ECN Broker

What is an ECN broker and what advantages bring this with them. There are basically five different types of brokers: Mahers, ECN-broker, STP brokers, NDD broker (no dealing desk) and IB (introducing broker) broker. In this article, we will explain the differences and the advantages of an ECN broker. An ECN broker forwards an order directly on the interbank market and requires a flexible spread or a Commission depending on the market situation. ECN stands for (electronic communication network) and means that the buy and sell orders are forwarded electronically directly to the interbank market. The execution is much faster because no dealing desk is interposed which should only trigger the position. For the trader, a flexible spread is also usually cheaper, because the spread is close in trading hours with high liquidity and low volatility. With ECN brokers, visit also the orderbook and thus the market depth to assess the ratio of supply and demand.

All orders be forwarded anonymously to the interbank market and the broker sees is not what the trader. The ECN broker connects only to the market. In exceptional cases it can cause delays, so that the order no longer can be controlled at the desired price, but runs at a different price. This effect is called slippage and occurs particularly in hochvolatilen phases, such as after the publication of critical messages. The Mahers, however, have a fixed spread for each currency pair and forward the orders not on the financial market, but to provide own courses. Some open even an opposite position to the sales order to hedge. This leads to the adverse situation that the broker loses if the customer wins and the other way around. More information and ECN broker comparisons, visit