Forex trading is becoming more and more popular every year, and this leads to an increase in the number of offers from brokers.
One of such offers is an ECN account.
This type of account differs from the others by a fixed spread.
When trading through it, transactions are made not with the broker, but directly with other market participants.
The main feature is that it allows you to trade with market spreads that are lower than the others, and sometimes even zero.
Brokers earn not on spreads, but on commissions for each transaction.
This means that their interests do not conflict with the interests of the trader, which creates a more transparent and fair trading environment.
When a trader opens a position through an ECN account, his order is sent to the electronic system, where it is combined with the orders of other market participants.
The system automatically finds a suitable buy or sell order and concludes the transaction at the best available price.
Since market participants see the real market prices, they can be sure that the broker is not manipulating the quotes in their favor.
ECN accounts provide minimal delays in order execution, which is especially important for market participants using news or scalping strategies.
This account attracts market participants with extensive experience who understand the peculiarities of market trading and are willing to work with floating spreads and commissions.
They appreciate the speed of execution and transparency of such accounts.
Those who use short-term trading strategies, such as scalping or intraday trading, benefit from fast order execution and absence of requotes.
With direct access to liquidity and low spreads, they are attractive to market participants who work with large volumes of trades.
The more trades are executed, the greater the benefit of low spreads compared to traditional accounts.
Floating spreads change significantly during periods of low liquidity, such as during the publication of important news.
This leads to higher transaction costs if you do not take this factor into account when planning your trading strategy.
Setting stop losses is an important part of risk management, especially in highly liquid and volatile markets.
It will help minimize losses in case of adverse price movements.
With the development of technology and increased competition among brokers, ECN accounts are becoming more and more accessible to a wide range of people.
Earlier they were considered a tool only for professionals, but today many brokers offer such accounts even with a relatively low minimum deposit.
With the introduction of new technologies such as artificial intelligence and machine learning, we can expect further improvements in the quality of trade execution and automation of trading processes.
It is also likely that brokers will continue to reduce commissions and improve trading conditions to attract more clients to their accounts.