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What is an ECN broker?

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Ruben Couto
644
Ruben Couto  

Hello!

I know we are not allowed to discuss brokers on this forum. But is it ok to discuss broker types, not mentioning the actual firms?

What is an ECN broker? What are the main differences between ECN brokers and others? Which type is best? What should I look for and look out for when choosing a broker?

Thanks!

:)

Brian Dee - Random Trader
1759
Brian Dee - Random Trader  

Ruben

Read this several times first

http://www.investopedia.com/articles/forex/06/ECNmarketmaker.asp?viewed=1

and of course Google

http://www.google.co.uk/search?hl=en&q=forex+hotspot+metatrader&meta=

An ECN broker or data feed gets you to the wholesale FX market with lower spreads and no dealing desk to... organise quotes or requotes at very busy or very quiet times

As far as I know there is no true ECN source giving direct feed to MetaTrader Terminal (what we use)

If you have http://www.metaquotes.net/data_center/ and/or http://www.metaquotes.net/server/

I believe that there are some ECNs that will connect through these to your Terminal

Alternatively they may provide an API that your EA would need to call...

Disadvantages on an ECN could include:-

High initial deposit

No micro/nano accounts

Low maximum leverage

Commission to pay

For my purposes, an MT broker that shows minimal requotes, good service and lets me and my EA's make €€€ works for me :)

FWIW

-BB-

Ruben Couto
644
Ruben Couto  

Hello BB!

Thanks for the info and links!

;)

eduardo fiuza
228
eduardo fiuza  

Market Maker

A market maker provides liquidity for a particular currency pair and stands ready to buy or sell that currency by displaying a bid and offer price. A market maker takes the opposite side of your trade and has the option of holding that position or partially or fully offsetting it with other dealers, managing their aggregate exposure to the market. Market makers earn their commission from the spread between the bid and offer price.


Forex ECN Broker

ECN is an acronym for Electronic Communications Network. A Forex ECN does not operate a dealing desk but instead provides a marketplace where multiple market makers, banks and traders can enter competing bids and offers into the platform either inside or outside the spread, allowing traders to trade against each other and with multiple counterparties. A trader might open a trade with liquidity provider "A" and close it with liquidity provider "B", or have the trade executed against the bid or offer of another trader. Participants of the ECN send in competing bids and offers into the platform and the combined volume is usually displayed to traders at each price. Orders are matched between counterparties, usually for a small fee.


NDD

An acronym for 'No Dealing Desk'. A no-dealing desk broker uses a matching engine to match up orders between its liquidity providers and their clients. The liquidity providers send in competing bids and offers into the platform, resulting in the best bid and offer being displayed to the trader. A no dealing desk broker may increase the spread instead of charging a commission to their clients.



Ruben Couto
644
Ruben Couto  
edfiuza wrote >>

Market Maker

A market maker provides liquidity for a particular currency pair and stands ready to buy or sell that currency by displaying a bid and offer price. A market maker takes the opposite side of your trade and has the option of holding that position or partially or fully offsetting it with other dealers, managing their aggregate exposure to the market. Market makers earn their commission from the spread between the bid and offer price.

Forex ECN Broker

ECN is an acronym for Electronic Communications Network. A Forex ECN does not operate a dealing desk but instead provides a marketplace where multiple market makers, banks and traders can enter competing bids and offers into the platform either inside or outside the spread, allowing traders to trade against each other and with multiple counterparties. A trader might open a trade with liquidity provider "A" and close it with liquidity provider "B", or have the trade executed against the bid or offer of another trader. Participants of the ECN send in competing bids and offers into the platform and the combined volume is usually displayed to traders at each price. Orders are matched between counterparties, usually for a small fee.

NDD

An acronym for 'No Dealing Desk'. A no-dealing desk broker uses a matching engine to match up orders between its liquidity providers and their clients. The liquidity providers send in competing bids and offers into the platform, resulting in the best bid and offer being displayed to the trader. A no dealing desk broker may increase the spread instead of charging a commission to their clients.

Hello!

Thank you!

Considering the Market Maker brokers, is it reasonable to say that the way they handle the trades on real money live accounts is different from what happens in demo mode? If so, it would help explain the diferences of results between backtestings and live forward testing with real money. Is it so?

:)

eduardo fiuza
228
eduardo fiuza  

Rubencouto,


Penso desta forma também. Um MarketMaker não vai agir na demo como na conta real.


A melhor opção, quando o capital é menor ou não se quer operar ainda grandes volumes, é utilizar uma NDD.


Abraço.

Ruben Couto
644
Ruben Couto  
edfiuza wrote >>

Rubencouto,


Penso desta forma também. Um MarketMaker não vai agir na demo como na conta real.


A melhor opção, quando o capital é menor ou não se quer operar ainda grandes volumes, é utilizar uma NDD.


Abraço.

Olá!

Obrigado pela resposta!

:)

Brian Dee - Random Trader
1759
Brian Dee - Random Trader  

Ruben

> is it reasonable to say that the way they handle the trades on real money live accounts is different from what happens in demo mode?


Yes!

See

https://forum.mql4.com/14928

https://forum.mql4.com/15050

https://forum.mql4.com/12690

-BB-

eduardo fiuza
228
eduardo fiuza  

BarrowBoy,


The spreads in my broker vary in the demo and real account.


I like this way.

Brian Dee - Random Trader
1759
Brian Dee - Random Trader  

Useful links for broker info - not this is not comprehensive but is a good start

http://www.100forexbrokers.com/stp-ecn-brokers

..

http://www.100forexbrokers.com/mt4forexbrokers

..

Post additions you know of to this site

-BB-

mobixel
17
mobixel  

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