Real ecn brokers

Hi,

I do not want to trade with MarketMaker.

Instead, I really want to trade with ECN brokers.

There are any rules or conditions for choosing REAL ECN brokers?

Some people say it depends on Min trading lot(0.1) , Max leverage (1:100) and very tight spread like almost zero(cause of raw spread from LP).

The above things are we can consider REAL ECN brokers?

I suggest you choose your broker very carefully. There are so many fake brokers in the market. So, be careful when you are going to choose a broker for you.

Go with Oanda or Tenkofx, both has been around for more than 7 years and has been stable. You’ll get up to 1:500 leverage and very low spreads. Use old brokers that are established and stable, not the new brokers that are still standing on one leg.

IC Markets are an ECN broker and have been around for a good while if you want ones that have stood the test of time. 13 year now I think

Looking for a ECN broke to go live with, ideally with commission cost of 3$ per lot or lower as most brokers seem to be charging over this.

My Trading system only involved trading in EURUSD, so broker offering lowest spreads in this pair would be a advantage.

I don’t think there is any particular way to identify a broker whether that is a market maker or ECN; normally with ECN brokers you get lower spreads and better execution. Though almost every broker claims to be an ECN but you need to be careful while choosing a broker. You can also test some brokers by opening a demo or live account with small capital and compare their spreads you will get an idea. There are many good brokers around, you can check fxview, icm, pepper all ECN.

The term “ECN broker” is a marketing phrase used by the industry.

All retail FX brokers are market makers in the sense that they “make the market” for you and you have to trade the price they give you.

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They are not an ECN broker.

They were instructed by the regulator to change the name of their account types because it was misrepresenting their business model. They also clearly state in the fine print that they are the issuer of CFD’s. It is just the price that comes from an external source, like all FX brokers.

What does it actually mean to trade with an ECN broker anyway?

It is supposed to mean that they will pass your orders on to a “liquidity provider”. However, a liquidity provider is just another term given to what is essentially a market maker. So an “ECN broker” would just acts as a middle man between a trader and a market maker.

if you want to trade forex, you cant bypass or avoid the market makers.

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Check fxview, their commission charges are only $2/lot rt and eurusd spreads remains generally from 0.1 to 0.3 pips

It’s meant to make a retail FX dealer or CFD issuer sound fancy.

Even though forex brokers aren’t really “brokers”, using the phrase “ECN broker” makes it sound las if the forex broker gives its customers access to an ECN(s) and allows them to trade directly with other participants of that ECN(s).

But that’s false. Retail traders can’t trade on institutional ECNs. They don’t have the necessary credit relationships and they trade too small.

Even retail FX brokers can’t even access these ECNs by themselves without the help of a prime broker (PB) or prime of prime (PoP).

When trading on an ECN, you have access to the DOM and can view multiple levels of both sides of the order book. You can also “split the spread”, where you can enter a limit order that is priced within the spread between the bid price and ask price.

Your retail forex broker is not acting as an intermediary or agent who is simply matching buy and sell orders made by traders (which is what happens on an ECN).

When you buy, your forex broker sells to you. And vice versa. It doesn’t match your trade with another counterparty. It is your counterparty.

Your order is not “passed directly” to the ECN and out into the “market”.

Now when a broker uses the phrase “ECN broker”, what this usually means is that it’s receiving price quotes from one or more liquidity providers (LPs).

And then the bid and ask quotes are cherry-picked (based on the broker’s pricing engine rules) and shown on your trading platform.

How many LPs exactly? You’d have to ask your broker.

If you decide to “lift the ask” (buy), your broker will still take the opposite side of your trade.

You want to go long 1,000 units of EUR/USD? Your “broker” (who is really a dealer or CFD issuer) will fill your order and will now be short 1,000 units of EUR/USD.

Your broker is always your market maker. In this case, it is “making a market” for you (quoting you bid and ask prices) based on prices from third-party sources, but in the end, you can still only trade with it (and nobody else).

As your counterparty, it’s now exposed itself to risk. If you win, it will lose, so it can (choose to) protect itself partially or entirely by hedging.

(While the primary purpose of hedging is to mitigate losses, it can also be used to generate profits for the broker.)

So when it comes to order execution, the broker can decide to pre-hedge, post-hedge, or internalize this risk (assuming the risk can’t be offset by another customer’s order).

That said, assuming it wants to hedge, most retail FX trade sizes are small and don’t reach 100K units so the “broker” has to aggregate these “tiny” trades before it can hedge to an LP on a volume-weighted average price (VWAP) basis.

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I stand corrected. Good info from you and @Pippo