If you’re considering signing up with a Forex broker and possibly you came across the word “ECN Forex broker”, then you’re on the right page. Before we get to the nitty-gritty of the Best ECN Forex Broker in 2022, let’s get to the basics.
What Does an ECN Mean?
ECN stands for Electronic Communication Network. It is a computerized system that automatically matches a buyer with a seller of a financial instrument, e.g. stocks and currencies.
The ECN is a modern way of matching client’s order against each other in real-time through a broker’s trading platform at a small commission or fee.
The ECN Forex broker’s network is instant and enables traders execute orders faster and more precisely.
The broker’s job is to provide the network for clients to access the marketplace themselves without the broker’s interference.
In time past, orders are passed through a trading desk. The broker then matches these orders manually, a buyer to a seller.
Going through a dealing desk these days result to delays and there are chances that a broker could influence some trades to his benefit thereby hurting clients unknowingly.
It is in the best interest of an ECN broker to provide an enabling platform for its clients to conveniently trade before they are entitled to earn a commission.
They know this and they strive to provide the best service possible because a bad review on their platform will lead to very high bounce rates.
With this, private traders, institutional traders, banks and other fund managers prefer ECN Forex brokers and trade strictly on their platform.
You should know what makes ECN Forex brokers different from other type of brokers. Let’s examine the Pros and Cons of an Electronic communication network Forex broker.
The Pros of an ECN Forex broker
Instant Execution
Gone are the days of the “Pit” when trades are matched manually in a usually rowdy shouting session.
Technology has changed all that. Trades can now be matched with speed and accuracy at the comfort of your home through a mobile app or desktop computer provided by the ECN Forex broker.
Lower Fees
Deposits are free with most ECN brokers.
Transaction costs are often charged mainly on withdrawals and fees largely depends on the method and region. Credit cards, PayPal, PayCo, Skrill. Generally, these costs range from 0.5% – 2% which is applied on the size of your withdrawal.
For instance, withdrawal fees on eToro is different. Since Feb 2020, all withdrawals on eToro was reduced from $25 to $5 and 0% commission provided all withdrawals are in USD. Conversion fees will apply for other currencies. This is great for eToro users with an up to 80% savings on likely fees.
On InstaForex, withdrawal fees a lot different. You get charged 2.5% + 3.50 EUR/USD for VISA/MasterCard withdrawals that would take 1-6 days to receive credit and 0.5% if you’re withdrawal via Bitcoin that would take 1 – 7 days.
The rule of thumb is, the longer the time it takes to get credit, the lower the fees.
It’s certain to get a better deal regarding fees with ECN brokers out there. Generally, these fees are low and also very competitive among ECN Forex brokers.
Privacy and Anonymity
Since the marketplace is free for anyone to access provided you have signed up with an ECN broker, you now have control over your trades and can determine largely the outcome of your trades.
The dealing desks and manual matching days are over. No bias, interference or manipulations.
Floating Spread
A true ECN Forex broker should have no control over the spread of transactions. They do not control the bids of a trader.
Before you proceed, it’s important to understand what a fixed and a floating spread means.
A Spread is the difference between the Ask and Bid price.
Fixed spread – the spread remains constant and does not change irrespective of rapid changes in market prices. This helps traders plan ahead and strategize when all other variable changes except spread.
Floating spread – The opposite of fixed spread, floating spread fluctuates as market prices moves. This of course could be seen a bigger opportunity for more profit for a trader if applied cautiously.
If you cannot find this information displayed on their website, contact your ECN Forex broker to know if they offer a fixed or floating spread. Some ECNs’ offer both depending on the kind of account you subscribe for.
For instance, FXTM broker offers a floating spread on their Standard account and a fixed spread on the Cent account. So you can have a combination of both with a single broker.
Healthy Competition
The Electronic communications network has eliminated monopoly of the pit where brokers meet physically to trade for themselves and for their clients.
With trading terminals and easy accessibility to trading software via mobile apps and desktop, clients now have an array of ECN brokers to choose from.
The Cons of an ECN Forex broker
With lots of pressure on traders and the demand for better trading experience, ECN Forex brokers have an enormous task to constantly improve on existing infrastructure.
There are no major cons or downsides to the ECN, however, it is worth mentioning that most ECN brokers charge a fixed commission per trade and it’s something you should find out before you open an account.
How to Choose an ECN Broker
There a few things to lookout for, though not so many. A solid reputation is everything and an ECN broker will do all within its power to protect its reputation.
The Forex business thrives on reputation which is hinged on excellent trading/user experience, funding and withdrawal methods, minimum account opening balance, spread and customer support.
In addition to the above mentioned attributes of a true ECN broker, there are other passive but important questions to ask an ECN broker before you sign up with them.
These are other features to look out for, you need to clarify from your broker about these features:
Fixed or Floating Spread
As mentioned earlier, a true ECN broker should offer a floating or variable spread which allows a trader benefit from a variety of market conditions.
Generally, the EUR/USD have a spread of 1- 4 pips for most ECN brokers at a normal trading session. In volatile trading -sessions, pips could get to as high as 7-10 pips.
A fixed spread remains the same irrespective of market conditions.
Dealing Desk
True ECN brokers generally do not use dealing desks these days. A dealing desk enables matching of orders (bids and spreads) which could at a large extent influence the outcome of a trade.
Manually matching of an order by dealing desk staff could be prone to bias thereby hurting the trader on the other end.
A true ECN broker mainly provides the platform and marketplace for a buyer and seller at a fee to the broker.
It’s in the best interest of the broker that live trades happen in real-time with no technical hitches.
This is how they make their brokerage fee from the tiniest transaction which then translates into lots of money down the road.
Slippage
Slippage is the difference between the expected stop price of a trade and the actual price of the trade.
Slippage is prevalent during high market volatility as price rise and drop sharply. The trader’s stop price may not to be exact as intended in real-time.
Slippage could also occur as a result of a large volume order without a corresponding request on the other end to fill it.
These underlining features are usually overlooked but it means a lot in terms of costs in the long-term.
Tips for New Forex Traders
New traders mostly look at minimum account opening deposit as a yardstick to evaluate a broker which in our opinion is not enough.
Once the minimum deposit is good and there is a bonus credit attached to a sign up or actually deposit on a live account then, most new traders jump in.
The above listed factors are important to consider asides from an allowable minimum account opening balance and some bonus credit attached to it.
If you are considering signing up with an ECN Forex broker, the under listed are a selection of the very best out there.
We have review tons of ECN Forex brokers and are going to make this easy for you.
See the list below…
AvaTrade
This ECN Forex broker tops our list.
AvaTrade’s user-oriented perspective, combined with solid financial backing has made it outstanding.
AvaTrade has an optimal trading environment for every level of trader. AvaTrade’s wide scope includes a full spectrum of trading instruments including Forex, stocks, commodities and indices.
Whether you are an experienced trader or a novice, AvaTrade’s adaptable trading platforms and services provide you with the right balance of simplicity and sophistication. It’s no wonder that AvaTrade earned nine industry awards since 2009.
Quick Facts
Assets: Cryptocurrency, Currencies, Commodities & Stocks
Platforms: MT4, MT5, AvaOptions, DupliTrade, ZuluTrade
Minimum Opening Balance: $100 (Debit/Credit Cards), $500 (Wired transfers)
Leverage: 1:400
Spread: 0.6 Pips
Regulations: BVI, ASIC, FSCA, FSA, ADGM.
Bonus: N/A
U.S. Clients: No
FBS
FBS is an international broker with a broad presence in over 190 countries of the world. Its technologically advanced platform provides exceptional trading services to 15,000,000 traders and 410,000 partners devoted to propelling the brand.
FBS has a reputation for being a customer-centric organization with an unswerving support system and goal to satisfy its clients.
FBS broker has a positive reputation for its easy-to-use platform which allows it have a high trader retention rate. 48% of its traders say “trading with FBS has been their main source of income”. These remarkable testimonials of course keeps 80% of its traders for life.
Users stick with FBS due to its commitment in investors training and development, periodic loyalty & reward programs, seminars, webinars and a variety of resource materials available to its diverse clients.
Quick Facts
Assets: Cryptocurrency, Currencies, Commodities & Big U.S. Company stocks
Platforms: MT4, MT5, WEB, MT5 for Android, FBS TRADER
Minimum Opening Balance: Cent $1, Micro $5, ECN $1000
Leverage: 1:50
Spread: 0.2 Pips
Regulations: IFSC.
Bonus: 100% on credit
U.S. Clients: No
InstaForex
InstaForex is continuously pushing the limits in trading platform modernization. This enhanced its reputation having earned over 30 financial awards, making it a “go-to” choice for forex traders and investors.
With more than 30 financial analysts on its team, you can instantly find out about trends in the currency market round the clock.
InstaForex offers over 300+ trading instruments including cryptocurrencies, commodities, indices, oil and currencies.
Instaforex has one of the most flexible account opening packages with a 30%- 100% bonus credit on all deposits.
InstaForex brand is a registered trademark of InstaForex Group and it is well regulated. Instaforex stands for – Instant Forex Trading, Head Quarter – Russia.
Quick Facts
Assets: Cryptocurrencies, Currencies, Commodities & Stocks
Platforms: MT4, MT5, InstaBinary, WebIFX
Minimum Opening Balance: $1
Leverage: 1:30, 1:1000
Spread: 0.2 Pips
Regulations: BVI FSC, CySEC.
Bonus: 30% – 100% on deposit
U.S. Clients: No
FXTM
Forex Time (FXTM) has been on the trading and investment scene since 2011 with over 2 million people trading financial instruments on its platform.
As an award-winning broker with tailormade solutions for every client, FXTM has broadened its reach to cater for every unique trading need.
FXTM’s dynamic innovation in technology gives it clients one of the best trading platforms online offering remarkable order execution speed.
Trade over 250 financial instruments on FXTM across 7 unique accounts types offering diverse benefits.
FXTM has one thing going for it. Its pool of strategy managers mainly from Asia and the UK allow for brilliant copy trading. If trading passively is your thing, then FXTM is a broker you might want to consider.
Quick Facts
Assets: Cryptocurrency, Currencies, Indices, Commodities & Stocks
Platforms: MT4, MT5, WebTrader, FXTM Mobile Trader
Minimum Opening Balance: $10
Leverage: 1:1000, Fixed, 1:2000 Floating.
Spread: From 0.13 – 1.33 Pips
Regulations: FSCA, FCA UK, CySEC.
Bonus: N/A
U.S. Clients: No
IQ Option
IQ Option was founded in 2013 and quickly became one of the world’s fastest growing online trading platforms.
With a minimum deposit of $10, you can start trading on IQ Option making it very accessible to all classes of traders. With an easy deposit and withdrawal process, funds are credited to your account in 24 hours.
IQ Option offers 3 major trading account types for every class of trader.
- Demo account
- Live account
- VIP account
Live account offers over 300+ assets for trading with a fully functional MT4 platform for an ultimate trading experience.
Deposits and withdrawals are processed within minutes of execution to your e-wallet and then to your bank account with your preferred payment method.
Live accounts are privy to weekly tournaments and have access to live chat support, real time.
Quick Facts
Asset: Cryptocurrency, Currencies, Binary, Commodities & Stocks
Platforms: Proprietary web, Mobile trading
Minimum Opening Balance: $10
Leverage: 1:300 Currencies, Stocks: 1:500
Spread: 0.5 Pips
Regulations: CySEC
Bonus: N/A
U.S. Clients: No
eToro
Our independent assessment of eToro revealed the uniqueness of the organisation and what makes them the world’s leading social trading platform. If you’re thinking of social trading, think of eToro.
eToro offers both investing in stocks and cryptocurrencies, as well as trading CFD with different underlying assets.
eToro is multi-regulated in Tier 1&2 countries therefore solidifying its reputation and customers confidence in the financial markets space.
6 digital currencies are traded on eToro broadening its scope and meeting the needs of a variety of new and expert traders.
eToro’s platform is open to trade a variety of financial assets across all classes of accounts.
With its strong social trading network which is #1 in the world, new and experienced traders can explore these currencies with minimal risks through eToro’s Copy-trading mechanism.
Quick Facts
Assets: Cryptocurrency, Currencies, Indices & Stocks
Platforms: WebTrading and MobileTrading
Minimum Opening Balance: $200
Leverage: 30:1 Major currency pairs, 2:1 Cryptocurrency
Spread: 0.7 Pips
Regulations: ASIC, FCA, CySEC.
Bonus: $50
U.S. Clients: Yes
XM
XM Global Limited has a very impressive resume, outshining some of the industry pioneers. Since it was founded in 2009, XM has grown to a large and well-established international investment firm and has become a true industry leader.
XM is currently built of more than 450 professionals with long-year experience in the financial industry.
One unique quality that keeps XM going is the unveiling of the faces of brilliant leaders behind the company. The management makes effort to connect with traders all over the world having visited over 120 countries.
From the series of live webinars, trainings and other educational materials, there is no doubt that XM have hosted hundreds of seminars around the world to educate traders, enabling them to make better trading decisions.
To continuously boost commitment of traders, they now organize daily live webinars for new and professional traders.
XM has 6 Asset Classes – 16 Trading Platforms – Over 1000 Instruments.
XM Global offers 5 types of trading accounts with various minimum deposit requirements.
Quick Facts
Assets: Cryptocurrency, Currencies, Indices & Stocks
Platforms: MT4, MT5 & Mobile App
Minimum Opening Balance: $5
Leverage: 888:1
Spread: 1.0 Pips
Regulations: AFSL, DFSA, IFSC, FRN, CySEC.
Bonus: 50% deposit bonus up to $500
U.S. Clients: No