ECN forex brokers carry relatively higher trading fees, but more suitable for professionals who seek to make use of expert advisors or scalping strategy.
When you are looking for forex brokers for the first time, you may find a lot of mentions about ECN, STP, and Dealing Desk brokers. It is said that ECN forex brokers are superior compared to STP and Dealing Desk brokers. Is this true? What are ECN forex brokers and how do their fees compare to other types of brokers?
What are ECN Forex Brokers?
ECN is shorthand for "Electronic Communication Network", a type of bridge that is used by brokerage companies to connect retail forex and CFD traders to their liquidity providers. ECN bridge enables buyers and sellers between these parties to deal directly, without passing through the broker's dealing desk. This is the reason why ECN forex brokers also often called "No-Dealing Desk (NDD)" brokers.
ECN is not the only method that is commonly used by brokers to connect traders with liquidity providers. There's also Straight Through Processing (STP). According to STP protocols, traders' orders are directed to the liquidity pool where orders will be executed according to the best price policy. However, the ECN bridge is considered superior because of the preception of non-interference from brokers.
Do ECN Forex Brokers Provide Better Services?
ECN bridging technologies will enable forex brokers to provide excellent services for some, but it may also prevent them from providing other types of services common among STP and market makers. So, it is not that ECN forex brokers are better per se. Depending on what is your trading style, you may or may not need ECN forex brokers.
There are at least four ECN forex brokers advantages:
- Fast execution: Some STP and DD forex brokers may claim to have fast execution, but ECN forex brokers are still the fastest. Traders' orders will not be handed to an internal dealing desk nor undergo processing that may require several seconds delay.
- Transparent pricing: ECN forex brokers will provide real market quotes through Depth of Market (DoM) that could be accessed freely by traders in each trading platform. Therefore, there are fewer disputes between traders and brokers in relation to price execution.
- Real market spread: ECN forex brokers offer interbank connectivity without any interference. Therefore, prices are real market prices and spreads are free of mark-up.
- No requotes: If there are no suitable prices for your orders, the broker will not offer "alternative prices" such as requote. Instead, orders will be filled at the next best price available or delayed until there are suitable prices (see brokers' policies).
On the other hand, ECN forex brokers may have limited capability to reduce trading fees. They could not create a fixed-spread account, zero-spread account, cent account, and so on. ECN forex brokers could not even provide free commission services, because the commission is their main source of income.
How Do ECN Forex Brokers Charge Trading Fees?
ECN forex brokers may charge up to four types of fees, they are:
- Spread: As mentioned previously, ECN spreads are real market spreads. ECN forex brokers with tier-1 liquidity providers may provide lower spread compared to ECN forex brokers with connections to tier-2 aggregators. ECN forex brokers with the lowest spread are also known as "raw spread forex brokers".
- Commission: As ECN forex brokers could not mark-up trading spread, commission fees become their main source of income. Commission fees may be charged per side or per round turn. One "round turn" means one round of opening and closing position, while one "side" means the execution of half-round.
- Swap (overnight fees): Most ECN forex brokers have to charge swap fees for positions held overnight, in accordance with market rules. If you often need to hold positions for several days at a time, then ECN forex brokers may not be your cup of tea.
- Deposit/withdrawal fees: This is where some ECN forex brokers may compete with each other. Some brokers may charge nothing, while some others charge more.
All in all, ECN trading fees may be comparatively higher than STP dan Dealing Desk forex brokers' charges. In comparison, DD brokers create their own market and can freely determine their prices. Beginner traders may also find DD brokers' terms and conditions more favorable, due to the reduced fees and minimum capital requirements.
ECN forex brokers are more suitable for professionals who seek to make use of expert advisors (trading robots) or the scalping strategy. Traders will be guaranteed of receiving the best market prices and free of brokers' interference. But you have to make sure that your ECN broker has received licenses from a competent regulatory body, in order to avoid scams under the guise of ECN. For comparison, see some of the best ECN brokers worldwide such as IC Markets, Pepperstone, and Alpari.
The three brokers' specifications can be compared below:
rated by 12 users
rated by 916 users
rated by 3 users
|Office(s)||Australia, Hong Kong and Viet Nam||Australia, China, Kenya, Ukraine and United States||Saint Vincent and Grenadines|
|Regulation||ASIC ACN 123 289 109
Capital Markets Authority of Kenya, 128
DFSA (Dubai), F004356
|FSA (St. Vincent & the Grenadines) 20389 IBC 2012
|Minimum Position||0.01 lot||0.01 lot||0.01 lot|
|Payment||Bitcoin, BPAY, Credit/debit cards, FasaPay, Neteller, PayPal, Skrill, UnionPay and Wire transfer||BPAY, Credit/debit cards, Neteller, PayPal, Skrill, UnionPay and Wire transfer||Bitcoin, Credit/debit cards, Ethereum, FasaPay, Litecoin, Neteller, Perfect Money, QIWI, Skrill, UnionPay, Wallet One, WebMoney, Wire transfer, Yandex.Money and Zcash|
|Official Website||Visit IC Markets||Visit Pepperstone||Visit Alpari|
|Forex Demo Account|
|US traders are welcome|
|Requires sending documents via postal mail|
|Overnight interest rates (swaps)|
|Trading by telephone|
|Interest rate on funds|
Trading Platforms and Complements
|Trading via API|
|One-Cancels-Other (OCO) orders|
|Gold & silver|
|Website Languages||Chinese, English, Japanese, Russian||Chinese, English, Russian||Arabic, Chinese, English, Indonesian, Korean, Malay, Persian, Portuguese, Russian, Spanish, Ukrainian, Urdu, Vietnamese|
|General Review||Read IC Markets Review||Read Pepperstone Review||Read Alpari Review|
Liam AddingtonJul 24 2020
It's been a month using ICMarket demo, and I compared it with other brokers, relatively smaller commissions and spreads. hopefully it's the same as with the Real Account ... thank U ICMarket, keep Good Service ...
Garret NgJul 24 2020
It's been 10 times to register a live account at icmarket.com but there's no confirmation via email too ... even though it's been 2 days :(
Sarah MichaelsonJul 24 2020
Recommended for those looking for ECN brokers, regulated & affordable deposits
Jul 24 2020
Just check on icmarkets.com, the commission is quite affordable, the max is 3.50 USD / lot. It's reasonable since the minimal deposit is quite high. If compared to other brokers, trading cost in icmarkets relatively cheap cz I've seen an ECN account that commissions like 20 USD / lot.
Pedro ViennaJul 24 2020
IC Markets real ECN broker. Can be checked from the quality of the regulation, also the platform can use cTrader who can access directly to the market.
JanetaJul 24 2020
IC Markets Brokers are really great, the spreads are very good ... starting from 0.0 for ECN accounts ... depo and WD smoothly ...
Drew FabrizioAug 20 2020
I started with Pepperstone a couple of weeks ago. For the first time, everything seems fine, but it's just that their MT4 platform is really lagging during events. Also, their commissions are relatively expensive. It's not that they're not good, but their calculation with commissions and swaps really not my type.
Harley CadwellAug 20 2020
I place my withdrawal on Saturday, then on Monday, I got the money. It's a relatively fast process. Looking forward to another withdrawal this week. Not much but glad I got the profit.
Ruby PearceAug 20 2020
Such a great service and they have a good trading platform. I've been using Pepperstone for a while now and they keep improving its service in all different aspects.
Audrey PackmanAug 20 2020
I'm very interested in cTrader. That's why I join Pepperstone, it's the main reason. I've been trading with them for a while with no issues. I took my withdrawal profit (unfortunately, not that much :D) 2 or 3 times a week and it takes 2 days max to processed.
Eugene HackathornAug 20 2020
At the start, the broker running very well. But the longer it lasts, the worse it gets. Found that there was no more credit card option for withdrawals and can only be paid to PayPal which charged with high fees. Compared to other competitors, you know that deposit and withdrawal fees are relatively considered. Fastest and cheapest is a good sign of customer service.
Hannah CreedAug 20 2020
Such a good Australian local broker which hard to find these days. Excellent for support. Hope you guys can improve your mobile app tools for quick deposit and withdrawal, and also for other customer service support.
Markus ShallowAug 20 2020
I think Pepperstone needs to re-training its customer service once in a while. Because some of their representation doesn't have a clue about their own regulations. They are not well informed.
TuckerAug 20 2020
I don't have any problem with Pepperstone right now. They are very helpful dan provides good insight on their Telegram channel. I don't have problems with withdrawing funds too. Keep up the great job.
Patrick WilsonAug 20 2020
Many said that they were dealing with a sudden abnormal spike in the spread on a daily basis during the first hour each day. Not to scare anyone, but I just want to alarm other users about this broker.
Dawson MilesAug 20 2020
My experience with Pepperstone was very pleasant. I can make a decent profit. There is no problem with the withdrawal process.
Liam CastwoodAug 20 2020
So far, as a newbie on the forex trader, I don't have any problems with Pepperstone. They didn't hound me with phone calls, only called me to introduce themselves, and gave me an email to request assistance just in case I have any problems later. I am yet to make a withdrawal with Pepperstone but I will report back once I have.
Justin FrancoAug 20 2020
I don't have an account on Pepperstone right now, however, their 24/7 service is excellent. I have lots of questions and they answer all of them. It is very clear that they help me to understand. The great first impression so far.
Elijah BartonAug 20 2020
Their spread is lower than the other brokers. They close your position with no warning at all. It was a sell order and they close it way above my SL for no reason, all in an open market. Their customer service is so so. Think twice if you want to invest in Pepperstone.
Tom LucindaAug 20 2020
I have a pleasant experience with Pepperstone since have a live trading account. I made the account after more than a year building confidence over the demo account. I would like to see their Webinar based on the Ctrader platform. Looking forward to more content there since I'm not really used to MT4 or MT5.
Bennett SkylarAug 20 2020
So, I planned to trade temporarily with Pepperstone. Their platform is OK, but other brokers have better spreads. Their support is not terrible and pretty average. Also, I read some reviews and news about their data security. Apparently, their 3rd party leaks Pepperstone client's data. Data is very crucial for business these days, but to have a problem like this surely made me be aware of their circumstance.
Callum OlsonAug 20 2020
Pepperstone is a good broker that offers a great platform base for all of its users. The support is okay tho.
Puff HedgetonAug 20 2020
Their live support is amazing. I've been contacting them couple times since before I opened an account until now. They replied fast and answered all my questions. Pretty happy with the great experience.
Shayla KumarAug 20 2020
Recently, I had an issue with the logging process to my account on MT5. But the customer service assists me until the issue is sorted. Now it's resolved and I'm very happy.
John NeymarAug 20 2020
Excellent support and help. Thank you very much. They have the fastest system to approve the process. I recommend this broker.
JanikaAug 20 2020
Hello there, I had a great experience with broker Pepperstone. It's been a while with them. Their customer support is amazing. Even with someone with broken English like me, they still help me through the process.
Pam YohanneJul 27 2020
I've tried the Pepperstone Broker. I have tried to compare it through demo accounts among all existing brokers.
I think this ECN broker has the thinnest spread. But what prevented me from opening a real account was the language barrier.
I'm worried if there are certain complaints where I have to complain, whereas the Live chat service can only be in English. English is not my first language.
EzharJul 27 2020
What I like from Pepperstone, the trading technology is very modern, and the razor account for ecn trading is really raw spread, not manipulated
JoahnJul 27 2020
It's been a few years using this broker there are no obstacles. Just a small language barrier, can be helped right with google translate or something like that.
Razor ECN account is quite good, withdrawal to local bank is quite satisfying, 2 working days already liquid. so far quite satisfied with this broker
Davinne AtmarJul 27 2020
Between IC Markets and Pepperstone competing in terms of spreads. A minimum deposit of $ 200. And the winner is IC Markets broker Australia with the smallest spread in the world
CayenneJul 28 2020
Alpari is good for a newbie like me. The MetaTrader is working just fine. I learn trading from my workmates which already trading in Alpari since 5 years ago. Considering this, so I thought that Alpari is reliable.
Kiki ParamountJul 24 2020
I immediately use Alpari since the beginning. Alpari platform is very easy.
If only Alpari wanted to make a new breakthrough that could motivate novice traders, like me, to be successful trading ... I would give two thumbs up to Alpari. But yeah, for the time being, I won't move anyway, because Alpari customer service is so friendly. Hehe...
Angela YJul 24 2020
I like Alpari the most because there's insurance for deposit and the withdrawal process is not complicated.
M'dhanweJul 24 2020
I first registered and made a deposit through E-banking, It was very difficult, several times the widget for the payment process said it failed, it happened up to 5x.
The last one still fails, turned out that that the transaction was successful after I saw the mutation and the remaining balance of my account. I am still waiting for the last because the status is still a process. Unlike XM, depositing via E-banking is very fast and requires no processing. Instant about 1 second entered
Jericho HahnJul 24 2020
I was interested in Alpari. But when I registered, I couldn't. The code is invalid, the password is also not attached in the email. Please improve the service so i could give 5 stars.
Justin HaoJul 24 2020
Disappointed with the new Alpari website. It looks less attractive and really heavy to access. The button is complicated, I can't get the information that I need.
Just my two cents, please give the layout back to the old website. I'm commenting because I'm already being a loyal trader for a long time
Remy AdzarJul 24 2020
I tried to withdraw funds 3x with transaction number 25631019, 24584342, 24556904 and all of them were rejected with the following reasons: Transfer request No. 25631019 rejected.
Reason for rejection: an error occurred while trying to complete the operation. Please try again or contact our payment department: +448449869559 (ex.2), Mon-Fri, 06: 00-17: 00 GMT.
Like when I deposit, I withdraw funds using the Ebanking method. I have followed all the procedures or step by step. It's very dissappointing, I could not contact CS by email or webchat. I was only given a contact telephone number for the UK.
VegaJul 24 2020
Previously, I was comfortable trading in alpari, but this year there have been a lot of policy changes. starting from leveraging the leases, the maximum lot is replaced, now the spread is floating. Confused
|Open Real Account||Open IC Markets Real Account||Open Pepperstone Real Account||Open Alpari Real Account|
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