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Best True ECN Brokers for 2020

Are you looking to create an ECN trading account? Check out our comprehensive guide below to easily get a list of the best true ECN brokers.
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Author: Nica San Juan
Last Updated: 29 April 2020

In the past few years, the forex industry has been experiencing an increase in a new type of brokers known as the Electronic Communication Network (ECN). These brokers are allowing clients to interact with each other or with third parties.

Usually, the minimum amount required for ECN accounts is higher than regular forex accounts. By having an ECN account, you can get several benefits such as faster order executions and lower spreads.

Read on to find out what ECN brokers are, how they work, the difference between ECN and standard accounts and the best ECN brokers in the market.

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FXTM: Best ECN Broker for 2020

Our rating

  • FCA, CySEC, FSCA, IFSC, FSC regulated
  • MT4 and MT5 Platforms
  • $5 min deposit

What are ECN brokers?

Together with Straight Through Processing (STP) and Direct Market Access (DMA) brokers, ECN brokers are classified as non-dealing desk types of brokers.  They execute the clients’ trades by matching them with other clients and third parties who act as counterparties.

In contrast, dealing desk brokers serve as the counterparties on the other side of the trade. This creates an apparent conflict of interest, where the clients are disadvantaged.

In most cases, ECN brokers charge lower spreads than desk dealing brokers. On top of that, they also charge commissions on trade entries and exits made. However, the combination of both the spreads and commissions charged by ECN brokers is lower than the fees most desk dealing brokers charge. The low cost of trading and the lack of conflict of interest make ECN brokers attractive to most traders.

However, ECN brokers ask for a higher minimum deposit compared to dealing desk brokers. Most of them require a minimum trade size as high as one mini-lot rather than one micro-lot that is standard in the industry. Nonetheless, they offer excellent execution speeds.

How do ECN brokers work?

ECN brokers are a type of forex broker that get the matching orders they offer their clients from tier-1 liquidity providers such as banks, big financial institutions, hedge funds, etc. These liquidity providers offer the best currency rate. However, their minimum trading transaction and credit line requirements are very high for ordinary traders to afford. This, in turn, hinders small market players and individual traders from taking advantage of their lower rates.

This is where ECN brokers shine. They bridge the gap between tier-1 liquidity providers and small participants in the market. Since quotes come directly from liquidity providers, ECN brokers will allow you to access exclusive interbank rates.

Most ECN brokers incorporate a program that brings participants together and automatically execute orders in real-time. When orders are made, they are matched with opposite orders of the same amount and volume. This concept involves algorithms and matching engines to execute orders and perform limit checks in a matter of milliseconds. Although the spreads are flexible, they charge 1 to 2 pips on most currency pairs.

What are the advantages of ECN brokers?

The main difference between an ECN and a standard forex broker account is the execution method and the fee policy involved. This difference creates a number of advantages for retail traders, which we outlined below:

  • Tighter spreads: Standard accounts have fixed spreads determined by the broker. On the other hand, one thing that has made ECN accounts popular is their tight spreads. The spread is determined by the buy and sell prices and the market itself. As a result, you can usually get spreads at very favorable points or break-even points. Because ECN brokers consolidate price quotations from several market providers (banks), they generally offer clients much tighter spreads than would otherwise be available to them
  • No conflict of interest : Since an ECN broker only matche trades between traders, it cannot trade the other side of the client’s business. This eliminates any conflict of interest,
  • Trading hours: ECN brokers allow you to trade outside of the traditional trading hours providing a mechanism for those who either cannot be actively involved during market hours or for those that prefer he fexibility of 24 hour a day trading.

Best True ECN brokers for 2020

Below are our most recommended true ECN brokers. They all offer robust trading platforms, tight spreads and fast order execution.

FXTM - Best Overall ECN broker

Founded in 2011, FXTM is a well-established ECN forex broker. It is regulated by several agencies such as the Financial Conduct Authority (FCA), Cyprus Securities and Exchange Commission (CySEC), Financial Sector Conduct Authority (FSCA) and Financial Service Commission (FSC).

Register on FXTM to take advantage of its featured-filled ECN Zero account which charges no commissions. Its most appealing feature is its low minimum deposit requirement of only $5. Its traders can access over 90 forex currency pairs with a starting spread of 01.pips.

FXTM gives access to 3 different types of ECN accounts: an ECN XTM account, an ECN Zero account and an ECN MT5 account, each with different spreads or commissions. In addition, FXTM offers swap free Islamic trading accounts.

Min. Deposit: $5

Max. Leverage: 1000:1

Trading Platforms:  MetaTrader 4 and MetaTrader5

Regulation: FCA, CySEC, FSCA and FSC

Fees: aling spreads at FXTM start at 0.1 pip for a standard account and 0 pips for ECN based trading accounts. Withdrawal fee from $3 to $40 depending on your payment method, Inactivity fee of $5 per month

Our rating

  • Low minimum deposit
  • High leverage up to 1:30 for UE, up to 1:1000 for non EU
  • Spreads from 0.1 pip
  • Inactivity fee

Forex.com – Ideal for Experienced Traders

Forex.com is one of the leading forex brokers in the world. It is regulated by top financial authorities such as the US Commodity Futures Trading Commission (CFTC), the UK’s Financial Conduct Authority (FCA), Investment Industry Regulatory Organization of Canada (IIROC) and many more.

Forex.com offers a state of the art ECN platform dubbed as GTX direct. However, since it requires a minimum deposit of $10,000, its users are usually high worth individuals. Nonetheless, you will benefit from its tighter spreads.

It offers three trading platforms, including the Advanced Trading Platform, Web Trader and MetaTrader 4. Although it does not charge deposit or withdrawal fees, there is a $15 monthly fee for inactivity. Trading fees and maximum leverage will depend on the activity and the account type you are using.

Min. Deposit: $10,000

Max. Leverage: 200:1

Trading Platforms: Advanced Trading Platform, Web Trader and MetaTrader 4

Regulation: FCA, IIROC, FSA, ASIC, CFTC, CIMA

Fees: Spreads from just 1.2 pips, Inactivity fee of $15 per month

OUR RATING

  • State of the art ECN platform
  • Regulated several regulatory agencies
  • Free deposit and withdrawal
  • High minimum deposit

Pepperstone - Best ECN Trading Platforms

Launched in 2010, Pepperstone has enjoyed a remarkable growth rate and became a major player in the trading industry. It offers a wide range of trading platforms such as the MetaTrader 4, WebTrader and cTrader. Notably, it is among the few forex brokers that offer ECN trading.

Pepperstone is regarded as one of the safest brokers in the world as it is regulated by the Australian Securities and Investment Commission (ASIC) and the Financial Conduct Authority (FCA). Also, its clients’ funds are segregated in trust accounts with tier-1 banks.

To open an account on Pepperstone, you will need a minimum deposit of $200. The platform offers a leverage of up to 500:1 in ASIC jurisdiction, 30:1 in FCA jurisdiction and 50:1 in DFSA jurisdiction.

Generally, Pepperstone fees are low compared to other brokers. For instance, it does not charge a deposit fee. Fortunately, it supports a wide range of payment methods such as bank transfer, credit/debit card, PayPal, etc. Also, there is no inactivity fee and withdrawal is only charged for bank transfer.

Min. Deposit: $200

Max. Leverage: 500:1

Trading Platforms: MetaTrader 4, WebTrader and cTrader

Regulation: FCA, ASIC

Fees: Spread from 0.49pips, Withdrawal fee up to $20

  • Offers several trading platforms
  • Regulated by reputable agencies
  • Low fees involved
  • Limited educational resources

Hotforex - Best ECN Broker in Asia

In 2012, Hotforex was voted as the best broker in Asia. It was established in 2010 and has grown to become a reputable broker.

It offers six account types to cater to a wide range of traders, and its pricing is better compared to its competitors. Its ECN account only requires a minimum deposit of $50. Also, it offers super tight spreads from major liquidity providers.

Commissions start as low as $0.03 per 1K lo. In addition, Hotforex is regulated by various authorities such as FCA, CySEC, FSCA, DIFC and SFSA.

Min. Deposit:  $50

Max. Leverage:  500:1

Trading Platforms:  MetaTrader 4 and WebTrader

Regulation: FCA, CySEC, FSCA, DIFC and SFSA

Fees: Commissions start as low as $0.03 per 1K lo

  • Regulated by multiple agencies
  • Low commissions
  • Super tight spreads
  • Does not allow scalping

Admiral Markets - Best for Advanced Analysis Tools

Established in Russia, Admiral Markets later transferred to London. It is regulated by the Financial Conduct Authority (FCA) and the Australian Securities and Investment Commission (ASIC).

It offers various account types, including the ZeroMT4 account, which is based on the ECN technology. It is designed to facilitate both high frequency and high volume traders.

The spreads are as low as 0pips, and orders are sourced from leading liquidity providers. However, the minimum deposit is on the more upper side at £1,000 or its currency equivalent.

Min. Deposit:  £1,000 or its currency equivalent

Max. Leverage:  500:1

Trading Platforms:  MetaTrader 4 and MetaTrader 5

Regulation: FCA, ASIC

Fees: Spread from 0pips and commission of up to $3 per lot, Inactivity fee of £10 per month

  • Funds are segregated in top-tier banks
  • Regulated platform
  • Low spreads
  • Charges inactivity fee

XM - Offers over 56 currency pairs

XM is a well-established broker and a major player in the online trading industry. It is formally regulated in Australia by the Australian Securities and Investment Commission (ASIC) and the UK by Financial Conduct Authority (FCA). Also, it has secured regulations in other countries such as Germany, Spain, Italy, France, Sweden, etc.

It offers a spread of 1.7pips in the standard account. However, when it comes to the ECN-styled account, the spreads fall to only 0.8pips. Also, on the benchmark EUR/USD currency, there is a commission of only 0.0035%, which is one of the best in the trading industry.

On the ECN account, you will be able to trade over 56 currency pairs as well as silver and gold. The good part is that it offers flexible leverage of up to 500:1. Also, it offers both the MetaTrader 4 and MetaTrader 5 trading platforms.

Min. Deposit:  $100

Max. Leverage:  500:1

Trading Platforms:  MetaTrader4 and MetaTrader 5

Regulation: FCA, CySEC, ASIC

Fees: Spread from 0.8pips, Inactivity fee of $5 per month, Bank withdrawal fee up to $15

  • Competitive spreads
  • Wide range of assets to trade
  • Flexible leverage
  • Inactivity fee

What to look for when choosing an ECN broker

Due to the increased popularity of ECN trading, more brokers are claiming to be ECN brokers or brokers that offer ECN-type accounts to ride on the wave, but not all are true ECN brokers. Below we explain what to look for in a true ECN broker.

  • Credentials: Ensure that they are regulated in your country of residence and ensure they have a reputable platform with favourable reviews
  • Automatic, quick process: A true ECN broker is a type of broker that put your trade orders in a network where it is automatically matched with a similar order of the same amount and volume. The whole process of matching orders is automatic and only takes a few seconds. If a broker is claiming to offer ECN trading and does not use this method of order execution, it is almost certainly not a real ECN broker.
  • Execution speed: Make sure to check out the order execution speed. If it is slow, then it is not a real ECN broker.
  • Transparency : ECN brokers source their orders from tier-1 liquidity providers. Fake ECN brokers usually do not indicate which liquidity provider they are using.
  • Variable spreads: Ensure that the broker is offering variable spreads as this requirement must be adhered to at all times. If you encounter a broker that is offering established spreads, it’s unlikely to be a true ECN operator.

Conclusion

Due to the increasing number of available ECN brokers, it is difficult to determine which one best suits your trading needs.

When choosing an ECN broker, consider your personal circumstances and trading needs as your financial circumstances may dictate the type of broker you choose. Also, be sure to verify their credentials and that the broker is meeting the requirements of a true ECN forex broker. Also, consider reviewing their charting tools and educational material and ensure the broker offers the appropriate research tools you require.

Finally, remember that all trading carries risk, and do not risk more than you can afford to lose.

FXTM: Best ECN Broker for 2020

Our rating

  • FCA, CySEC, FSCA, IFSC, FSC regulated
  • MT4 and MT5 Platforms
  • $5 min deposit

FAQs

Is there a difference between a regular forex account and an ECN account?

The only difference between an ECN and a standard forex trading account is the order execution method. In ECN trading, clients act as counterparties while in standard accounts, the broker is the counterparty.

Which broker type is better : an ECN or an STP broker?

ECN accounts are typically considered more favorable for the trader as they tend to offer tighter spreads.

How much capital do I need to open an ECN trading account?

You can create an ECN trading account by depositing between $5 to $200. You can try either Hotforex, XM, FXTM or Pepperstone.

Remember, all trading carries risk. Past performance is no guarantee of future results.
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Janica Sherine is an expert writer who specializes in financial technology and cryptocurrency. At her young age, she was already able to work with founders who graduated from Harvard, tech startups funded by Y-Combinator, CEOs of multi-million dollar blockchain companies, investment companies in London and many more.

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