clients/residents of the United States of America (USA) are eligible to use TD Ameritrade’s ECN brokerage and trading services, which are limited to US markets. Clients can trade directly through the broker’s Classic Web Platform, NextGen Web Platform, TD Ameritrade Mobile, ThinkorSwim Desktop, ThinkorSwim Web, and ThinkorSwim Mobile trading platforms.
TD Ameritrade’s Spread Analysis
Spreads may be slightly higher at TD Ameritrade, especially during less liquid trading hours. Based on price data obtained from October 2018 to June 2019, the average EUR/USD spread is 1.06 pips.
One of the most important features of the TD Ameritrade price engine is its ability to handle large orders.
Clients of TD Ameritrade can send trading orders to JP Morgan, Citadel Securities, XTX Markets, HC Technologies, and Virtu Financial, five of the largest tier-one liquidity providers.
#7. Go Markets
GO Markets is a brokerage firm that was founded in 2006 and operates under the auspices of the Australian Securities and Investments Commission (ASIC). It is driven by compliance, competitive spreads, and technological advancements.
The brokers provide a valuable trading environment connected to innovative technologies through their major offices in Australia and Cyprus. This allows traders to create strategies and improve trading outcomes.
FOREX.com, according to several reviews, is one of the finest forex ECN brokers. They are a GAIN Capital affiliate with almost $1.5 billion in assets and $350 million in available liquidity. FOREX.com enjoys this many accolades as a result of completing 99.65% of its trades in less than one second.
FOREX.com features a wealth of resources for both novice and experienced traders, including live market data streams, commentary, analyst research, screeners, and more. They also send out an email newsletter with market updates, as well as entry and exit points.
Furthermore, they offer classes for investors of all skill levels to continue learning.
On FOREX.com’s Advanced Trading Platform for your desktop, MetaTrader, and through their web trading, you can trade 84 different currency pairs. These systems are also user-friendly and adaptable.
#9. Interactive Brokers; Best ECN Broker For US Clients
Interactive Brokers’ ECN forex trading platform, which provides direct access to interbank market prices, accepts US clients. You’ll be able to trade 23 different currencies with commissions as low as 0.08 pips. However, the MetaTrader platform isn’t supported.
However, Interactive Brokers’ account minimums are a little high. To start an account, you’ll need a $10,000 deposit, which may scare off some smaller retail traders. However, there aren’t many ECN forex brokerage choices for US Clients, and according to reviews, Interactive Brokers is one of the best.
In addition, its instructional library is chock-full of trading tactics and approaches. If you’re just learning how to trade forex, you’ll find a lot of information to help you start on the right foot.
This article should NOT influence your decisions, it’s solely for informational purposes. We thereby emphasize that we do NOT endorse any of the Brokers in this post. They are subject to your choice of decision and verification. We are not sponsored by any of the Brokers and the information provided here is to the best of our knowledge.