Despite their respective reputation among traders, both ECN and fixed spread have advantages and disadvantages. How to know which one is better for you?
ECN brokers and fixed spread brokers make money in different ways. Understanding how these brokers charge their clients is very important so you can maximize your profit in trading.
Contents
ECN Brokers
ECN brokers are a type of forex broker that displays bid/ask prices on their trading platform based on live price streams from liquidity providers, most certainly without any manipulation. As a result, many traders prefer ECN brokers, especially for those whose trading system requires high accuracy in pricing and order execution.
When choosing an ECN broker, the first thing you need to know is that true ECN brokers do not make a profit from spread, but rather charge commission fees on each traded lot. Spreads on ECN accounts will always float, depending on market condition and corresponding to prices provided by their liquidity providers. Instead of spread, the commission fee is more important when you choose an ECN broker.
Another important aspect to consider is regulation. A broker is worthy of being called the best if it is licensed by credible regulatory bodies, not offshore or even unregulated. In this case, choosing a CySEC-regulated ECN broker is perhaps a controversial decision. However, since CySEC Cyprus is a member of MiFID, it holds a license that is applicable across the European Union countries, thus it can be considered a decent option.
Next, you should also consider the features that a particular type of account offers. For example, a broker may offer instant execution in a standard account, but the option for market execution is made available only on the ECN account. When registering on a forex broker, make sure you have paid attention to this as the features offered vary among brokers.
Obviously, the ECN broker you choose also depends on how much funds you have and what money management strategy you want to apply. Hence, take a look at the minimum deposit and maximum leverage that fit your trading plan.
Lastly, check what trading platforms are provided by the broker. Some say that a truly great ECN broker must not offer the MT4 platform because this platform is prone to manipulation by the brokers, thus intervention can always occur. The reality is, however, the MT4 is still the favorite among traders. That's why the list below includes brokers that offer the MT4 as their primary offering and other types of platforms as alternatives that can be chosen for ECN trading.
Here we've compiled a list of the best ECN forex brokers.
- IC Markets
- Admirals
- Dukascopy
- Exness
- FXTM
- FXCM
- FXOpen
- HotForex
- Orbex
- Pepperstone
- Roboforex
- ThinkMarkets
Fixed Spread Brokers
A spread is the cost of trading charged by brokers, which is calculated from the difference between the bid and the ask price. The smaller the difference, the higher the profits. However, a spread tends to fluctuate, always changing depending on the price movement. In volatile markets, a spread can widen significantly.
This condition leads to the emergence of fixed spread. As the name implies, this type of spread promises a more stable spread cost, thus it is more reliable for traders to apply a consistent money management strategy. This is one advantage of trading with a fixed spread. What are the other advantages? And what are the drawbacks of fixed spread?
The Pros of Fixed Spread
- You can trade without having to worry about erratic spread fluctuation
- It is easier to implement money management. The potential profit and loss can be calculated more easily since you have a more definite estimation of how much spread you get for each trade.
- It gives you protection from extreme spread widening. As has been mentioned earlier, normal or floating spread can jump drastically during high volatility. In this case, a fixed spread can protect your position from a volatile market.
- A fixed-spread account can make trading with EA easier.
- It is suitable for beginners who are not ready yet to deal with spread fluctuation. The fixed spread can also help new traders learn about how to determine and implement money management more easily.
The Cons of Fixed Spread
- It is usually higher than the floating spread. For example, if the minimum floating spread for the EUR/USD starts from 1 pip, the fixed spread for the same currency pair can be as high as 3 pips. Still, considering that a floating spread is reactive to market fluctuation, you must prepare yourself for spreads that are multiple times higher than the standard value. On the other hand, the 3-pip value of fixed spread is generally stable.
- It doesn't match the market price. Brokers who are able to offer fixed spread determines the range of bid and ask price themselves. It is impossible to give fixed spread if they truly follow the market price.
- Fixed spread can still change when faced with highly extreme market conditions. This can happen either around the release of unexpected news that shock the market. That being said, this change rarely occurs and generally the difference is not too big. Brokers also would send notifications should there is a temporary change on a fixed spread.
- It is more susceptible to requote.
- Order execution can beed.
Since there are many forex brokers today and become more competitive, it won't be difficult to discover a broker that offers the most ideal fixed spread for you. Some forex brokers that we recommend below may be an option for you to consider.
InstaForex
InstaForex is an international broker that provides trading services to traders globally. Since it was founded in 2007, InstaForex has provided for clients from various countries as many as 7 million traders. Based in Kaliningrad, Russia, InstaForex always attempts to improve the quality of the company in order to captivate the hearts of their clients.
Their hard work can be proven, one of which is by achieving a variety of awards, including Best Forex Cryptocurrency Trading Platform 2018 by UK Forex Awards, Best ECN Broker Asia 2018 by IBM, Forex Broker of the Year for Eastern Europe 2018 according to le Fonti Awards, Development, and Success award at Financial Olympus 2016-2017, etc.
There are 4 types of account offered by InstaForex representing a universal trading tool that help to work on international financial markets, such as Insta.Standard, Insta.Eurica, Cent.Standard, dan Cent.Eurica. Trading account types differ by the methods of accounting spreads and commissions, which are picked by the trader opening an account.
Insta.Standard account is relevant for standard trading terms on the Forex market and allows a trade to be settled with classical spread and with no fees. Traders will be charged a fixed spread every time they make a transaction. Spreads that are provided ranging from 3-7 pips. The main advantage of this type of accounts is its universality, as a trader can change the trading leverage and work with a deposit size convenient for traders.
Different from Insta.Standard accounts, Insta.Eurica accounts do not require payment of any spread on opening a deal. Therefore, this type of InstaForex account is suitable for beginner trader with a minimum transaction of 0.01 lots.
There are also other types of accounts InstaForex, namely Cent.Standard and Cent.Eurica which can be used for beginner traders because they can use the minimum transaction volume, which is 0.0001 lots (the cost per lot is USD0.1 cent). Deposit currencies that can be used by traders are EUR and USD (for all types of accounts).
Trading in InstaForex is quite a given as traders can choose to trade with leverage between 1:1 to 1:1,000. With a minimum initial deposit requirement of only USD1 (for all types of accounts), InstaForex clients have the opportunity to get a 30% to 100% deposit bonus.
Not only that, but beginner traders are also exempt from confusion in determining forex trading strategies. Because Instaforex provides ForexCopy services that allow traders to copy orders from professional traders in just a few minutes.
And then, there are around 300 trading instruments offered by InstaForex for traders. In addition to currency pairs, there are also futures, shares, gold, silver, CFDs, Bitcoin, and others.
Every InstaForex client is free to choose a trading platform that can be tailored to their needs. There are four types of trading platforms available, including InstaBinary, WebIFX, MetaTrader4, and MetaTrader5. Each platform has advantages and disadvantages. InstaForex also provides video tutorials on how to register on each platform. It aims to make it easy for beginner traders who want to join InstaForex.
If a trader still confused after seeing the video tutorials, traders can contact customer service available 24 hours connected to various social media, including email, Skype, Whatsapp, Telegram, Viber, Twitter, and Phone Call. On the InstaForex website, there are around 30 languages provided to facilitate traders from various countries.
The trader can also help themselves with trading calculators provided on the InstaForex website. Traders can accumulate currency pairs, Leverage, volume, and currency used.
The payment system in InstaForex is also diverse. Traders can pay deposits via Visa, Mastercard, Skrill, Neteller, PayCo, as well as Wire Transfer. All in all, InstaForex is a well-rounded broker for many types of traders.
One thing that makes this broker stands out is it offers various types of account with attractive spread concepts. On InstaForex, the Insta.Standard and Cent. Standard accounts have 3-pip fixed spreads for the EUR/USD. Nonetheless, the broker also explains that the fixed spread can go as high as 7 pips during certain market conditions.
If the range of fixed spread is 3-7 pips, is InstaForex still worthy of being called a true fixed spread provider? It must be noted that fixed spread can still change, so fixed spread disclosure indicates transparency from InstaForex.
FBS
Since 2009, the action of FBS Holding Inc. or known as FBS in the world of forex trading has been recognized by various international institutions. With clients reaching 14 million as of 2019, FBS has received the title of Most Transparent Forex Broker 2018, Best Investor Education 2017, Best Customer Service Broker Asia 2016, IB FX Program, and many others.
FBS is regulated by FSC Belize and CySEC Cyprus. This broker has been trusted by millions of traders and 370 thousand partners from various countries. Based on their data, FBS garners about 7,000 new traders and partner accounts every day. And, 80% of the clients stay in the FBS for a long time. No wonder the broker is growing rapidly due to the incredible growth in the number of clients.
Trading products offered by FBS range from forex, CFD, precious metal, and stock. For forex trading, CySEC-regulated FBS offers leverage up to 1:30 on Cent and Standard Accounts. Clients who want to try higher leverage than that can alternatively register an account under FBS Belize.
FBS spread begins from 0.5 pips for Pro account type and from 0.7 pips for Standard and Cent accounts. On a standard account, volume orders can be made from 0.01 to 500 lots. Therefore, this account is recommended for experienced traders.
Whereas on Cent Accounts, volume orders can be carried out with a maximum of 500 cent lots or the equivalent of 5 standard lots. Cent Accounts involve a different level of risk. FBS recommends Cent Accounts for beginner traders. All account types support the following trading instruments: 36 Forex pairs, 8 metals, 3 energies, 11 indices, 127 stocks, 5 crypto pairs.
Before plunging into the real forex market, traders can practice with FBS Demo Account which consists of two types, i.e Standard and Cent.
FBS uses the MetaTrader 4 and MetaTrader 5 platforms. They offer them on Windows and Mac as well as Android and iOS mobile. These platforms provide a trading experience at traders' fingertips, allowing traders to progress as a trader anywhere at any time.
MetaTrader platforms also have a variety of mainstay features, including the possibility to create, buy, and use expert advisors (EA) and scripts, One-click trading and embedded news, technical analysis tools, the possibility to copy deals from other traders, hedging positions, and VPS service support.
Another advantage provided by FBS is a deposit bonus of 100% for clients who fulfill certain requirements. The process of FSCing and withdrawing funds can be run easily and quickly. Based on clients' testimonies, each process usually takes no more than 3-4 hours, except on holidays.
Traders also have the opportunity to develop a side business when trading with FBS, namely as an Introducing Broker (IB) or Affiliate. The FBS partnership system provides partner commissions that are already in 3 level positions. Only by introducing new clients to FBS according to certain procedures, traders can earn extra income.
Traders will also get trading education experience at FBS. They have prepared a comprehensive forex course. The course consists of 4 levels: beginner, elementary, intermediate, and experienced. Traders can take courses that will turn them from newbies to professionals. All materials are well-structured. Besides, FBS provides various forex analyzes, webinars, forex news, and daily market analysis that can be accessed easily on their site.
Traders can access the FBS website with many language choices. Of course, this will increasingly provide comfort for traders. Available languages include English, Italian, French, Portuguese, Indonesian, Spanish, and others. Live chat support is also provided 24 hours 7 days a week.
In conclusion, FBS is a widely known broker among retail traders around the world. It continually grows to become a preferred broker because of flexible trading conditions that enable its clients to trade with various instruments, low deposit, and other trading advantages.
FBS started their operation in 2009 and has since added fixed spread feature which starts from 3 pips. Unlike InstaForex that offers fixed spread on two types of accounts, FBS activates this feature only on their micro account. It is a recommended account for new traders, as the minimum deposit is only around $5, while the minimum trading size is micro-lot or 0.01 in standard lot. Furthermore, this broker gives other attractive features in the form of free education programs for traders and copy trading.
FirewoodFX
FirewoodFX is a good contender in the retail forex trading industry since it offers competitive features such as fixed spread and swap-free accounts as defaults in all account types. However, choosing a FirewoodFX account can be quite dilemmatic if you take the minimum deposit and fixed spread into account. The micro and standard account offer a minimum deposit of $10 and a fixed spread that starts from 3 pips and 2 pips respectively. Meanwhile, the minimum deposit of the premium account is higher ($100) but the fixed spread starts from only 1 pip.
Best Tips to Choose a Fixed Spread Broker
Obviously, different brokers have different fixed spreads on different types of accounts. To gather more information, you can check the specification of fixed spread on each broker's website.
| Feature | InstaForex | FBS | FirewoodFX |
| General Rating |
2.24/5 |
3.65/5 |
1.00/5 |
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| Score | 63 | 84 | 53 | |
| Trustpilot |
2.8/5 330 users |
3.7/5 565 users |
3.6/5 1 users |
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| 💼 Regulation | ||||
| ❗Info | ||||
| ⌛ Established | 2007 | 2009 | 2014 | |
| 💲 Min Deposit | $1 | $5 | $10 | |
| ⚖ Max Leverage | 1:1000 | 1:3000 | 1:1000 | |
| 🔢 Spread | Fixed | Variable | Fixed | |
| 💸 Commissions | $30 | from $0 | ||
| 💡 Min Position | 0.0001 lot | 0.01 lot | 0.01 lot |
| 💳 Payment | Skrill, Wire transfer, Credit/debit cards, Neteller, UnionPay, AliPay, SOFORT, Crypto, Litecoin, Dash, Crypto Cash, AdvCash, Ripple, Tether (USDT), Dogecoin, NEO, AstroPay and EOS.IO | Credit/debit cards, FasaPay, Local bank transfer, Neteller, Perfect Money, Skrill, UnionPay and Wire transfer | Wire transfer, Credit/debit cards, UnionPay, Perfect Money, FasaPay, Tether (USDT), Stellar (XLM), Binance Coin (BNB) and Crypto | |
| 🏢 Office(s) |
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| 🧩 Demo Account | ||||
| 📁 Segregated Account | ||||
| 🕋 Islamic Account | ||||
| 👨💻 PAMM Account | ||||
| 📈 Managed Account | ||||
| LAMM Account | ||||
| MAM Account |
| 💱 Hedging | ||||
| 🇺🇸 US traders | ||||
| 📫 Requires sending documents via postal mail | ||||
| 🕛 Swaps | ||||
| ☎️ Trading by telephone |
| 🏆 Trading contests | ||||
| ⚡ Automated trading | ||||
| 💰 Bonus offers | ||||
| 📖 Free education | ||||
| 👔 Affiliate program |
| 1️⃣ One-click trading | ||||
| ⏱ Trailing stop | ||||
| ⏳ Pending orders |
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| 🗣 Website Languages | Arabic, Azerbaijani, Bulgarian, Czech, German, English, Spanish, Indonesian, Italian, Japanese, Georgian, Lithuanian, Latvian/Lettish, Malay, Dutch, Polish, Portuguese, Russian, Slovak, Turkish, Ukrai | Arabic, Bengali/Bangla, Burmese, Chinese, English, French, German, Indonesian, Italian, Japanese, Korean, Laothian, Malay, Portuguese, Spanish, Thai, Turkish, Urdu, Vietnamese | English, Indonesian, Chinese |
| 🚪 Trade Now | Open InstaForex | Open FBS | Open FirewoodFX |
You can examine all the pros and cons of fixed spread, compare it with floating spread from an ECN account, and adjust it to your trading needs and conditions. Don't forget to try it out on a forex demo account before using it for live trading.
Brokers usually write the minimum spread for the EUR/USD currency pair as the standard. You can make this a point of reference when comparing the fixed spread between brokers.
Also, understand the feature for each account, as brokers may put additional requirements for a fixed spread account. After all, this service is a special feature that is still absent in many brokers.
See Also: Lowest Spread Forex Brokers For EUR/USD
Final Words
True ECN brokers only charge commission fees and do not make money on spread difference. Therefore, it is in their best interest for traders to make profits from their traders. If you keep on winning, you will most likely trade on larger volumes, thus giving them more income from the trading fees.
Fixed spread, on the other hand, can help traders in many ways. From compatibility to automated trading to easier money management, fixed-spread brokers provide traders with such convenience that is not found in the floating spread system. To figure out further on the comparison between the two types of spreads, look into Fixed Spread Vs Floating Spread: 5 Things You Should Know.
10 Comments
Jun 2 2021
Different trading ways, different spread you need. My suggestion, if you want to become a scalper, the best way is to open an ECN account because the spread starts from zero point and it is very cheap for scalpers. Meanwhile, if you are a swing trader, it is better to trade with a fixed spread although it is not 100% good at all at least you pay more little bit pips with the guarantee that if the floating rate rises high, you will not get affected.
Jun 7 2021
David: I was searching for brokers that can support my scalping trading system. So, you have said that scalpers can become more profitable if use an ECN account right? Then I will choose a broker that has ECN Account in their service. But about the broker that provides ECN accounts, which one you recommended for? At least the broker can give you a very minimum deposit. Because the article has too many suggestions.Thank you!
Jun 15 2022
Peter: All the brokers listed above are ECN brokers which have spread starting from zero point (0.) so it depends on you to choose which one is the best for you. You need to try them at a demo account with MetaTrader 4 or their own trading platform to see which one suits you and the trading condition such as how fast they execute your order and the commission that you may acquire. So I can't say which is the best for you and you can see their minimum deposit too.
Jun 29 2021
David: Dude wanna ask, you've said about ECN brokers may not be suitable for swing traders because of the floating rate. Is it true that every swing trader can get a higher floating rate if they used to trade with a variable spread? I mean you can close the position at a lower rate, right? Instead of doing that at a higher rate, you can wait for a little bit. Am I Right?
Jul 2 2021
Maui: No, I was told that a fixed spread is not always a good thing for a swing trader. But for some swing traders, they open a position while the market is not too volatile. And they close when the price is higher or lower than normal. And they often wait for an economic event or news that affects the market. And this economic event could make the market more volatile and allow variable interest rates to float. And those swing traders who predict correctly, can make huge profits. So if they use floating spreads, they will be charged the same as the floating market rate which is usually higher. Hence, this is why the swing trader makes better use of the fixed spread.
Jul 2 2021
Maui: For the scalpers, it is obvious that they can trade at any time and under any conditions because they open closed positions very often on the same day. So, if the scalper wants to avoid a higher rate, he simply won't take the trade during events and news and will wait for the normal market trend, downtrend or uptrend, or even trend to go away. horizontal to trade.
Jul 8 2021
Maui: Nope I am disagree about the ECN brokers not suitable for swing trader.
ECN accounts can be used for swing trading. Basically, Swing trading involves holding positions for days to weeks, and the fast execution speed and competitive pricing of an ECN account can be beneficial for swing traders. ECN accounts allow traders to access the interbank market and benefit from greater liquidity, which can lead to better pricing and reduced slippage. Note : The biggest enemy of swing trading is slippage that can be reduced
Swing traders using ECN accounts should always consider the risks of forex trading and implement appropriate risk management strategies such as placing stop-loss orders and closely monitoring their positions. . They should also make sure that the broker they choose offers trading conditions and features that match their swing trading strategy.
Jul 12 2021
David: I agree, basically, scalping is a trading strategy that takes advantage of small price movements in the market and holds positions for a short period of time, usually seconds to minutes. Scalpers can benefit from low spreads and direct access to liquidity providers offered by ECN accounts, as well as no requotes and price manipulation as ECN brings transparency to the trader. It is important for scalpers to make sure that the broker they choose allows speculation and has trading conditions that suit their strategy, such as low spreads and fast execution speeds. , and such elements may be provided by the ECN Broker.
Aug 2 2021
As a beginner forex trader, is an ECN account a good choice? I mean the main advantage of ECN account is the spread that is very low meanwhile the disadvantage is higher commission. And I am really confused about the differ between ECN from other account types especially STP accounts? What factors should beginner traders consider when choosing an ECN broker, and what are some common features of ECN accounts that beginner can use? How can beginner traders use an ECN account to maximize their trading potential while managing risk? thank you!!
Aug 5 2021
Harvey: The ECN account is designed for traders who need direct access to the interbank market and who have a good understanding of the forex market and trading strategies. ECN accounts can offer competitive prices, fast execution, and deep liquidity, but they can also have higher costs associated with other account types. In addition, ECN accounts may have more complex trading conditions, such as minimum deposit requirements and sometimes higher trading volume requirements.
So in my opinion and many traders may agree, for a beginner trader, a simpler account type like a micro or standard account might be a better choice. These types of accounts typically have lower minimum deposit requirements, simpler trading conditions, and can allow novice traders to gain experience and develop their trading skills without any hassles. need the added complexity of an ECN account. In addition, novice traders may not need the advanced features and direct market access offered by an ECN account until they gain more experience in the forex market.