Best ECN Brokers
The technology behind true ECN brokers allows for faster executions and tighter spreads with higher leverage and greater transparency. Here we list the best ECN brokers in the world 2024 and also explain how ECN brokers work, their benefits and drawbacks and how to get started.
Top 10 ECN Brokers
We have reviewed 265 brokers and these are the 10 best ECN brokers:
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1
IC Markets
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
$2000.01 Lots1:30 (ASIC & CySEC), 1:500 (FSA), 1:1000 (Global)ASIC, CySEC, FSA, CMACFDs, Forex, Stocks, Indices, Commodities, Bonds, Futures, CryptoMT4, MT5, cTrader, TradingView, TradingCentral, DupliTradePayPal, Skrill, Neteller, Visa, UnionPay, Wire Transfer, Rapid Transfer, Mastercard, POLi, BPAY, Credit Card, Klarna, Swift, SafeChargeUSD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD -
2
IC Trading
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
$2000.01 Lots1:500FSCCFDs, Forex, Stocks, Indices, Commodities, Bonds, Cryptos, FuturesMT4, MT5, cTrader, AutoChartist, TradingCentralPayPal, Neteller, Mastercard, Visa, Wire Transfer, Debit Card, Credit CardUSD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD -
3
Exness
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
$100.01 Lots1:UnlimitedCySEC, FCA, FSCA, CMA, FSA, CBCS, BVIFSC, FSCCFDs, Forex, Stocks, Indices, Commodities, CryptoExness Trade App, Exness Terminal, MT4, MT5, TradingCentralWire Transfer, Credit Card, Visa, Mastercard, Bitcoin Payments, Boleto, Airtel, Debit Card, Neteller, Skrill, Perfect Money, Sticpay, AstroPay, Cashu, FasaPay, WebMoney, M-PesaUSD, EUR, GBP, CAD, AUD, NZD, INR, JPY, ZAR, MYR, IDR, DKK, CHF, HKD, SGD, AED, SAR, HUF, BRL, NGN, THB, VND, UAH, KWD, QAR, KRW, MXN, KES, CNY -
4
PepperstoneCFDs and FX are complex instruments and come with a high risk of losing money rapidly due to leverage. of retail investor accounts lose money when trading CFDs.
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
$00.01 Lots1:30 (Retail), 1:500 (Pro)FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCBCFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto, Spread BettingMT4, MT5, cTrader, TradingView, AutoChartist, DupliTradeVisa, Mastercard, Credit Card, Debit Card, PayPal, Wire Transfer, POLi, UnionPay, BPAY, Neteller, Skrill, PIX PaymentUSD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD -
5
Eightcap
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
0.01 LotsASIC, FCA, CySEC, SCB, CNMVCFDs, Forex, Stocks, Indices, CommoditiesMT4, MT5, TradingViewNeteller, Skrill, Visa, UnionPay, Credit Card, Debit Card, Bitcoin Payments, Wire Transfer, FasaPay, BPAY, PayPal, Dragonpay, PIX PaymentUSD, EUR, GBP, CAD, AUD, NZD, SGD -
6
LiteForex Europe
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
$500.01 Lots1:30CySEC, AFMCFDs, Forex, Indices, CommoditiesMT4, MT5Neteller, Skrill, Visa, QIWI, Mastercard, Perfect Money, Western Union, Credit CardUSD, EUR, GBP, CHF -
7
RoboForexRoboForex Ltd and its affiliates do not target EU/EEA/UK clients. Please be aware that you are able to receive investment services from a third-country firm at your own exclusive initiative only, taking all the risks involved.
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
$100.01 Lots1:2000IFSCCFDs, Forex, Stocks, Indices, Commodities, ETFs, FuturesR StocksTrader, MT4, MT5, TradingViewVisa, iDeal, Trustly, Neteller, Skrill, Giropay, Sofort, Wire Transfer, Rapid Transfer, Alipay, POLi, Perfect Money, MoneyGram, Cashu, SafeCharge, WeChat Pay, Vietcombank Transfer, Volet, ecoPayz, AstroPayUSD, EUR -
8
FOREX.com
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
$1000.01 Lots1:400NFA, CFTC, CIRO, FCA, CYSEC, ASIC, SFC, FSA, MAS, CIMACFDs, Forex, Stocks, Cryptos, Futures, Options, CommoditiesMT4, MT5, TradingView, eSignal, AutoChartist, TradingCentralWire Transfer, Credit Card, Debit Card, Visa, Mastercard, Skrill, Neteller, ACH TransferUSD, EUR, GBP, CAD, AUD, JPY, CHF, PLN -
9
InstaForex
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
CFDs, Forex, Stocks, ETFs, Cryptos, Futures, CommoditiesMT4, MT5Skrill, Mastercard, Visa, Neteller, Wire Transfer, Przelewy24, Giropay, Rapid TransferUSD, EUR, GBP, PLN, CZK -
10
BlackBull Markets
Ratings/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5/ 5
$00.01 Lots1:500FMA, FSAForex, CFDs, stocks, indices, energies, metals, commodities, cryptosMT4, MT5, cTrader, TradingView, AutoChartistNeteller, Skrill, Visa, UnionPay, FasaPay, Mastercard, Credit Card, Bitcoin Payments, Debit Card, BoletoUSD, EUR, GBP, CAD, AUD, NZD, JPY, ZAR, SGD
Here is a short summary of why we think each broker belongs in this top list:
- IC Markets - IC Markets is a globally recognized forex and CFD broker known for its excellent pricing, comprehensive range of trading instruments, and premium trading technology. Founded in 2007 and headquartered in Australia, the brokerage is regulated by the ASIC, CySEC and FSA, and has attracted more than 180,000 clients from over 200 countries.
- IC Trading - IC Trading is part of the established IC Markets group. Built for serious traders, it boasts some of the most competitive spreads, reliable order execution, and advanced trading tools. The catch is that it’s registered in the offshore financial centre of Mauritius, enabling it to offer high leverage but in a weakly regulated trading setting.
- Exness - Established in 2008, Exness has maintained its position as a highly respected broker, standing out with its industry-leading range of 40+ account currencies, growing selection of CFD instruments, and intuitive web platform complete with useful extras like currency convertors and trading calculators.
- Pepperstone - Established in Australia in 2010, Pepperstone is a top-rated forex and CFD broker with over 400,000 clients worldwide. It offers access to 1,300+ instruments on leading platforms MT4, MT5, cTrader and TradingView, maintaining low, transparent fees. Pepperstone is also regulated by trusted authorities like the FCA, ASIC, and CySEC, ensuring a secure environment for day traders at all levels.
- Eightcap -
- LiteForex Europe - LiteForex Europe is a CFD broker established in 2008 and authorized by the CySEC. The brokerage offers forex, commodities and indices via the MT4 and MT5 platforms. Spreads are ultra tight on ECN accounts and leverage is available up to 1:30 in line with EU regulations. LiteForex also offers a rich education centre for new day traders and social trading capabilities.
- RoboForex - RoboForex is an online broker, established in 2009 and registered with the IFSC in Belize. Traders can choose from five accounts (Prime, ECN, R StocksTrader, ProCent, Pro) catering to different needs with trades from 0.01 lots and spreads from 0 pips. RoboForex has also enhanced its offering over the years, adding CFD instruments and launching its stock trading platform, plus the CopyFX system.
- FOREX.com - Founded in 1999, FOREX.com is now part of StoneX, a financial services organization serving over one million customers worldwide. Regulated in the US, UK, EU, Australia and beyond, the broker offers thousands of markets, not just forex, and provides excellent pricing on cutting-edge platforms.
- InstaForex - InstaForex is a forex and CFD broker founded in . The broker offers diverse market coverage to millions of clients, spanning traditional assets like currencies and shares, as well as other interesting opportunities such as IPOs.
- BlackBull Markets - BlackBull is a New Zealand-based CFD broker with trading opportunities on forex, stocks, indices, commodities and cryptos. The broker supports the MetaTrader 4 and 5 platforms as well as TradingView, cTrader and a proprietary mobile app. Clients can trade with high leverage and tight spreads from 0 pips on the broker's ECN accounts.
IC Markets
"IC Markets offers superior pricing, exceptionally fast execution and seamless deposits. The introduction of advanced charting platforms, notably TradingView, and the Raw Trader Plus account, ensures it remains a top choice for intermediate to advanced day traders."
Christian Harris, Reviewer
IC Markets Quick Facts
| Demo Account | Yes |
|---|---|
| Instruments | CFDs, Forex, Stocks, Indices, Commodities, Bonds, Futures, Crypto |
| Regulator | ASIC, CySEC, FSA, CMA |
| Platforms | MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade |
| Minimum Deposit | $200 |
| Minimum Trade | 0.01 Lots |
| Leverage | 1:30 (ASIC & CySEC), 1:500 (FSA), 1:1000 (Global) |
| Account Currencies | USD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD |
Pros
- You have access to over 2,250 CFDs across various markets, including forex, commodities, indices, stocks, bonds, and cryptocurrencies, allowing for diversified trading strategies.
- IC Markets offers fast and dependable 24/5 support based on firsthand experience, particularly when it comes to accounts and funding issues.
- IC Markets offers among the tightest spreads in the industry, with 0.0-pip spreads on major currency pairs, making it especially cost-effective for day traders.
Cons
- Interest isn't paid on unused cash, an increasingly popular feature found at alternatives like Interactive Brokers.
- Despite four industry-leading third-party platforms, there is no proprietary software or trading app built with new traders in mind.
- While IC Markets offers a selection of metals and cryptos for trading via CFDs, the range is not as extensive as brokers like eToro, limiting opportunities for traders interested in these asset classes.
IC Trading
"With superior execution speeds averaging 40 milliseconds, deep liquidity, and powerful charting software, IC Trading delivers an optimal trading environment tailored for scalpers, day traders, and algorithmic traders. "
IC Trading Quick Facts
| Demo Account | Yes |
|---|---|
| Instruments | CFDs, Forex, Stocks, Indices, Commodities, Bonds, Cryptos, Futures |
| Regulator | FSC |
| Platforms | MT4, MT5, cTrader, AutoChartist, TradingCentral |
| Minimum Deposit | $200 |
| Minimum Trade | 0.01 Lots |
| Leverage | 1:500 |
| Account Currencies | USD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD |
Pros
- Trading Central and Autochartist are valuable tools for in-depth technical summaries and actionable trading ideas and are accessible from within the account area or the cTrader platform.
- IC Trading provides industry-leading spreads, including 0.0-pip spreads on major currency pairs such as EUR/USD, making it ideal for day traders.
- The simplified and digital account opening process saves time and effort, allowing traders to start trading sooner without extensive paperwork, taking just minutes during testing.
Cons
- Unlike IC Markets, IC Trading does not support social trading through the group’s IC Social app or the third-party copy trading platform ZuluTrade.
- Despite being part of the trusted IC Markets group, IC Trading is authorized by a weak regulator - the FSC of Mauritius, with limited financial transparency and regulatory safeguards.
- The educational resources are greatly in need of improvement, unless you navigate to the IC Markets website, posing a limitation for beginners in search of a comprehensive learning journey, especially compared to category leaders like eToro.
Exness
"After slashing its spreads, improving its execution speeds and support trading on over 100 currency pairs with more than 40 account currencies to choose from, Exness is a fantastic option for active forex traders looking to minimize trading costs."
Exness Quick Facts
| Demo Account | Yes |
|---|---|
| Instruments | CFDs, Forex, Stocks, Indices, Commodities, Crypto |
| Regulator | CySEC, FCA, FSCA, CMA, FSA, CBCS, BVIFSC, FSC |
| Platforms | Exness Trade App, Exness Terminal, MT4, MT5, TradingCentral |
| Minimum Deposit | $10 |
| Minimum Trade | 0.01 Lots |
| Leverage | 1:Unlimited |
| Account Currencies | USD, EUR, GBP, CAD, AUD, NZD, INR, JPY, ZAR, MYR, IDR, DKK, CHF, HKD, SGD, AED, SAR, HUF, BRL, NGN, THB, VND, UAH, KWD, QAR, KRW, MXN, KES, CNY |
Pros
- Fast and dependable 24/7 multilingual customer support via telephone, email and live chat based on hands-on tests.
- Improved execution speeds, now averaging under 25ms, offer optimal conditions for short-term traders.
- Excellent range of account types for all experience levels, including Cent, Pro plus the introduction of Raw Spread, ideal for day traders.
Cons
- Apart from a mediocre blog, educational resources are woeful, especially compared to category leaders like IG which provide a more complete trading journey for newer traders.
- Exness has expanded its range of CFDs and added a copy trading feature, but there are still no real assets such as ETFs, cryptocurrencies or bonds
- MetaTrader 4 and 5 are supported, but TradingView and cTrader still aren’t despite rising demand from active traders and integration at alternatives like Pepperstone.
Pepperstone
"Pepperstone stands out as a top choice for day trading, offering razor-sharp spreads, ultra-fast execution, and advanced charting platforms for experienced traders. New traders are also welcomed with no minimum deposit, extensive educational resources, and exceptional 24/7 support."
Pepperstone Quick Facts
| Demo Account | Yes |
|---|---|
| Instruments | CFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto, Spread Betting |
| Regulator | FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCB |
| Platforms | MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade |
| Minimum Deposit | $0 |
| Minimum Trade | 0.01 Lots |
| Leverage | 1:30 (Retail), 1:500 (Pro) |
| Account Currencies | USD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD |
Pros
- There’s support for a range of industry-leading charting platforms including MT4, MT5, TradingView, and cTrader, catering to various short-term trading styles, including algo trading.
- Award-winning customer support is available via telephone, email or live chat with response times of <5 minutes during testing.
- Pepperstone boasts impressive execution speeds, averaging around 30ms, facilitating fast order processing and execution that’s ideal for day trading.
Cons
- Despite enhancements to its range of markets, crypto offerings are relatively limited compared to other brokers such as eToro, with no option to invest in real coins.
- Pepperstone does not support cTrader Copy, a popular copy trading feature built into the excellent cTrader platform and available at alternatives like IC Markets, though it has introduced an intuitive copy trading app.
- Pepperstone’s demo accounts are active for only 30 days, which may not be not long enough to familiarize yourself with the different platforms and test trading strategies.
Eightcap
"Eightcap delivers in every area for day traders with a growing selection of charting platforms, education via Labs, and AI-powered tools. Now sporting 120+ crypto CFDs, it's also become a stand-out choice for crypto trading, winning our 'Best Crypto Broker' award two years in a row."
Eightcap Quick Facts
| Demo Account | Yes |
|---|---|
| Instruments | CFDs, Forex, Stocks, Indices, Commodities |
| Regulator | ASIC, FCA, CySEC, SCB, CNMV |
| Platforms | MT4, MT5, TradingView |
| Minimum Trade | 0.01 Lots |
| Account Currencies | USD, EUR, GBP, CAD, AUD, NZD, SGD |
Pros
- With tight spreads from 0 pips, low commission fees, and high leverage up to 1:500 for certain clients, Eightcap provides cost-effective and flexible trading conditions that can accommodate an array of strategies, including day trading and scalping.
- Eightcap stands out with a selection of powerful trading tools and resources, including MT4 and MT5, the innovative algorithmic trading platform Capitalise.ai, and more recently the 50-million strong social trading network TradingView.
- Having excelled across all key areas for day traders, Eightcap outperformed every competitor to win our 'Best Overall Broker' award for 2024, also securing our 'Best Crypto Broker' title.
Cons
- In spite of an increasing variety of tools, Eightcap doesn't offer industry favorites like Autochartist or Trading Central, which offer cutting-edge charting analytics, live news, and market insights for short-term traders.
- Eightcap needs to continue bolstering its suite of instruments to match category leaders like Blackbull Markets with its 26,000+ assets, featuring a particularly weak selection of commodities.
- The demo account expires after 30 days and can only be extended upon request - a notable inconvenience compared to the likes of XM with its unlimited demo mode.
LiteForex Europe
"LiteForex is a good option for active day traders with variable spreads from 0.0 pips, daily analysis and high-quality training guides. The forex copy system also lets you duplicate the positions of experienced traders."
LiteForex Europe Quick Facts
| Demo Account | Yes |
|---|---|
| Instruments | CFDs, Forex, Indices, Commodities |
| Regulator | CySEC, AFM |
| Platforms | MT4, MT5 |
| Minimum Deposit | $50 |
| Minimum Trade | 0.01 Lots |
| Leverage | 1:30 |
| Account Currencies | USD, EUR, GBP, CHF |
Pros
- The broker offers a VPS server for experience day traders looking to run their auto strategies continuously
- LiteForex offers a client-oriented approach, with personal manager assigned to each trader and 24/5 multilingual customer support
- LiteForex has been established for 15+ years and is regulated by a trusted regulator, CySEC
Cons
- The range of day trading markets is limited compared to alternatives, with no share CFDs offered
- There is no swap-free trading account for Muslim day traders
- Fees are fairly high, with spreads starting from 2.0 pips in the Classic account and $10 forex commissions in the ECN account
RoboForex
"RoboForex is great if you want a vast range of 12,000+ day trading markets with ECN accounts, powerful charting and loyalty promotions. It also stands out for stock traders with its user-friendly R StocksTrader platform, featuring 3,000+ shares, fees from $0.01 and sophisticated watchlists."
RoboForex Quick Facts
| Bonus Offer | $30 No Deposit Bonus |
|---|---|
| Demo Account | Yes |
| Instruments | CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures |
| Regulator | IFSC |
| Platforms | R StocksTrader, MT4, MT5, TradingView |
| Minimum Deposit | $10 |
| Minimum Trade | 0.01 Lots |
| Leverage | 1:2000 |
| Account Currencies | USD, EUR |
Pros
- The broker offers two commission-free withdrawals each month in the Free Funds Withdrawal program, helping day traders to minimize transaction costs.
- The R Stocks Trader platform rivals leading solutions like MT4, with netting and hedging capabilities, comprehensive backtesting, Level II pricing, and a flexible workspace.
- RoboForex offers over 12,000 instruments, providing more short-term trading opportunities than the vast majority of online brokers, with forex, stocks, indices, ETFs, commodities, and futures.
Cons
- Despite 15+ years in the industry and registering with the Financial Commission, RoboForex is authorized by one ‘Red-Tier’ regulator – the IFSC in Belize, lowering the level of regulatory protections for traders.
- RoboForex now restricts base currency options to USD and EUR. This limitation may inconvenience day traders preferring to manage their accounts in other currencies, while potentially leading to conversion fees.
- While RoboForex offers competitive spreads, some of its account types come with high trading commissions up to $20 per lot, trailing the cheapest brokers, such as IC Markets.
FOREX.com
"FOREX.com remains a best-in-class brokerage for active forex traders of all experience levels, with over 80 currency pairs, tight spreads from 0.0 pips and low commissions. The powerful charting platforms collectively offer over 100 technical indicators, as well as extensive research tools."
FOREX.com Quick Facts
| Demo Account | Yes |
|---|---|
| Instruments | CFDs, Forex, Stocks, Cryptos, Futures, Options, Commodities |
| Regulator | NFA, CFTC, CIRO, FCA, CYSEC, ASIC, SFC, FSA, MAS, CIMA |
| Platforms | MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral |
| Minimum Deposit | $100 |
| Minimum Trade | 0.01 Lots |
| Leverage | 1:400 |
| Account Currencies | USD, EUR, GBP, CAD, AUD, JPY, CHF, PLN |
Pros
- Alongside a choice of leading platforms, FOREX.com offers a superb suite of supplementary tools including Trading Central research, SMART Signals pattern scanner, trading signals, and strategy builders.
- The in-house Web Trader continues to shine as one of the best-designed platforms for aspiring day traders with a slick design and over 80 technical indicators for market analysis.
- There’s a wealth of educational resources including tutorials, webinars, and a stacked YouTube channel to help you get educated in the financial markets.
Cons
- FOREX.com's MT4 platform offers approximately 600 instruments, significantly fewer than the over 5,500 available on its non-MetaTrader platforms.
- Demo accounts are frustratingly time-limited to 90 days, which doesn’t give you enough time to test day trading strategies effectively.
- Despite increasing its range of instruments, FOREX.com's product portfolio is still limited to forex and CFDs, so there are no options to invest in real stocks, real ETFs or real cryptocurrencies.
InstaForex
"InstaForex maintains its position as a top forex broker, with more currency products than most rivals. The tight spreads and low minimum deposits make it accessible to all experience levels, especially those familiar with the MT4 and MT5 platforms."
InstaForex Quick Facts
| Demo Account | Yes |
|---|---|
| Instruments | CFDs, Forex, Stocks, ETFs, Cryptos, Futures, Commodities |
| Platforms | MT4, MT5 |
| Account Currencies | USD, EUR, GBP, PLN, CZK |
Pros
- The broker is a particularly good pick for serious forex traders, with over 100 currency pairs, tight spreads from 0.0 pips and a market-leading selection of curated forex market resources
- The broker is accessible for beginners, with low minimum deposits and zero-commission trading available.
- InstaForex delivers a superb day trading environment, with the powerful MT4 and MT5 platforms offering dozens of technical analysis tools, automation capabilities and multiple order types
Cons
- The broker provides trading instruments only in the form of CFDs.
- The broker’s website and client cabinet feel outdated and difficult to navigate for newcomers
- Customer support is available only in EN, CZ, PL, and SK.
BlackBull Markets
"BlackBull Markets will suit traders of all experience levels with a growing suite of thousands of tradable instruments, tight spreads and the familiar MetaTrader platforms."
Tobias Robinson, Reviewer
BlackBull Markets Quick Facts
| Demo Account | Yes |
|---|---|
| Instruments | Forex, CFDs, stocks, indices, energies, metals, commodities, cryptos |
| Regulator | FMA, FSA |
| Platforms | MT4, MT5, cTrader, TradingView, AutoChartist |
| Minimum Deposit | $0 |
| Minimum Trade | 0.01 Lots |
| Leverage | 1:500 |
| Account Currencies | USD, EUR, GBP, CAD, AUD, NZD, JPY, ZAR, SGD |
Pros
- Autochartist plugin
- Huge range of 26,000+ instruments, with recent additions to its Asia Pacific indices
- Mobile trading experience upgraded with direct TradingView integration
Cons
- US traders not accepted
- Withdrawal fees with some methods
What Is An ECN Broker?
The simple definition is that Electronic Communication Network (ECN) brokers enable traders to place competing bids against each other. They are Non-Dealing Desk (NDD) brokers, meaning that instead of passing orders to market makers who take the opposing position in a trade, they connect buyers directly with sellers. When they cannot match two counter-parties, they reflect the highest bid and lowest ask price listed in the open market.
ECN forex brokers act as a major source of liquidity for retail traders versus major market makers like large banks, hedge funds and other financial institutions. They are the fastest-growing brokerages globally and are particularly popular for forex trading, offering greater transparency for investors.
ECN Brokers Vs STP Brokers
ECN brokers are very similar to Straight Through Processing (STP) providers. STP brokers also have no dealing desk. Listed trades are routed to the broker’s group of liquidity providers, such as hedge funds, big banks and investors. These providers act as counter-parties for each trade and compete for the best bid/ask spreads. The broker effectively acts as a silent facilitator, connecting the trader with its internal liquidity pool and taking its fee from a mark-up in the spread.
The primary difference with ECN vs STP brokers is routing. Whereas the STP broker provides access to different providers in their liquidity pool, the ECN plays the role of a hub. The hub essentially acts as the primary liquidity source, formed of the different hedge funds, banks and market players. The other notable difference is position size. ECN brokers typically cap minimum position sizes at 0.1 lots. This is a result of few liquidity providers being able to cater to smaller position sizes, which can prove challenging for beginners.
Both ECN and STP models offer fast executions and tight spreads which lend them to a range of strategies, including scalping trading. In fact, many ECN, STP or hybrid brokers offer zero-pip forex spreads, though they may charge a fixed commission per lot.
Benefits Of ECN Brokers:
There are several advantages to trading with an ECN broker:
- Execution speed – Pure ECN forex brokers such as Pepperstone connect you directly to liquidity providers ensuring direct market access and faster fills.
- Transparency – ECN brokers prevent price manipulation as everyone uses the same feed and trades at a defined price. No investor enjoys a built-in advantage over other traders on the ECN.
- Trading hours – ECN providers generally let you trade beyond traditional trading hours, allowing investors to react to after-market news announcements, for example.
- Leverage – Top ECN brokers typically offer leveraged forex trading. Ratios vary depending on your jurisdiction, but it’s not uncommon to find 1:100 leverage levels.
- Scalping – Rapid order executions and tight spreads lend ECN brokers to high volume scalping forex strategies. With that said, it’s worth checking the broker’s guidelines around scalping before you deposit funds.
- Regulation – ECN providers are heavily regulated. This is particularly important in light of the increasing number of online forex scams. The best ECN brokers are regulated and meet compliance measures. See our list of the best ECN brokers above for trustworthy providers.
Drawbacks Of ECN Brokers
Downsides to trading with ECN brokers include:
- Commission – Forex commissions charged by most ECN brokers usually range between $2.50 to $5.00 per lot. Fees tend to be higher compared to trading CFDs, stocks, binary options, or other non-ECN trading brokers. This may mean ECN is less favourable for low-volume retail traders or those with micro-accounts.
- Volatility – Forex markets are vulnerable to sudden upsurges in variable spreads, especially during high market volatility. It’s therefore important traders use appropriate risk management tools.
- Deposits – The best ECN brokers generally come with higher opening deposits than standard trading accounts. This is because ECN providers often shift the responsibility of meeting market liquidity requirements on the trader. This is the opposite of a market maker broker who can intervene to provide liquidity on the trader’s behalf, and therefore offer lower minimum deposits.
How To Identify The Best ECN Brokers
The top true ECN brokers are regulated by reputable financial agencies. For example, if you’re trading forex in the UK, check the provider is regulated by the FCA. For traders in Europe, check for CySEC regulation. Reliable regulators will cap leverage limits to protect a trader’s risk exposure.
Logistically, location is significant as the best ECN brokers can only accept accounts for traders in the countries they work within. For example, RoboForex cannot accept traders in the USA, Japan, Canada and Australia, despite being a top ECN broker. This means clients from the US will need to look to another broker, such as Forex.com, another top ECN brokerage. Similarly, the best ECN brokers in Kenya, Dubai, Malaysia, Cyprus or the Philippines might differ from the top providers in Nigeria, South Africa, India, Australia and Singapore.
You should also check the trading fees and commissions and whether you are allowed to start with a demo account. This will give you time to practice and get familiar with the platform, whether you are using MetaTrader 4 (MT4), MetaTrader 5 (MT5), cTrader or another. Brokers offer different platforms so it’s important to use one you feel comfortable with.
Other considerations to take into account on your broker checklist comparison should include:
- Fast deposit and withdrawal processing times
- Providers with a history of at least two years
- Brokers with no deposit bonuses
- A decent customer support team
- Forex trading rankings
- Good online reviews
Final Word
ECN brokers bring significant benefits for forex traders in the US, UK and beyond. High levels of market transparency mean price manipulation is not possible. With that said, it’s still worth looking for regulated ECN brokers. Leverage levels, commissions, plus trading tools are also important to consider when opening a live account with an ECN broker.
FAQ
What Does An ECN Broker Mean?
An ECN broker is a technology hub, or bridge, that enables traders to place competing bids against each other or liquidity providers.
How Do ECN Brokers Make Money?
ECN brokers typically make money from fixed commissions charged to the customer on each trade. This is in contrast to market maker models that generally take their cut from the spread.
What Is The Difference Between A Market Maker And ECN Broker?
Market makers help ensure there’s enough liquidity so trades can be executed seamlessly. Market makers typically take the opposing side of a trade. In contrast, ECN brokers connect buyers and sellers, drawing on various liquidity providers. ECN brokers usually offer tighter spreads, faster order execution and increased transparency.
Who Are The Top ECN Brokers In The UK And Europe?
Among the top European ECN are Pepperstone, Axi, IG, Swissquote and FXCM. See our list of the best ECN brokers.
Is XM An ECN Broker Or STP?
XM is regulated by the FCA and offers both ECN and Straight Through Processing (STP) options. Which model you want to use will depend on your strategy, trading capital, position size and leverage requirements.