Author: Eduardo Montero
Mundo-Forex.com today we will talk about ECN brokers, a particular type of financial intermediaries that can be successfully used by different types of traders on the currency market (Forex). Which are the best brokers with ECN or STP execution? Here is our comparison table:
Go to XTB
|Depending on which type of account the client chooses, XTB broker may act as a Market Maker or offer STP execution.Website: https://www.xtb.com/|
Regulated by: FCA, CNMV, FSC
Min Deposit: 0 € / $
Trading Platforms: WebTrader + iOS App + Android App
Type of Execution: Market Maker / STP
Available Instruments: Over 2100: Forex, indices, commodities, stocks, ETFs and cryptocurrencies.
|Excellent customer support.|
(*) 77% of retail investors lose money when trading CFDs with this broker.
Go to Pepperstone
|Pepperstone offers either Straight Through Processing (STP) or No Dealing Desk (NDD) execution depending on which trading account you choose.Website: https://pepperstone.com/|
Regulated by: FCA, CySEC, ASIC, BaFin, DFSA, SCB, CMA
Min Deposit: 200 € / $
Trading Platforms: MetaTrader 4 + MetaTrader 5 + cTrader + Trading View
Type of Execution: STP / NDD
Available Instruments: More than 1200. Specialised in Forex, also offers CFDs on indices, stocks, commodities, cryptocurrencies, ETFs and currency indices.
|Low spreads and ultra-fast execution.|
(*) Between 74-89 % of retail investor accounts lose money when trading CFDs.
Go to IC Markets
|IC Markets is an ECN broker, does not serve as a counterparty to your trades.Website: https://www.icmarkets.com/|
Regulated by: CySEC, ASIC, FSA
Min Deposit: 200 € / $
Trading Platforms: MetaTrader 4 + MetaTrader 5 + cTrader
Type of Execution: ECN
Available Instruments: More than 2250: More than 60 Forex currency pairs. Also offers commodities, indices, stocks, bonds, cryptocurrencies and futures.
Go to Axi
|Axi broker provides STP execution (Standard accounts) and ECN execution (Pro accounts).Website: https://www.axi.com/|
Regulated by: FCA, ASIC, DFSA, FSA
Min Deposit: 0 € / $
Trading Platforms: MetaTrader 4
Type of Execution: STP / ECN
Available Instruments: More than 130 instruments: Forex, indices, commodities and cryptocurrencies.
Go to FP Markets
|FP Markets (as ECN broker) does not act as a counterparty for its clients' trades.Website: https://www.fpmarkets.com/|
Regulated by: CySEC, ASIC
Min Deposit: 100 € / $
Trading Platforms: MetaTrader 4 + MetaTrader 5 + IRESS + cTrader
Type of Execution: ECN
Available Instruments: More than 10,000 tradable instruments: Forex, CFDs, indices, stocks, commodities, metals, cryptocurrencies and bonds.
Go to RoboForex
|RoboForex can execute STP (non-dealing desk) or ECN (non-dealing desk) depending on which type of trading account you select.Website: https://roboforex.com/|
Regulated by: FSC
Min Deposit: 100 € / $
Trading Platforms: WebTrader + MetaTrader 4 + MetaTrader 5 + cTrader + iOS App + Android App
Type of Execution: STP / ECN
Available Instruments: Over 12,000: Forex, stock indices, ETFs, commodities, cryptocurrencies and stocks (over 8400 in R Stocks Trader account).
|First and subsequent deposit bonus up to $50,000.|
(*) Bonus not available for European clients. Check conditions on the broker's website.
Go to Exness
|This online broker may act as Market Maker or offer ECN execution, depending on which type of trading account is chosen.Website: https://www.exness.com/|
Regulated by: FCA, CySEC, FSC, FSCA, FSCA, FSC, SDL, CBCS
Min Deposit: 0 € / $
Trading Platforms: MetaTrader 4 + MetaTrader 5
Type of Execution: Market Maker / ECN
Available Instruments: Over 250 instruments including more than 100 Forex pairs, commodities, energies, stocks, indices and cryptocurrencies.
Go to FBS
|The FBS online broker offers STP or ECN order execution depending on the type of trading account used by the client.Website: https://www.fbs.com/|
Regulated by: CySEC, FSC
Min Deposit: 1 € / $
Trading Platforms: MetaTrader 4 + MetaTrader 5 + iOS App + Android App
Type of Execution: STP / ECN
Available Instruments: Over 650 assets: Forex currencies, cryptocurrencies, precious metals, energies and equities.
|100% deposit bonus doubling your deposit.|
(*) Bonuses are not available for European clients. See conditions on the FBS broker's website.
What are the advantages of the best ECN brokers? What are the disadvantages? Who would be better off working with this type of broker? Let’s see it together, in a guide that really leaves nothing to chance.
Are you ready to learn more about ECN Forex brokers? Let’s see together everything there is to know about them.
What will we talk about in this guide?
Before going into the specifics of each topic, we offer you a brief summary of all the content that you will find waiting for you in this guide:
- What are ECN brokers: to understand what Electronic Communication Network means and how it applies to both brokers and forex traders through these intermediaries;
- How ECN brokers operate compared to traditional brokers, i.e. OTC (Over the Counter) or Market Maker brokers. We will also analyse specifically what are the operational and cost differences for traders;
- Best ECN brokers for Forex: As always at Mundo-Forex.com we have tested for you all the opportunities offered by Forex brokers on the market and have selected only the best ones. You don’t have to try them all. We have already done it for you;
- Ideal strategies for choosing ECN brokers: as we will see in our guide, ECN brokers are not suitable for everyone. They have limitations (and advantages) that are best suited only to those who follow certain strategies. Yes, for many, the best brokers are ECN brokers, typically among those who do scalping trading; (see our comparison of the best brokers for scalping)
- Good reasons to choose an ECN broker, at least momentarily abandoning the broker market makers, which in some circumstances can certainly be an ideal choice, but not always;
- MetaTrader 4 and ECN brokers: because even the best software platform to trade on the Forex market has a special way to interact with ECN brokers.
We will therefore talk about all the most important aspects that concern ECN brokers, so that you can choose for yourself whether or not they are right for you.
What are ECN brokers?
Let’s start from the beginning. We will certainly have to spend a few lines to understand what ECN brokers are and why they can be important for certain categories of traders.
ECN brokers are No Dealing desk brokers in the sense that they do not create a parallel market to satisfy the open and closed positions of their clients. ECN brokers guarantee direct access to the interbank market. In order to understand the difference between an ECN broker and the most common OTC brokers (market makers), we will also have to understand how the latter work.
The OTC broker is in fact a broker that does not guarantee access to the interbank market, but that creates its own internal market, offering exchanges at set prices that can be even slightly different from the official ones on the markets.
The OTC broker is a sort of bank, against which you can go and invest: when you open a position, you are buying contracts that represent the pair you have chosen.
When you ask for the position, it will be the broker himself who will liquidate you at the prices prevailing at that time on his “sub-market”, without you actually having to find a counterparty to close it.
This category of broker is therefore a regulator of last resort, a bank against which to bet and which is always willing to exchange at prices set by him.
Generally the prices set by OTC brokers are slightly higher for buying and selling than the official ones, i.e. there is a higher spread between bid and ask or between supply and demand than the official markets.
The ECN broker, on the other hand, is not an over-the-counter broker. It merely transfers your orders to the market, acting in all respects as a mere vehicle for your intentions.
Already at this point in the guide, it should be clear that ECN brokers and OTC (or Dealing Desk / Market Maker) brokers are substantially different, although from the novice user’s side the differences may seem almost non-existent.
The fundamental points to remember are the following:
- ECN brokers do not pass orders to market makers, but interface directly with liquidity providers;
- ECN brokers only allow trading between market participants and do not invest against the client’s position;
- The spreads offered by these brokers are much lower than those offered by OTC/Market Maker brokers;
- ECN brokers to make up for tighter spreads generally charge a fixed commission for each open or closed position.
Do you want to test the advantages such as transparency,effective access to markets, the absence of desks and intermediaries that make the market?
Later in our guide today we will continue to explore the advantages and disadvantages of opening an account with an ECN broker.
The transparency offered by ECN brokers
Perhaps the most important advantage for those who want to invest through a good ECN broker is transparency. When we choose a classic broker, we are in fact betting and investing against it. We are in the same situation, to understand us, as those who play against the bank. In the long run, the banker always wins, even if they do not necessarily win against us.
However, some problems could arise in terms of transparency, since precisely who manages the sub-market, prices and spreads is the same that should then offer us neutral conditions to invest. The ASIC license is the most important for those who trade with ECN brokers
Although ESMA regulations seek to prevent this problem, you can never trust them 100% and with your eyes closed, except for OTC/MM brokers who have proven over the years to be completely reliable.
With ECN brokers there is no danger in this respect. The broker of this type in fact limits himself to pass the order to the market, without intervening, without fixing the prices nor without opening his own positions contrary to those of the client.
If the first is a bank, the second, the ECN, is to all intents and purposes only an intermediary.
There is no doubt that, on paper, one can sleep much more peacefully with a broker offering this type of service.
ECN Brokers typically offer lower spreads
The second of the advantages offered by ECN brokers is also and above all the spreads. We are talking about the distance between the purchase price and the sale price of a given Forex pair.
In the case of Market Maker brokers, they do not charge direct commissions to ensure a return, but simply offer higher spreads, pocketing the difference.
- EUR/USD is at bid/offer 1,1089 1,1091 at the time of writing. This on ECN networks and therefore on actual global quotes;
- At Market Maker brokers you are more likely to find values closer to 1.1085 and 1.01095. The difference between the actual spread and the one practiced by market makers is, in fact, pocketed by the broker.
Looking at it from this side, it may seem that ECN brokers are always cheaper. In reality this is not the case, because ECN brokers, in order to support themselves and to get their profit, add fixed commissions to each type of order.
These are two methods to apply very different commissions (and the second, perhaps, immediately clearer) and have, as we will see later in our guide, important repercussions on those who use particular trading strategies like scalping.
Are there regulated ECN brokers? Which are the best?
The question of brokers is always particularly thorny.
Don’t worry though. We have chosen for you only those brokers who can actually offer you a safe, reliable and problem-free investment environment with no scams.
As you know, if you read Mundo-Forex.com you can get started on the trade and scams that are sometimes easy to find in the Forex world.
Are ECN brokers a scam?
Absolutely not. ECN brokers only offer a different type of market access, which among other things also provides greater transparency than the broker market makers that exist in Europe.
What is certain is that we will still have to pay the utmost attention when looking for a broker who can actually support us during this type of action. There is no need to take unnecessary risks. Choose ECN brokers that are really solid and safe.
In fact, we are still in a sector where there is a lot of money circulating and where a lot of malicious people could take advantage of the popularity of the networks to try to get money out of you.
What to do then? Simple: follow newspapers and sites that you can consider as reliable as the one you are reading. Never trust brokers who contact you directly or who promise you automatic earnings through their networks.
How to recognize an ECN broker scam or not
There are some tricks that allow you to immediately discard those brokers who are actually the spearhead of articulated scams and who only aim to get rid of money.
At Mundo-Forex.com we have prepared an in-depth guide on scam brokers, which will allow you to identify directly from a list the brokers we have already identified as scammers.
If you don’t want to consult the guide, we would still point out the criteria that can help you to recognise ECN scam brokers from those who are legitimate brokers:
- The broker does not have a credible office: that is, his office is on some remote island in the Pacific, perhaps at an address where hundreds or thousands of companies are actually based. We obviously have nothing against non-European brokers, but when they lack guarantees and certifications, it is better to pay more attention;
- They offer you incredible bonuses on your first deposit. It can be 100% or even more, but you won’t be able to withdraw it until you have made several dozen trades;
- They offer systems for automatic profit: no broker can promise you this, because there are no systems that can automatically generate money for you. When they offer you robots or other similar systems, you run away!
- They insist on contacting you by telephone: it is not an orthodox way to contact potential clients. Usually, those who call all the time are not reliable brokers, but a system that focuses on very aggressive commercial strategies to get clients willing to spend thousands of usd or euros;
- They ask you to pay with increasing insistence, perhaps promising higher earnings or switching to VIP plans. When the demand for money gets too insistent, there is never anything good waiting for us.
The best ECN brokers: how to find and choose them
There are several criteria that you should take into account before choosing the right ECN broker. Later in our guide we will reveal what our choices in this specific area are.
Now we will look at what criteria you can use to identify brokers that are effective and reliable for your next transactions on the Forex market and perhaps other markets.
- Country of origin or certification: ECN brokers never or almost never operate from Europe, which can be justifiably suspicious for investors from UE. Not all non-EU countries are unreliable. In our selection you will find either brokers who operate from safe economies for investors (such as Australia or South Africa), or brokers who have international certifications that attest to their safety and reliability;
- Commissions: especially if you want to operate in scalping, the commission plan must be one of your first concerns. How much and how do you pay? Is it a lump sum or a percentage? What is the ideal order size to minimise the associated costs? Again, below you will find an overview of the best ECN brokers with the lowest commissions;
- Other assets present: those who want to differentiate the best, i.e. those who are intelligent enough to avoid betting everything on Forex, are well aware of the need to have different types of assets available to compose their portfolio. It never makes sense to choose brokers who instead offer a few Forex pairs and nothing more. Today you can also invest in shares, cryptocurrency, indices and many other securities, always from the same broker;
- Platforms offered: even in this case having a large broker can be really fundamental. In fact, choosing a broker that guarantees you access to the best software for trading (such as MetaTrader 4), means being put in a position to compete with the best;
- Customer service: in the management of orders and Forex, hardly anything goes wrong. When this happens, however, it is always better to have a good support service on your side, i.e. a customer service that can actually offer you help when you need it.
Following these criteria, we have chosen the best ECN brokers for you. Brokers that we have personally tested and who are able to offer you only the best in terms of ECN trading.
Which brokers are we referring to? These are the ones you can find in the table at the top of this page.