Best ECN Forex Brokers
May 09, 2022
Last modified May 10, 2022
The Electronic Communication Network (ECN) method of executing trades is one of the most transparent methods of trading available to retail traders. This is because ECN brokers allow the trader to get access to the actual pricing of currencies as set by the big banks (who function as liquidity providers), while also displaying the orders of the trader in the market.
This is in contrast to the market making system where pricing and order fulfilment is handled internally by the market maker’s dealing desk. So the ECN brokerage provides a non-dealing desk environment which allows the trader to trade against other traders and the banks, and not the broker itself.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 65% and 82% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Best ECN Forex Brokers
Here are the best ECN forex brokers.
- IG - 9.7/10 Overall
- Saxo Bank - 9.5/10 Overall
- CMC Markets - 9.4/10 Overall
- Interactive Brokers - 9.2/10 Overall
- TD Ameritrade - 8.9/10 Overall
- FOREX.com - 8.7/10 Overall
- XTB - 8.7/10 Overall
- City Index - 8.7/10 Overall
- Swissquote - 8.5/10 Overall
Trust Score
Highly Trusted
Cost & Fundingexpand_moreexpand_less
| Average Spread EUR/USD - Standard | 0.828 (September 2021) |
| All-in Cost EUR/USD - Active | 0.365 (May 2020) |
| PayPal (Deposit/Withdraw) | Yes |
| Skrill (Deposit/Withdraw) | No |
| Visa/Mastercard (Credit/Debit) | Yes |
Trust Score
Highly Trusted
Cost & Fundingexpand_moreexpand_less
| Average Spread EUR/USD - Standard | 0.8 (August 2020) |
| All-in Cost EUR/USD - Active | 0.6 (August 2020) |
| PayPal (Deposit/Withdraw) | No |
| Skrill (Deposit/Withdraw) | No |
| Visa/Mastercard (Credit/Debit) | Yes |
Trust Score
Highly Trusted
Cost & Fundingexpand_moreexpand_less
| Average Spread EUR/USD - Standard | 0.73 (August 2021) |
| All-in Cost EUR/USD - Active | N/A |
| PayPal (Deposit/Withdraw) | Yes |
| Skrill (Deposit/Withdraw) | No |
| Visa/Mastercard (Credit/Debit) | Yes |
Trust Score
Highly Trusted
Cost & Fundingexpand_moreexpand_less
| Average Spread EUR/USD - Standard | 0.6 (From 09/25/21 - 10/02/21) |
| All-in Cost EUR/USD - Active | 0.6 (From 09/25/21 - 10/02/21) |
| PayPal (Deposit/Withdraw) | No |
| Skrill (Deposit/Withdraw) | No |
| Visa/Mastercard (Credit/Debit) | No |
Trust Score
Highly Trusted
Cost & Fundingexpand_moreexpand_less
| Average Spread EUR/USD - Standard | 1.26 pips (August 2021) |
| All-in Cost EUR/USD - Active | 1.26 pips (August 2021) |
| PayPal (Deposit/Withdraw) | No |
| Skrill (Deposit/Withdraw) | No |
| Visa/Mastercard (Credit/Debit) | No |
Trust Score
Highly Trusted
Cost & Fundingexpand_moreexpand_less
| Average Spread EUR/USD - Standard | 1.1 (US August 2021) |
| All-in Cost EUR/USD - Active | 1.1 (US August 2021) |
| PayPal (Deposit/Withdraw) | Yes |
| Skrill (Deposit/Withdraw) | No |
| Visa/Mastercard (Credit/Debit) | Yes |
Trust Score
Highly Trusted
Cost & Fundingexpand_moreexpand_less
| Average Spread EUR/USD - Standard | 0.9 (Q3 2021) |
| All-in Cost EUR/USD - Active | 0.9 (Q3 2021) |
| PayPal (Deposit/Withdraw) | Yes |
| Skrill (Deposit/Withdraw) | Yes |
| Visa/Mastercard (Credit/Debit) | Yes |
Trust Score
Highly Trusted
Cost & Fundingexpand_moreexpand_less
| Average Spread EUR/USD - Standard | 1.1 (August 2021) |
| All-in Cost EUR/USD - Active | 1.1 (August 2021) |
| PayPal (Deposit/Withdraw) | Yes |
| Skrill (Deposit/Withdraw) | No |
| Visa/Mastercard (Credit/Debit) | Yes |
Trust Score
Highly Trusted
Cost & Fundingexpand_moreexpand_less
| Average Spread EUR/USD - Standard | -1 |
| All-in Cost EUR/USD - Active | -1 |
| PayPal (Deposit/Withdraw) | Yes |
| Skrill (Deposit/Withdraw) | Yes |
| Visa/Mastercard (Credit/Debit) | Yes |
Advantages of ECN Brokers
The ECN system ensures the full transparency of pricing and trade executions since everything is fed from the liquidity providers to the trader (pricing and trade execution) and from the trader back to the liquidity providers (trade orders), without any interference from the broker.
In addition, the direct market access (DMA) technology which provides access to pricing from several liquidity providers ensures that there are no re-quotes and execution as the order price is virtually guaranteed.
Some of the further advantages of ECN Brokers are:
- Traders have a choice of what bid and ask prices to use for their orders, since the pricing is being provided by not just one, but several liquidity providers.
- All trading strategies including scalping are accepted on ECN platforms because ECN brokers make more money the bigger the deal flow and not from winning or losing the trades of customers.
- ECN brokers are able to fill larger orders as trades are routed to several liquidity providers and not just a single buyer/seller.
- By having access to the Order Book, it is possible for traders on the ECN platform to visualize the bids and ask prices at which other market participants are trading. This will provide some idea as to where the order flows are going and provide some insight into the future direction of the market for a currency pair.
Challenges of Using an ECN Brokers
One factor that traders have to contend with is the cost of ECN trading. ECN brokers will generally charge a commission on every trade placed and it is only economical for larger trades and higher frequency traders as compared to the market maker model of only charging a spread markup.
Liquidity requirements are also high with ECN trading since the trader is dealing directly with the liquidity providers. Unlike the market maker model where the market makers provide liquidity intervention on behalf of traders, the responsibility of meeting the liquidity requirements in the ECN model rests solely on the trader. As such, the account opening capital requirement for an ECN account can be much higher.
Some of the other challenges facing ECB Brokers include:
- Traders have to contend with variable spreads (spreads can widen in an instant when volatility is high) and also have to pay commissions for trade entry and trade exit.
- Minimum trade sizes tend to be much larger and due to the commission charge when entering and exiting a position, it is not as viable for smaller trades.
- To get the best prices, clients will have to meet minimum trade requirements. This is generally not a problem for traders who meet certain conditions and benefit from the lower prices.
ECN Brokers Conclusion
There are several brokers that provide both market making and ECN trading models. There are brokers that are exclusively ECN brokers, and others which work exclusively as dealing desk market makers.
As a general rule, ECN brokers are suitable for traders who can meet the capital requirements and want a trading platform with generally superior trading conditions.
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Forex Risk Disclaimer
There is a very high degree of risk involved in trading securities. With respect to margin-based foreign exchange trading, off-exchange derivatives, and cryptocurrencies, there is considerable exposure to risk, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or related instrument. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable, or that they will not result in losses. Learn more.
About the Author
Marcus Taylor
BrokerNotes was founded in 2014 by Marcus Taylor, founder and CEO of Venture Harbor, a venture studio in Oxford that develops innovative online tools & technology across a range of sectors.
