Hi, I have been looking at some true ECN brokers with 10,000 USD minimum deposit, because I see at certain times of the day spreads are extremely low (less than 0.5 pips most of the time), and I just want to confirm that with a 10k usd minimum deposit account, would I be able to get these low spreads??? Or is that showed as a reference, and you would need another type of acount with more than 10k minimum to get such tight spreads???
In other words, is it possible to get ECN spreads lower than 0.5 pips with accounts that have a 10k USD minimum deposit???
I’m with Pepperstone an Australian ECN broker, their “razor” account has the 0.1-1 pip spreads but has a commission approximately = to about 0.7 pips [B]EDIT:[/B] to enter and close an order.
Good thing about it is though, I believe its a $200 minimum deposit so you can get access to really good spreads no matter how little money you may have
They are not ECN, so don’t get confused. They are simply a market maker with ECN ‘style’ execution. Any broker offering less than a $10K deposit is not going to be a true ECN. All these “open with $1,000 ECN accounts” are not true ECN.
As for the spreads being low, yes, this is always the case when trading a true ECN account. You are trading the actual market spreads, and at times these spreads can even reach zero. However, the fixed variable that is not shown in the ECN spread is the broker commission that has to be paid. This usually varies with the amount of total lots you trade in each 30 day month. The more you trade in volumes, the more business you are giving your broker, and the more likely they will reduce the commission that they are charging you as a result.
The number of people we get in Babypips who think they have a true ECN account is really quite unbelievable, ever time I see misinformed newbies incorrectly reading their own account details.
ECN accounts really are for pro status traders, people who know exactly what they are doing (but don’t have to always be correct), and have a nice bigger than average bankroll to test the waters with. It’s equal to the premium league of accounts, and it’s not cheap to become a member…no newbies allowed!
Ok - So I’m confused as to what an ECN account even is! Is it better? I have an account with Oanda, now assuming that the minimum deposit wasn’t an issue are these ECN accounts better?
What really upsets me with Oanda is how the spreads widen so dramatically right before news events… Would an ECN account fix this problem and if so at what cost?
ECN accounts are not better in the way that they make trading decisions any easier. However, they do take out the possibility of the middle person, which is the broker, dealing against your best interests. With non ECN accounts, the broker is the market maker, they provide you with the spread, they can minipulate price if they really want to, and they can move price against what the actual market is suggesting. This is known as indicative data feeds, also common with spread betting accounts. In some cases you will even see a little text box on charts stating that the data is indeed indicative.
True ECN accounts are a little different. The trades that you place are sent through to the market. Even though you still have the middle man, which is your broker, they only benefit from the commission which they charge. Notice in this ECN account that the spread is not decided by the broker, you are trading off the actual market spread. Also notice that the broker can’t move price against you, they simply cannot when in ECN mode. So it seems rather good when considering ECN…well, this is not always the case. It can be much more risky in times of dry liquidity. Fast moving markets in ECN accounts can kill you, you really are at the true mercy of the market. ECN accounts cant process anything less than 1.0 standard lots. although in some cases I have seen true ECN accounts allow trade volume increments of as little as 0.1 standard lots.
[ul]
[li]True ECN accounts cost more in deposits due to the minimum volume required per trade of around 1.0 std. lots
[/li][li]They are more transparent
[/li][li]The Broker can’t move price against you
[/li][li]The broker does not decide the spread
[/li][li]You can negotiate the commission charged by your broker
[/li][/ul]
If you are experienced and you can afford the choice of ECN or non ECN then go for ECN, no thought required.
