So I’ve done a bunch of research on ECN brokers and Market Maker brokers and I can’t seem to figure out what the ADVANTAGE of a market maker is? Everything I read leads me to believe that an ECN should be the only way to go…what are some pro’s to using a market maker broker (like Oanda) vs an ECN broker?
Thanks,
CK
Hi ckFXTrader,
I think this can help you
ECN Forex broker provides a marketplace where all its participants (banks, market makers and individual traders) trade against each other by sending competing bids and offers into the system. Participants interact inside the system and get the best offers for their trades available at that time. All trading orders are matched between counter parties in real time. A small trading fee - commission - is always applied. ECN Forex brokers always have variable spreads. Commission is the only revenue/profit an ECN broker receives. ECN brokers are not making money on bid/ask (spread) difference.
Forex market maker - a broker with a dealing desk earns money on bid/ask difference as well as when a client loses a trade, since market makers are trading against their clients by hedging (entering in an opposite trade).
So what can be an advantage to a market maker vs a ECN? It seems that the only thing a market maker has is no commissions but this can just be offset by the spreads. So why would someone want to go with a market maker rather than an ECN?
Thanks for all your help I’m just trying to get as much information as possible before I choose a broker.
Good ECNs typically require 10k USD or more. You can find ECNs with a smaller requirement though. As for why anyone would choose a market maker regardless I have no idea.
Okay now it’s starting to make more sense to me…I am just trying to figure out the reasons for choosing one over the other.
Even i’ve no idea why some traders choose Market makers but i prefer ECN broker. Before you choose a broker know its regulation and background.
Happy Trading 
http://forums.babypips.com/fxcm/33022-no-dealing-desk-q.html
This thread helped me tons in understanding ECV vs Market Maker.
Stay away from MM, instead of that try a STP broker or an interbank, they are closer to an ECN. Good ones are forex.com and ibfx. Practice with stp first and the when you manage to stay profitable jump to an ecn. Dukascopy for example is an ECN and allows you to start with 1000 USD.
Regards.
I was originally going to go with Dukascopy because they are exactly what I wanted and had the $1000 deposit, but apparently they are changing the minimum to $5000 after October 15. So recently I have been looking into Oanada because I also like their platform. I do realize they are a dealing desk but they seem pretty highly regulated and reputable so I am thinking of at the very least starting with them…especially for practice because you can do ANY lot/unit size :).
Anyone got any warnings about Oanda other then the common spread increase during news events?
Thanks
Edit: ibfx looks interesting I’m going to do some more research on it thanks for the suggestion
Oanda is a MM but a cleaner one. Have some tips as an ecn but only have standard accounts. IBFX allows you to trade with 0.01 minilots, 100 USD contracts, forex.com too but this last one has a minimum of 350 USD and spreads are a little higher than IBFX.
Regards.
You have started to sway me towards IBFX the fact that it also has MT5 is pretty awesome The 0.01 minilots should be perfect for me.
I also like that it’s NFA and CFTC regulated so I feel it adds a lot more legitimacy to the broker. Thanks for the great suggestion Mr Gone.
I use Oanda but because I use a Mac.
I think that Market Makers are probably best if you wanna do Exotics because some of those pairs don’t have much liquidity while I would assume that a Market Maker would take the bet. The pip spread could be hefty but at least you’ll get your action. Just a guess, though, as I never play Exotics.
Yeah I went with Oanda as well in the end. I really like their platform and since you can make any unit size trade you can start account really small and still control risk properly just to get more of an idea what it’s like trading with real money…I’m still learning.
i guess i arrived to late but i use oanda. I havent had a lot of problems but there are problems. I get limit orders cancled, in 1 week i had 4 requotes, 2 orders canceled, 1 tp not hit. I also get slippage every day ranging between .1 pips to 6 pips sometimes. I did get my account reimbursed for the requotes. But the other things like orders that are cancled etc. ofcourse these orders would have been profitable if they were triggered. which is f-ing BS. But overall its pretty good. Atleast they reimbursed me immediately. But i will eventually move to futures because it is a central marketplace. But until then i will be with oanda.
Pretty ignorant question, but how do you know if a broker is a MM or ECN (apart from doing hardcore research)?
MM is a no no for me. I made money with it, but it’s harder and they all have their issues. ECN is the way to go.
ECN brokers won’t allow you to set SL+TP until after the order has been placed. They call it market execution instead of instant execution where you can set SL+TP when you place the trade.
But you would only know that once you set up an account. Is there a symbol or something in a brokers terms and conditions that reveals they are ECN (or MM)?
Most ECN brokers state this fact on their website, you may have to dig a little to find out, some brokers state it in their FAQ, but I don’t recall ever seeing an ECN broker who didn’t state it.
Great question! ECN trading has developed during the recent decade. Until then, you could trade only through a market maker. Now, a market maker is not something bad because without them we did not have a market… so why we need ECN brokers? A real ECN broker that actually sends your orders directly to the market guarantees that you get prices which are the closest to the real market of the institutional. But the most important thing is that it makes the broker objective and eliminate the fear of “my broker plays against me”. No doubt that today ECN brokers show better performance and the trading experience is better. However, there are many brokers that claim to be ECN but in fact, they are not. How can you know if it is real or not? You need to have enough experience… anyways, I know for sure that Alpari is 100% ECN and recently I started checking sunbird fx, which claims to be an ECN and so far I am satisfied with them… I am sure you can find more ECN broker though.