Best ECN Brokers

The Ultimate Guide to

Choosing a Broker
For ECN

Not sure which broker is right for you?

Don’t worry - we’ve got you covered. In this guide, you’ll learn:

• Why ThinkMarkets scored high for ecn (Jump to section)
• Who ThinkMarkets is (and isn’t) suitable for (Jump to section)
• An in-depth feature comparison of the top #3 brokers (Jump to section)
• An overview on ecn (Jump to section)

Ready?

Part 1

Why Choose ThinkMarkets
For ECN?

ThinkMarkets scored best in our review of the top brokers for ecn, which takes into account 120+ factors across eight categories. Here are some areas where ThinkMarkets scored highly in:

ThinkMarkets offers five ways to trade: Forex, CFDs, Spread Betting, Autotrade, Autochartist. If you wanted to trade EURUSD through copy trading or other means, skip to part two.

The two most important categories in our rating system are the cost of trading and the broker’s trust score. To calculate a broker’s trust score, we take into account a range of factors, including their regulation history, years in business, liquidity provider etc.

ThinkMarkets have a B trust score, which is good. This is largely down to them being regulated by Financial Conduct Authority and ASiC, segregating client funds, being established for over 7 years, and much more. For comparison:

Trust Score comparsion

The second thing we look for is the competitiveness of the spreads, and what fees they charge. We've compared these in detail in part three of this guide.

Part 2

Who ThinkMarkets is (& Isn’t)
Suitable For

As mentioned, ThinkMarkets allows you to trade in five ways: Forex, CFDs, Spread Betting, Autotrade, Autochartist.

To trade with ThinkMarkets, you'll need a minimum deposit of $250. ThinkMarkets offers a range of different account types for different traders including a mini account, vip account.

ThinkMarkets is also suitable for traders looking to trade with an ECN broker. ECN trading allows the trader to get access to the actual pricing of instruments as set by the banks and liquidity providers, rather than relying on the broker to set the price. To open an ECN account with ThinkMarkets you will need a minimum deposit of $2000.

Finally, ThinkMarkets isn't available in the following countries: AF, Yugoslavia, AO, GM, NG, AW, GH, KR, BY, GN, BO, GN, PK, BW, HT, PG, IR, PN Island, Burma MM, IQ, RW, KH, , SN, CF, JP, Sierra, Leone, TD, KG, SO, CI , LB, SZ, CU, LS, SY, of CG, LR, TJ, DJ, LY, Tanzania, EC, Laos, TG, ER, ML, TM, ET, MN, UG, Falkland Islands, NA, US of America, FJ, NI, YE, ZW.

Part 3

A Comparison of ThinkMarkets vs. vs.

Want to see how ThinkMarkets stacks up against and ? We've compared their spreads, features, and key information below.

Spread & fee comparsion

Comparison of account & trading features

Part 4

What is ECN?

ECN stands for Electronic Communication Network. In the forex market, ECN represents a system of forex brokerage where the broker allows the traders to get access to the pricing of currencies from the liquidity providers without interference. In other words, ECN brokers provide traders with direct market access (DMA).
The ECN system is thought to be the most transparent system of forex brokerage available in the forex market, as the ECN broker allows the trader to get access to the actual pricing of currencies as set by the big banks (who function as liquidity providers), and also displays the orders of the trader in the market. This is unlike the market making system where pricing and order fulfillment is handled internally by the market maker’s dealing desk. So the ECN brokerage provides a non-dealing desk environment which allows the trader trade against other traders and the banks, and not the broker itself.

How Does ECN Work?

An ECN platform features a conglomeration of several major participants in the forex market, thus providing a significant deepening of the liquidity on currency pairs. A true ECN platform should provide traders with access to the forex interbank market.
An ECN platform enables traders’ orders to be transmitted to the trading and execution systems of several liquidity providers. The ECN process allows the client to receive the best bids and ask prices and to channel these trades without a conflict of interest between the ECN brokers and the traders.
A true ECN broker will have a deep liquidity pool filling the traders’ orders so there is no monopoly on pricing of client trades. Prices are determined principally by the participants in the interbank forex system. The ECN broker only provides a pathway for the trader to get to the interbank market and plays no role in derivation of pricing for any assets traded on the network.

The snapshot above is an illustration of how the ECN system works.
There are several liquidity providers, each providing their own bid and ask prices for currency pairs.
The trader is interested in purchasing 0.5 lots of the EUR/USD, and clicks on the BUY order for the EUR/USD on how computer system.
The order is transmitted to the ECN broker, and from the ECN broker is sent out to the liquidity provider which can provide the best bid/ask execution for the trader’s order (in this example, LP 4).

Trading on an ECN Platform

The requirements for trading on an ECN platform are more stringent than what is obtainable on a dealing desk brokerage platform. This is in terms of factors such as the cost of trading, pricing of assets, spreads payable and account capital requirements. These requirements are listed below.
The starting capital requirement to trade with ECN broker is much higher, for example, to open an ECN account with LCG, the minimum deposit is £10,000.

ECN platforms interfaces are built for professional traders and therefore require a deeper understanding of forex trading to use.

Advantages of ECN Brokers

• The system ensures 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.
• The direct market access (DMA) technology which provides access to pricing from several liquidity providers ensures that there are no re-quotes and execution at the order price is virtually guaranteed.
• 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 money the bigger the deal flow and not from winning or losing 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.

Disadvantages of 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 is only economical for larger trades and higher frequency traders as compared to market maker model of only charging a spread mark up.
• 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.
• Liquidity requirements are 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 is much higher, for example the £10,000 minimum set by LCG mentioned earlier.
• Minimum trade sizes tend be much larger and due to the commission charge when entering and exiting a position, it is not viable for smaller trades.
• To get the best prices, clients will have to meet minimum trade requirements, this is not a problem for traders who meet the certain conditions and benefit from the lower prices, for example, the lowest commission tier of $7.50/million traders need over $2 billion in forex trading volume per month with LCG.

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 superior trading conditions.