Standard Account Vs ECN Account What’s The Difference?

This means that non-dealing desk brokers do not have conflicts of interest with their clients, and their profits are based on commission charges. Most brokers charge around $7.00 round turn for each standard lot you trade, so unless you hold a lot of equity and plan to trade high volumes, the ECN account can be a costly choice. ForexTime (FXTM) offers a choice of 6 account types including 3 standard accounts including one micro-lot account and 3 ECN accounts. This FXTM Standard vs ECN account looks at each account type and compares their spreads to other brokers.

ForeTime uses an electronic communication network (ECN) and straight-through processing (STP) to automatically connects you with liquidity providers when you trade. Each 1.0 pip you trade costs $10, so you are paying $13 for each lot you trade with FXTM. Choosing a broker with spreads of 0.8 pips ($8) could save you $5.00 for each lot you trade. The ECN (Electronic Communications Network) account is an order-matching execution system. The broker charges a premium as commission per trade instead of inflating the cost of the raw spread. As a rule, normally, a standard account is considered as one with a fixed margin.

PLATFORMS

We provide in-depth analysis of Forex Brokers, Stocks, CFDs, ETFs, and other financial instruments to help our readers make informed decisions. When trading directly from the interbank market, there’s little chance of re-quotes or slippage compared to an STP broker, which relies on other brokers for fills. With an STP broker, the execution speed can vary depending on how the broker routes a trade, which can vary with each trade.

The main downside to using an ECN broker is the commissions you may incur. These fees are calculated on a per-trade basis, so can be costly over the long-term. Envision it as a marketplace for broker’s clients to trade with each other, so traders like you can get the best possible offer at that moment in time. If you are looking for ECN style spreads then FXTM ECN account can be a good deal as spreads can be as low as $4.00 round turn which is very good.

Forex Isn’t As Difficult As You Think: Here’s Why…

The answer to this question depends on the kind of trader that you are. ECN will be a better choice if you are a short-term trader, as the spreads are tighter. However, if you are a long-term trader, you can go for STP irrespective of the spread because the number of transactions you will make is less. Any experienced trader would be able to benefit from both accounts. Obviously you trade with the intention of making some profit, however it is important to appreciate that CFD are risky instruments and using leverage can amplify your losses.

However, as a general rule, the network will keep spreads relatively tight most of the time, especially if it is a huge network because there are many operators involved. Finally, a trader who is profitable can have an advantage in any type of broker, be it a standard broker or an ECN. The main reason why using an ECN account can help you is that it offers liquidity across a network.

The Difference between an ECN and a Standard Account

One of the main advantages of an ECN account is the high level of transparency it offers. Traders can view real-time market data, including live price quotes, order book information, and historical trading data, which can help them make informed trading decisions. Additionally, ECN accounts typically offer faster execution speeds, as trades are processed electronically and ecn account vs standard directly with other participants, reducing the potential for delays. ECN account works by providing traders with direct access to the interbank market through a network of electronic communications. For traders seeking to make a decision between an ECN account and a standard account, it’s crucial to assess their individual trading preferences, goals, and strategies.

• If you get good value with the commissions of the FXTM ECN account then you could consider that account, otherwise, you are better to look at other forex brokers.
• The ECN account (Electronic Communications Network), is one of the forex account types commonly provided direct access to the market.
• The pro account is recommended by FXTM for serious (semi-professional) retail investors, institutional traders, and hedge fund managers.
• It’s a valuable learning opportunity that can help you understand the dynamics of the market, practice risk management, and develop your trading skills gradually.

This commission can be generally avoided by working with non-ECN brokers, like STP brokers. However, working with an ECN broker will be cheaper if you are a prominent trader in a liquid market. As a result, with a RAW ECN account, traders can experience some of the lowest trading costs in the industry.

ECN Account

Therefore, you’ll trade more and provide the broker with more revenue. If you’re a swing or position trader, you might prefer this choice. If you pay 2 pips per trade when you’re aiming for 150 pips plus, then the transaction cost isn’t as significant compared to being a scalper. One of the most basic questions regarding trade is what kind of broker to use. The conclusion will depend on your situation, but let’s look at the main difference between an ECN account and a standard account.

One thing to note is that ECN brokers avoid wider spreads that are common with a traditional broker. However, the ECN broker will benefit from commission fees per transaction – this is a fixed, transparent commission. The pro account is recommended by FXTM for serious (semi-professional) retail investors, institutional traders, and hedge fund managers. To show ensure only serious traders use this account, a large minimum deposit of $25,000 will be required. FXTM’s ECN zero account is essentially the same as their standard ECN account except with no commissions. However, you pay a premium in the spread, for which FXTM advertises they start from 1.5 pips.

A Guide to ECN Trading

Micro accounts typically have a minimum deposit requirement that is higher than cent accounts. They offer trading with smaller contract sizes, such as 1 micro lot equaling 1,000 units of the base currency. This type of account is suitable for traders who prefer to trade with smaller positions and have a modest trading capital.