What is an ECN account? Know the Difference between an ECN and a standard account

When I trade with a Dealing Desk broker, the broker decides the price and spread, meaning I trade the broker’s specific prices. This leads some traders to believe there is a greater chance of price manipulation by the broker and potentially less fair market conditions. Based on this, the ECN pricing is cheaper compared to the standard account leading the Raw Spread account to have lower brokerage. As a rule of thumb, the more you trade, the more your expenses will be, thus day traders and those using EAs (Expert Advisors) in particular will benefit from the Raw Spread account.

The trading strategy is talked about more towards the end of the series of educational videos. Our forex comparisons and broker reviews are reader supported and we may receive payment when you click on a link to a partner site. Choosing the right broker for ECN trading is crucial to your trading journey. There are many factors to consider before settling with your current broker or switching to a broker that better suits your needs and priorities. Forex Admin is a blog where you can find an in-depth analysis of Forex Brokers, Stocks, CFDs, ETFs, and other financial instruments to make informed decisions. This means that when you place an order to buy or sell currencies with your broker, multiple parties will be able to fill your request at once instead of being queued by the broker’s own inventory.

Standard Account vs ECN Account – What’s the Difference?

$4.00 per lot round-turn is one of the best commission rates you can find with any broker. The catch is that to get this commission you need an account with lots of equity and to be trading in high volumes. Otherwise, you will end up paying more commission than what other brokers charge. To highlight the emphasis on this account being for new traders is that all figures are displayed in cents.

Envision it as a marketplace for broker’s clients to trade with each other, so traders like you can get the best possible offer at that moment in time. An ECN is an automated system that publishes orders entered by market participants directly to third parties and individual traders. Those orders are then automatically executed by matching buy and sell orders at the best price available.

Advantages of Forex Trading – Leverage, Liquidity, and Volatility

ECN trading is trading through an ECN (electronic communications network) broker. The cost of ECN trading tends to be cheaper above a certain trading volume. The difference between an ECN and an STP broker is that ECN routing differs from STP routing. ECN is a hub that gives the trader direct access to liquidity providers.

Prices reflect real, live market conditions at that time with the ECN providing a level of privacy to those who need it, such as those executing large orders. Since there is no limit set by the regulator that the broker can offer, leverage is significantly higher than in the UK and Europe. Instead of set leverage for each financial instrument, you trade, FXTM uses scaled leverage which means the bigger your position, the lower the leverage you can use. Like the Standard account, it utilizes simple, no commission, market-making brokerage style trading with instant execution.

Advanced Techniques for Customizing MT4 Forex Indicators for Maximum Profits

MAM trading accounts or Multi Account Manager is a special type of account money manager created for investing. The MAM managed accounts differs from the PAMM account in that it allows the investor to intervene in the trading process. In other words, the investor can see the trader’s process and close the positions if they believe it’s the right thing to do. In summary, a forex ECN broker uses the MT4 or MT5 trading platforms, and manages ECN trading as a ‘hub’, where all the major market players act as a liquidity source. The broker uses this network to provide its clients with direct access to other participants in the market. To take an overview of Standard Account and True ECN, this blog is going to help you in knowing which one is more competitive.

This is compared to a standard account where you can trade from a 1 pip spread. At 0.3 pips spread on the ECN account, the transaction fees would be the equivalent to trading with a 1 pip spread. So you will usually be trading from something like a 1 pip variable spread on the standard account type. The ECN account has a $3.50 per lot commission, with spreads from 0.0 pips. However, the separate fixed commission of $3.50 per lot, per side may seem undesirable to some traders.

Can I change from an ECN account to a standard account or vice versa?

You will use the MetaTrader trading platform, have the same spreads for all currency pairs, and incur the same commissions. The main difference is there are no swap rates (also called overnight fees or rolling fees) and you will incur additional charges for trading minor currency pairs. The main difference between a standard account and an ECN account is that it generally has a fixed spread.

These accounts do not make good money, and they are all good for practice only. While the ECN works with commission fee model, ECN costs split between the interbank spread from 0 pip and commission charge per lot. The ECN provides an electronic system for buyers and sellers to come together for the purpose of executing trades. It does this by providing access to information regarding orders being entered, and by facilitating the execution of these orders. The network is designed to match buy and sell orders currently present in the exchange. When specific order information is not available, it provides prices reflecting the highest bid and lowest ask listed on the open market.

Pros of a Standard Account

If you prosper, then you’re more likely to stay in the forex trading industry and remain loyal to the broker who helped launch your success. Therefore, you’ll trade more and provide the broker with more revenue. If you’re a swing or position trader, you might prefer this choice. If you pay 2 pips per trade when you’re aiming for 150 pips plus, then the transaction cost isn’t as significant compared to being a scalper.