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What is an ECN Account?
Electronic Communication Networks (ECNs) are used to match buy and sell orders in the foreign exchange (forex) trading market. ECNs are essentially computerized trading systems that automatically match orders between buyers and sellers in the foreign exchange (forex) market. In addition to matching buy and sell orders in the market, ECNs provide current bid and ask price quotes that show the highest bid and lowest offer prices currently available in the market for each forex trading pair.
A trading pair consists of one currency priced against another currency. For example, the EUR/USD trading pair reflects the value of the euro in relation to the US dollar. The forex market, by dollar volume traded, is the largest financial market in the world. However, forex trading does not take place on an exchange like stocks do, but rather on an over-the-counter market where buyers and sellers are connected.
What is the function of an ECN Account?
The obvious benefit of using an ECN is faster and hassle-free trading worldwide. Traders also gain flexibility in their trading as they can move after hours using an ECN. Lastly, there is the anonymity afforded to brokers and individuals using an ECN. There are other benefits to ECN that are a little less obvious. One of them is as follows.Certain ECNs may offer additional features to their clients. This includes giving ENC brokers access to negotiation, pegging, reserve sizes, and more. Some brokers or platforms with ECN Forex account types may gain access to the entire electronic communications network book which gives them access to real-time market data. With data such as depth of trading interest, these brokers have an advantage when it comes to making calculated market moves.
Difference between ECN Account and Non ECN Account?
ECN accounts match orders, and a commission is charged for execution without placing any premium on the raw spread. In contrast, market maker brokers typically offer standard trading accounts, where they apply a premium on top of the raw spread to profit from executing trades. When you trade a standard trading account, you typically get a fixed spread. For example, you might get a 2 pip spread quote on EUR/USD, regardless of the price or volatility of the currency pair.You don’t know what price you’ll be filled at when you place an order on a standard account, but the broker will try to guarantee a 2-pip spread. The spread is your version of the commission or fee for handling the transaction. In this situation, the broker acts as the counterparty to whatever position you have. The fixed spread/counterparty situation doesn’t always work against the trader. In times of increased volatility, that 2-pip spread can be an attractive and sometimes more competitive option.
If you are a swing or position trader, you may prefer this option. If you are paying 2 pips per trade when you are targeting 150 pips plus, then the transaction costs are not that significant compared to being a scalper. The downside of fixed spreads is that you may be paying around 1.5 pips extra per trade compared to the ECN trading model, and if you are a frequent trader, the extra costs quickly add up and eat into your bottom-line profits.
ECN brokers charge commission as a variable spread which can sometimes be as low as 0.5 on EUR/USD, so paying two pips on each trade if you are scalping or day trading can be expensive. The ECN model is considered fairer and more transparent as you pay the live market price at the time of execution.
STP Brokers: Types, Advantages, Characteristics, and Differences with ECN
Beware of Fraudulent ECN Brokers
Forex scam brokers are not always represented by the brokers themselves. They are most likely individual players without a company but position themselves as a brokerage company. Often they are very experienced Internet users who can create false information on the sites they create. The owners of such fraudulent sites are not licensed and therefore not properly regulated.Sometimes they don’t even have basic knowledge about the Forex market. But for a novice trader who has no education in economics or finance, not everything is so clear. For example, one can visit a beautifully designed website, see promises of attractive profits, and words or phrases like “ spread ” and “instant order execution”. That for a beginner, can add a semblance of legitimacy to a dishonest website.
As a result, someone signs up, makes a deposit — and this is where the most interesting part begins — and there is a fraud by technology. Well, for those of you who want to trade with this ECN account, you can try it by trading at GIC and using the ECN account type to be able to enjoy the advantages of low spreads starting from zero.
What are the Benefits of GICTrade ECN Account?
Using a broker or platform with an ECN Forex account type has several advantages; in fact, a large number of traders look forward to ECN brokers, and for good reason. ECN brokers offer a number of key benefits, which can help them get ahead of their leading counterparts. Here are some of the main advantages of using a broker or platform with an ECN Forex account type.Anonymity and Confidentiality
You are often an open book when you are dealing with typical Forex trading. However, privacy and confidentiality are of utmost importance when you choose to go the route of a broker or platform with an ECN Forex account type. The high level of confidentiality does have to do with the fact that the broker will only act as an intermediary in the market, not as a market maker.Small Spread Broker, Get to Know the GIC Trading Platform and Its Advantages!
Variable Spread
Traders are given unhindered access to market prices through ECN agents and special accounts. Since prices vary based on supply, demand, volatility, and other market conditions, through a broker or platform with the right ECN Forex account type, one can trade with very low bid/offer spreads. So is the ECN Forex account type at GIC. You can enjoy low spreads starting from zero.Instant Trade Execution
This feature is something that Forex dealers usually cannot compromise on. ECN brokers ensure that efficient trading performance is absolutely certain at all times. This particular trading technique does not require the client to trade with the broker, but rather uses its network to place orders. This different method truly allows anyone to enjoy better trade execution.Access to Customers and Liquidity
ECN agents operate on a model that allows any and all opportunities to trade in an international liquidity pool of reputable, regulated and competent financial institutions. Furthermore, due to how the connected information is transmitted, transparency is another major benefit of a broker or platform with an ECN Forex account type. All ECN agents are given access to the same market and trading data; therefore, transparency of fundamental market prices from various liquidity providers is guaranteed.Trading Consistency
One of the main benefits of a broker or platform with an ECN Forex account type and a connected Forex trading account is trading consistency. Given the nature of Forex trading, breaks are not essential, nor do they ever occur between trades. When you utilize a broker or platform with an ECN Forex account type, you can trade well during events and news, with the potential to create a real flow of activity. This also creates an opportunity for every trader to profit from Forex price volatility.Apart from the advantages above, GIC also has several other advantages such as:
- You can make a minimum deposit of 2500 GICT
- Leverage 1:100 for all instruments, and 1:400 for forex and gold instruments.
- No requote
- Can be thrown directly to the market
- Spread starting from 0 pips
- Floating spread
- Commission 7 GICT/lot
- Swap fee 0.
| Leverage | 1:100 (All) |
| 1:400 (Forex & Gold) | |
| Fee & Commission | 3.5 GICT / Side |
| Swap | Free Swap |
| Spread | Start from 0 |
| Minimum Lot Size | 0.01 Lot |
| Maximum Lot Size | 20 Lot / Click |
| Minimum Deposit | 1000 GICT |
| Hedged Margin | $300 / pair |
| Margin Call | 30% |
| Stop Out | 30% |
| Negative Balance Protection | Yes |
Meanwhile, the standard account itself is:
| Leverage | 1:100 (All) |
| 1:400 (Forex) | |
| Fee & Commission | 0.5 GICT / Side |
| Swap | Free Swap |
| Spread | Low |
| Minimum Lot Size | 0.01 Lot |
| Maximum Lot Size | 20 Lot / Click |
| Minimum Deposit | 10 GICT |
| Hedged Margin | $300 / pair |
| Margin Call | 30% |
| Stop Out | 30% |
| Negative Balance Protection | Yes |
Trading Illustration Example Using an ECN Account: If using a Standard account for BEP, for example trading 1 lot of Gold with a spread of 36 pips, plus an admin fee of 1 GICT/settle, then once opened a position will be subject to a floating loss of 37 GICT. However, if using an ECN account on the same pair with a spread of 6 pips, plus an admin fee of 7 GICT/settle, then later it will only be subject to a floating of 13 GICT. Which means, customers have a faster opportunity for BEP when compared to a standard account.
Calculation example:
If using a standard account, Sell Gold 1 lot at a price of 1745.00/bid, then the trader can get BEP at a price of 1744.63/bid. While if using an ECN account, Sell Gold 1 lot at a price of 1745.00/bid, then the trader can get BEP at a price of 1744.87/bid. After learning about the ECN Forex Account along with its functions and advantages on a trading account at GICTrade, you can start trying to trade and enjoy low spreads starting from zero. To be able to get this type of ECN account, you can register now! Follow the GIC Instagram account for more information.
