The advantages of an ECN trading account

Learn about the benefits of an ECN (Electronic communication network) trading account and how you can take advantage of the trading conditions offered to ECN traders to maximize your results.

The advantages of an ECN trading account

ECN trading accounts are considered as the most cost-effective solutions in the industry, offering several advantages to currency traders. Even though at first, ECN accounts may seem somewhat more complicated and costly, they actually offer greater reliability, transparency and much lower trading costs.

The truth of the matter is that the forex market isn’t a regulated and centralized exchange such as the stocks and indices markets. Instead, currency trading is conducted over-the-counter and a forex broker is required to facilitate all orders and match them with their counterparts on the network.

In fact, there are so many liquidity providers contributing their rates to the network that different brokers may end up offering different trading conditions – some more competitive than others.

However, some regulated brokers offer clients access to ECN accounts which provide currency traders direct access to prices that are typically only available to major banks. This is why ECN accounts are so popular in trading the markets, even though they usually come with higher entry requirements.

These ECN accounts offer different terms and trading conditions in terms of spread and order execution and depending on your trading method, you may find that ECN offers a much better experience than your standard trading account.

ECN trading account

ECN benefits and drawbacks

The main advantage of ECN accounts and why they are so commonly popular is, of course, the lower spread offering and nearly instantaneous execution of orders.

Opening a position on a standard trading account immediately starts in the red, because of the spread. This is how you pay your broker for facilitating all your trades and spreads aren’t a fixed amount either, so in volatile market conditions, where the bid and ask prices start fluctuating rapidly, the spread widens and can become quite substantial.

High frequency trading, or scalping, which is a popular trading strategy among traders can sometimes be difficult to be made profitable due to the spread. If spreads are high, then the price needs to move by a larger amount of pips in order to turn a profit and therefore trading through ECN where spreads typically start from 0 pips is much more favorable.

If you are wondering how the broker makes a profit when spreads are so low on ECN accounts, then you need to look at the commission. Trading on ECN incurs a fixed commission for each lot traded and while spreads can vary when the market is volatile enough, the costs are often much more competitive than trading on a standard account.  

Also, since ECN trading takes place between the trader and the live market, there is no need to worry about requotes or slippage since it’s guaranteed that you will be getting the best price available on the network.

However, it’s important to note that traders who employ trading robots or Expert Advisors to open their trades for them, would likely prefer trading on a standard account since these tools usually can’t take into consideration these commissions.

 

ECN trading accounts at CM Trading

CM Trading offers unique trading account types, each catering to the needs of traders of different experience and skill levels.

You can open an ECN trading account with CM Trading by registering for a Gold which becomes available with a $10,000 initial deposit.

Trading on ECN with CM Trading provides you with access to razor sharp spreads starting from 0.1 pips on EUR/USD and a 200:1 leverage ratio.

Interested in trying out the best trading conditions we have to offer?

Open an account today and contact your trading specialist to request further information regarding our ECN offering.

 

Register here to get started!

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on whatsapp
WhatsApp
Share on email
Email

Recent .

Stock of the Week: Apple in huge demand, beats estimates by billions.

Stock of the Week: Apple in huge demand, beats estimates by billions. Apple beat estimates for quarterly earnings by billions of dollars. We look at …

Read More →
Stock of the week: Facebook makes CEO Mark Zuckerberg $8 billion in just one week!  

Stock of the week: Facebook makes CEO Mark Zuckerberg $8 billion in just one week!   It has been a momentous week for Facebook CEO Mark Zuckerberg who …

Read More →
Big Tech earnings roll in – Huge profits for Google, Microsoft and more! 

Huge profits for Google, Microsoft and more! Major big tech companies have released their quarterly earnings. We look at how some of the world’s biggest businesses performed so far this year!     Google, …

Read More →
MetaTrader 4 vs MetaTrader 5 – which is the better platform?
Bitcoin bounces back: Is buying the dip worth the risk?

Bitcoin bounces back: Is buying the dip worth the risk?  Bitcoin has recovered some of its losses following its fall from a record high of $65,000. Considering the crypto king’s astonishing performance in 2021, should …

Read More →
Oil summit: Waste of time
Oil market outlook: bumpy ride ahead?

2020 has been disastrous for the oil markets, however, it appears that oil has recovered most of its losses and is now hovering near pre-pandemic levels. In today’s article we will take a look at oil’s recent performance and explore the opportunities that may lie ahead.

Read More →
Dollar still on ten month lows while AUD gains
Stock Market Forecast: S&P 500, Dow Jones, NASDAQ Predictions and Analysis for 2021

With 2021 just around the corner, financial analysts are offering their outlook on where the stock market is headed in the coming year — and many of these experts are hoping for a bullish outcome. Read on.

Read More →
˄