Where to Open an ECN Account
ECN stands for Electronic Communication Network, and is a system of dealing in the forex market where brokers obtain prices from several liquidity providers. This price data (market data) is provided to traders without any interference, while forwarding all orders placed by buyers and sellers to the liquidity providers for execution. Under the ECN arrangement, there is no interference in the process via a broker's dealing desk, which provides a system of direct market access (DMA) for the trader. By extension, telephone trading in which the broker fulfils trade orders made over the phone on the client's behalf is executed in an ECN environment and is slower – much slower.
One feature of ECN trading is that unlike the dealing desk trading environment, traders pay a commission in addition to the trading spread. This is because providing the ECN environment to the trader comes at an expense to the broker, and this has to be paid for (by you!). Charging commissions as well as the enforcement of high volume trades on traders is the only way to cover this cost. Due to the fact that ECN brokers have high volume requirements of traders, it requires a large amount of capital on the trader's part to be able to participate in an ECN trading environment. ECN pricing is the most transparent in the market. In an ECN setup, what you see is what you get and there are virtually no re-quotes.
If you have made your mind up to go down this route and you have the money to do so, you can open an ECN account at the following places:
GAIN Capital Holdings Inc
Gain Capital are the operators of Forex.com, and their ECN trading account (GAIN GTX) is a true high-end account that is truly out of the reach of many traders. Account opening starts at $100,000 and commissions charged are at the rate of $5 for every $100,000 order opened and $5 for every $100,000 closed, totalling $10 for a completed trade.
The snapshot above shows the order tab of the GTX ECN platform, showing clearly the pricing of the currency pair from different liquidity providers, giving traders the choice of the best entry price possible.
IG Markets UK
IG Markets UK provides an ECN account which has an entry balance of $50,000. The Level 2 dealer platform attracts a commission of $6 on both sides of an order, totalling $12 for a complete trade.
Even though it will take a minimum of $25,000 to open an account with CIM Banque, this ECN broker has a very pricey commission structure, as traders can expect to pay as much as $10 per open order and $10 per Standard Lot for order closure, which makes a total of $20 per Standard Lot trade. This broker provides up to 10 levels of market depth. The advantage of using this Swiss based private bank is that the account is actually a bank account with access to an investment vehicle. The ECN platform is web-based.
With access to cutting edge technology for the provision of market moving information to traders in the Interactive Brokers Information System (IBIS), traders using Interactive Brokers also have access to ECN trading which starts from $10,000 for account opening.
Alpari UK Direct Pro Accounts
Alpari is one of the most reputable brokers on the planet. Whether you use Alpari UK (for international users) or Alpari US (for the US market), the Direct Pro platform which is a Currenex Classic product offers traders access to an ECN trading environment with a minimum balance of $20,000. Traders can expect to pay $5 on each side of the transaction per Standard Lot trade.
Traders need to be wary of brokers who claim to be offering an ECN environment but only demand for account opening balances as low as $300. The ECN model runs on expensive infrastructure and there is no way such brokers can maintain such models when traders are running such low account balances. It is better you save up, get enough capital and use brokers who operate true ECN environments.