In today’s technological age developments in trading can be considered daunting. Via electronic communication networks, also known as ECNs, traders are too maximising their potential. Despite ECNs becoming mainstream, not everyone is aware of the benefits associated with an ECN broker and this can help turn a trading account into a profitable trading account.
First let’s take a look at what an ECN is. This is a network which carries the trading orders of financial institutions for clients, be these retail clients, banks and or brokers. These orders are displayed directly to the market without any due interference from a broker. In other words, true ECN brokers provide their clients with direct market access.
For most traders the rationale for using an ECN will be to boost profitability. Compared to market makers, brokers with an ECN feed offer vastly improved bid/ask prices, occasionally with very little spread indeed. Given that the spread in trading forex is the principal cost involved, a tighter spread means a lower trading cost, which can only be a good thing for trading profits. Furthermore, the high levels of liquidity when using and ECN broker mean there are no minimum distances imposed for stop orders or limit orders. You are free to place or orders as close or as far away from the trade price as you chose.
Efficiency is often an associated benefit with technology and this is true for ECN brokers. Immediate trade execution is the norm with ECN broker, given the high levels of liquidity that are commonplace. Requotes just don’t happen with a true ECN broker. In addition, ECNs feeds circumvent traditional trading practices by offering trade continuity, allowing traders take advantage of breaking news and worldwide events.
A trader’s success can ultimately revolve around their strategy. Trading through an ECN broker can provide a strategic advantage in the sense that the broker won’t be trading against you. There is no restriction on client strategies meaning that scalping is permitted.
Traders looking for a new way to optimize trading or maximise potential earnings will find ECNs favorable. The uniqueness of ECNs originates from its connectivity and accessibility features that provide traders with a global liquidity pool of financial institutions. Nevertheless, the impact of an ECN will depend on the broker you use.
Vantage FX is a true ECN broker, which provides its clients with all the benefits associated to ECN trading. It as an award winning, Australian based forex broker, which offers clients some of the tightest spreads in the industry and unparalleled execution.