Do ECN brokers with Guaranteed Stop Loss exist?
----------------
An Introduction to ECNs
This video provides an introduction to electronic communications networks (ECNs), systems that allow buyers and sellers of stocks to trade directly without an intermediary.
==============
Most forex traders participate in the forex market with forex brokers. There are mainly two types of forex brokers: market makers and electronic communications networks (ECNs). In this article we want to introduce the latter type of brokers, the ecn forex broker.
What is an ECN forex broker?
ECN forex broker is a financial expert that provides the clients with direct access to other forex participants in the currency market by using electronic communications networks (ECNs). Unlike market makers, which always trade against their clients to make profit, an ECN forex broker only creates opportunities of trading between forex traders.
How does an ECN forex broker work?
The ECN forex brokers provide a medium by passing on the prices for different market participants such as banks, market makers and other traders in the market. Then the best bid/ask quotes will be displayed on the trading platforms based on these prices. ECN forex brokers also serve as counterparties to forex transactions, but it is a settlement that they operate on instead of pricing basis. While fixed spreads are offered by some market makers, spreads of currency pairs can be very different, determined by the trading activities of the currency pair. In active trading periods, sometimes you cannot get ECN spread at all, especially in those very liquid currency pairs such as the majors (EUR/USD, GBP/USD, USD/JPY, USD/CHF) and some currency crosses.
Pros and cons of the ECN forex broker
The ECN forex broker has both advantages and disadvantages. The pros and cons of the ECN forex broker are as follows.
The pros of the ECN forex broker can be presented in following aspects.
Traders can usually get better bid/ask prices for they are derived from multiple sources.
At certain time traders may trade on prices with no spread or with only very little spread.
Genuine ECN forex broker will pass on the orders to a bank or other trading participants on the opposite side of the transaction instead of trading against the traders.
It is very likely that the prices on the ECN forex broker are more volatile.
Traders can take on the role of market traders to other traders on the ECNs since they can offer a price between bid and ask.
The cons of the ECN forex broker can be presented in following aspects.
Many ECN forex brokers do not provide integrated charting or new feeds.
Some trading platforms are not so easy for traders to use or operate.
Since there are variable spreads between the bid and the ask prices, it may be difficult to calculate stop-loss and breakeven points in pips in advance.
Forex traders are obligated to pay commissions for each transaction.
It is obvious that there are both pros and cons of an ECN forex broker. Traders have to take many factors into consideration when choosing a forex broker.
Forex Broker Types - MM,NDD,STP,ECN
This is small 10 minute education video about the following: the difference between Forex Broker Types - MM,NDD,STP,ECN
Hi Guys,
It seems ECN is true market acces and therefore never garantueed stop loss right? Many Brokers advertise with it, but I think it is a trick and only fro their non-ECN accounts?!
Thx
You misunderstand what any stop order means: It is NOT a guaranteed price, but if the stop order is triggered it becomes a normal market order which may be subject to large slippage or gaps. That is the reason why e.g. so many traders lost so much money when the Swiss Frank lost the support of the Swiss National Bank.
Hi Guys,
It seems ECN is true market acces and therefore never garantueed stop loss right? Many Brokers advertise with it, but I think it is a trick and only fro their non-ECN accounts?!
Thx
Its most likely only for NON ECN. There is no guaranteed sl there. In case of black swan event, you are more likely to be safe with non ecn than ecn. That's my experience. But again, broker is likely to take positions against you in non ecn.
I still go with ECN mostly because I personally feel it takes away their interest in creating your loss by giving them flat commissions. You also get tighter spreads :)
I believe more extreme volatile markets will come in future. More flash crashes will destroy traders. Non ecn accounts might be safer for newbies. Having very low leverage is the best way to trade in ECN.
You misunderstand what any stop order means: It is NOT a guaranteed price, but if the stop order is triggered it becomes a normal market order which may be subject to large slippage or gaps. That is the reason why e.g. so many traders lost so much money when the Swiss Frank lost the support of the Swiss National Bank.
Yeah I was surprised too but it really exists. Google gives tons of results.
<...>
Its most likely only for NON ECN. There is no guaranteed sl there. In case of black swan event, you are more likely to be safe with non ecn than ecn. That's my experience. But again, broker is likely to take positions against you in non ecn.
I still go with ECN mostly because I personally feel it takes away their interest in creating your loss by giving them flat commissions. You also get tighter spreads :)
I believe more extreme volatile markets will come in future. More flash crashes will destroy traders. Non ecn accounts might be safer for newbies. Having very low leverage is the best way to trade in ECN.
It would not be impossible though. Most brokers use ecn-bridges and plug-ins to be able to manipulate prices on their ECN accounts. Nice example is coinexx ECN account. On myfxbookspreads they have a 0,1 LIVE spread and on my real account 0,4.
I contacted myfxbook, they contacted coinexx, then coinexx corrected the spread on myfxbook and emailed us it was a "problem but solved now". So manipulation if prices is ossible on ECN 101% garanteed.
So in theory a 'garanteed stoploss' would be technically possible but would cost the broker lots of money, so unlickely....
thx guys, topic can be closed.
Yeah I was surprised too but it really exists. Google gives tons of results.
<...>
For information.
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
You agree to website policy and terms of use
Hi Guys,
It seems ECN is true market acces and therefore never garantueed stop loss right? Many Brokers advertise with it, but I think it is a trick and only fro their non-ECN accounts?!
Thx