ECN account - what is it?

In trading in financial markets, all transactions occur through client trading accounts. They are different and differ in their characteristics. Brokerage companies offer traders and investors to open an account, or even several that allow using all trading opportunities with maximum benefits.

Accounts are distinguished by the volume of deposit funds, as well as by the terms. For Forex trading, you can choose a trading option such as VIP, Standard, Micro, and PAMM for investment. Surely many users have heard about the ECN account. What is it and how to open it, the reader will learn from this article. And also it will consider the positive and negative characteristics of this type of account.

What is an ECN account?

ECN stands for Electronic Communication Network or Electronic Communication Network. With its help, all trading orders that traders put up for the purchase or sale of a selected trading asset are displayed on world exchanges and the OTC foreign exchange market "Forex".

It does not matter what volumes have positions, the main thing is that transactions do not take place inside a brokerage company, as in many forex kitchens where there is no such type of account. In ECN transactions, absolutely all orders from individual traders, various organizations, firms, companies, banks and funds are taken into account.

Unfortunately, many beginners do not know or are not well informed about the ECN account and what they do not understand. This, in turn, leads to the fact that they do not use them in trade and, as a result, lose some of the advantages, which will be described below.

Value in trading

How does an ECN account work? In financial markets, all transactions occur due to the fact that there is liquidity. That is, for each buyer with a certain position volume for any currency pair, there is a seller with the same amount of a trading asset. As a result, a deal is made between them. Liquidity providers can be:

1. Brokerage companies.
2. ECN
3. Large banks and funds.

All of them form in the financial markets the level of supply and demand for any type of trading asset. Let’s say an individual trader opened an order through a brokerage company where he has an ECN trading account with a volume of 3 lots on the EUR / USD currency pair. Another client placed the opposite order with the same volume. As a result, both of these applications were launched to the market and processed in the ECN service. And in the future, depending on the direction of the quotes, one of the clients made a profit on the transaction, and the other, respectively, turned out to be in the red, that is, at a loss, since he chose the wrong solution to open a position.

Account Parameters

In trading, naturally, due to the fault of brokers or due to technical malfunctions of the trading platforms that they represent, the most unpleasant circumstances for customers. For example, such as slippage, that is, requotes that often occur on regular trading accounts, and are completely excluded in ECN technology.

Before choosing any type of trading conditions for a deposit, you need to familiarize yourself with all the options that a brokerage company provides. Therefore, it is very important to know the parameters of the ECN account, what kind of technology it is and what advantages it gives to the trader.

Features and comparative characteristics between accounts:

1. When using ECN-technologies, instant execution of transactions occurs, on simple accounts there are no such opportunities.
2. There is no slippage and requotes in ECN when opening a position, and customers can place an order at a better price. On simple trading accounts, they occur and often.
3. When choosing the usual conditions, there can be no guarantee that the transaction will be transferred to the interbank bank and most often they occur inside the brokerage company. At ECN, the broker simply does not have the opportunity to trade against the client.
4. Differences in liquidity. ECN has a large number of suppliers; when opening a regular account, only a brokerage company.

ECN Account at Alpari

Not every broker can get the most favorable trading conditions. For greater clarity and understanding of this technology, you can consider ECN-accounts in Alpari. This famous brand provides its customers with the most profitable trading opportunities.

ECN in Alpari for Forex:

1. ECN mt4 - provides traders with opportunities for transactions on the MetaTrader 4 trading platform.
2. Account ECN pro ndd.
3. ECN mt5 is designed for an improved version of the MetaTrader 5 trading platform, which has wider functionality.

In addition to Alpari, there are other brokers with ECN accounts:

• "BCS Forex";
• AMarkets
• RoboForex;
• FXTM
• Exness and other companies.

To choose a brokerage organization for yourself, you need not only to look at the ratings, but also to make sure of its reliability.

ECN Features

How to improve trading conditions in trading using ECN technologies? As an example, there are several parameters:

1. Brokerage companies provide traders with access to specialized trading floors with ECN benefits. For example, such as LavaFX, IntegralFX, 360T, Currenex. They are designed for traders and investors using the latest technologies, have wide functionality and a large number of a wide variety of tools and the ability to use a significant number of trading assets in trading.
2. Only a Forex trading ECN account provides such a tool as a “glass of prices”. It is used to analyze the exposed positions and helps traders to more accurately predict the market. In it you can see all open orders of small and large participants. On ordinary accounts on the trading platform, this tool is not provided.
3. You can also trade inside the spread, that is, open a deal. Suppose a speculator chose the EUR / USD asset for work. The spread for this trading pair is two points. If at the time of the transaction quotes were 1.2525 / 1.2527, then the client, when opening a pending Buy Limit order, can set parameters at the most favorable prices - 1.2526, ignoring the spread.

And also all ECN-clients of brokers can see reports both before execution, and after closing the order, and who is the counterparty to transactions.

Account Terms

In almost all brokerage companies, trading conditions for ECN are the same. Of course, in some dealing centers there may be some peculiarities, but they are insignificant.

Before choosing trading conditions for opening a deposit, you need to know that an ECN account is:

• always floating spread with minimum values ​​from 0.2 pips;
• the size of the lot volume can be selected from 0.01 to several whole units or even tens;
• the minimum deposit to enter the market and open an ECN account is $ 200, which is relatively small even compared to normal trading conditions.

Benefits

The main advantage of an ECN type trading account is that brokerage companies cannot influence the outcome of a transaction opened by a trader. This is due to the fact that the application is immediately withdrawn directly to the interbank, that is, to liquidity providers.

Among the positive characteristics, the following parameters can be distinguished:

1. Direct conclusion of the transaction to the interbank, as mentioned above.
2. High liquidity, which is caused by a large number of counterparties.
3. All transactions occur without requotes and slippage, which means that they open at a better price and are carried out instantly.
4. Due to the absence in ECN of trading operations on “non-market” quotes that are recognized as invalid, a brokerage company or a dealing center where a client has an account cannot cancel a previously placed, that is, a previously opened position.
5. Trading inside the spread at more favorable quotes.
6. No broker organization can interfere in the trading of a trader and, moreover, limit his work. Therefore, speculators have the opportunity to open deals with any duration.
7. If desired, traders can use scalping techniques in trading, for which only a few seconds or minutes are enough, but the transaction will be counted and the profit on it will be credited to the client’s trading account.

ECN Account Disadvantages

Among the negative characteristics, there are only a couple of points.

1. The complexity of using robots and advisers in automated trading. This is due to the floating value of the trading spread. All automated programs have predefined algorithms with constant values ​​in their settings. Therefore, when the exact value of the spread is not known, robots constantly have to control, which makes trading somewhat difficult.
2. Some brokerage companies do not have the ability to trade CFDs on stocks and assets.

According to traders, ECN accounts no longer have any drawbacks and can be fully used in their work.

Conclusion

ECN accounts have more advantages when trading Forex than disadvantages. They open up great opportunities for traders and allow them to increase the size of the likely profitability, since the market can be entered at more favorable prices. And also, importantly, this type of account has high liquidity and is fully protected from any interventions by brokerage companies.