Does FXOpen ECN account provide the same advantages usually found in other brokers? How do we apply for it and how do the orders work?
In today's fast-paced and ever-changing financial markets, having the right trading tools and strategies is essential for success. ECN trading has become increasingly popular in recent years, as traders seek a transparent and efficient way to navigate the foreign exchange market.
One of the main benefits of ECN trading is the ability to access deep liquidity pools and trade with tight spreads. This enables traders to execute trades at the best available prices, which can lead to improved trading results. Additionally, ECN trading allows traders to access real-time market data, which can provide valuable insights into market conditions and trading opportunities.
Another advantage of ECN trading is the transparency it provides. ECN brokers typically use a direct market access (DMA) model, which allows traders to see the exact prices at which other market participants are buying and selling. This allows traders to make more informed decisions and helps to eliminate any potential conflicts of interest between the trader and the broker.
One of the brokers that offer ECN account types is FXOpen. As an established and regulated broker, FXOpen offers its clients access to a variety of trading options, including the ability to trade with an ECN account. In this guide, we will cover the detail of how to get started with an ECN account in FXOpen.
Let's Get to Know FXOpen
FXOpen, established in 2005, is a reputable broker that has been in operation since 2003. with headquarters in Australia, Cyprus, and the United Kingdom, their global presence makes them well-suited to offer Forex and CFD trading services to clients worldwide.
In addition to its established reputation, FXOpen is also regulated by several governing bodies including ASIC (412871), CySEC (194/13), and FCA (UK) (579202). The company is also a member of the Investor Compensation Fund, which provides additional protection for clients' funds of up to EUR20,000. Overall, FXOpen has a good reputation for maintaining a safe and secure trading environment.
FXOpen started its operation as an online trading provider for retail clients since 2005. The company was founded by a group of traders with a mission to provide services that refer to the interests of traders. FXOpen claimed to be one of the firsts to offer ECN trading via MetaTrader 4 (MT4). With FXOpen's unique proprietary price aggregating technology, their clients can benefit from the industry's most competitive spreads (from 0 pips) and low trading commissions.
In 2006, FXOpen also became the first broker to offer a micro account and a swap-free account. After that, they continue to be the pioneers of several new and high-tech services, including the first Crypto account that can provide trading facilities on 24 Cryptocurrency pairs such as Bitcoin, Litecoin, and Ethereum.
Furthermore, the company provides One Click Trading and Level 2 MT4 plug-ins, enabling traders to place trades with just one click of the mouse. Traders do not need to worry about trading security at FXOpen. They have registered in Nevis, the UK FCA, and ASIC Australia.
A variety of trading accounts are provided such as STP, Micro, ECN, and free unlimited demo accounts. The minimum deposit for each account depends on the account type; USD1 in Micro Account, USD10 in STP and Crypto Accounts, and USD100 in ECN Accounts. As for leverage, FXOpen offers up to 1:3 (for Crypto Accounts), and up to 1:500 (for Micro, STP, and ECN Accounts).
Besides, traders can enhance their trading capabilities with Myfxbook and Zulutrade automated trading systems. Both of these services allow anyone to copy the transactions of experienced traders. Thus, traders can replicate the results of professional traders' strategies.
The FXOpen PAMM Service allows copying trades from a Master account to one or more than one Follower account and automates the distribution of profits and losses. The Master operates personal capital through a PAMM account, and his trading strategy is replicated to the Follower's capital. The owner of the Follower account can view and analyze the performance of the PAMM account with the help of advanced analytics. There are 3 PAMM accounts in FXOpen, namely STP, ECN, and Crypto PAMM.
On ECN accounts, traders will get direct price quotes from leading liquidity providers, including Dresdner, SG Paris, Standard Chartered, Barclays Capital, Bank of America, CRNX, JP Morgan, Morgan Stanley, Deutsche Bank AG, RBS, CITI, and UBS. This is one of the reasons why FXOpen's ECN account has become a trader favorite.
After seeing the various advantages offered by FXOpen, traders can easily register an account, simply by filling out the form in the registration menu on the FXOpen website. Traders will be asked to verify documents in advance if the trader will make a deposit or withdrawal of funds. Based on traders' experience and information since FXOpen was founded, there have not been any major complaints about payments (depositing or withdrawing funds) from clients.
Once registered with the FXOpen broker, traders also have the opportunity to get other benefits. One example is the FXOpen cashback program for the first 90 days from registration as a new client. The minimum cashback is USD5 and the maximum is USD1,000.
Furthermore, free VPS is available for ECN, STP, and Crypto account holders. Traders can use FXOpen VPS without any fees for 1 month if they can maintain equity of USD5,000 at the end of the month or trade with a trading volume of USD10,000,000 per month. The advantages of VPS on FXOpen are excellent accessibility, flexibility, and speed.
Trading on FXOpen is made easier because traders can add insight into trading by entering contests. FXOpen Broker offers weekly and monthly trading contests on demo accounts through the ForexCup.com site. Traders can join competitions that are free of charge to hone their skills. If a trader wants a bigger challenge, there is also a trading contest on a real account.
The company also offers Forex partnership programs to traders, Forex brokers, and website owners who publish information about fiat and crypto-currency trading. There are 3 types of partnership levels, including Forex IB (Forex Agent) that attracts new clients to FXOpen using a referral (affiliate) link, Forex Rebate, and individual partnership conditions.
In Conclusion, FXOpen is a well-rounded forex brokerage for traders with a desire to try various trading instruments, a trading environment in ECN account, low minimum deposits, the best cryptocurrency trading condition, as well as interesting trading features like PAMM and demo contests.
Reasons to Choose FXOpen ECN Account
Choosing an ECN account with FXOpen offers several benefits such as:
- Access to the best price spreads and execution: FXOpen's advanced technology aggregates liquidity from top banks to provide the best prices, real market spreads as low as 0 pips, and smooth order execution.
- No dealing desk: The system matches your order with an opposing order from another participant of the ECN, meaning the broker does not trade against you and there is no conflict of interest.
- Flexibility in trading styles: Scalping, news-trading, automated HFT (High-Frequency Trading), and expert advisors are all allowed with no limitations.
- Affordable: A $100 minimum deposit, the ability to trade in increments as low as 0.01 lot, and low commissions starting at $1.5 per standard lot.
- Two types of ECN TT accounts: You can choose to trade on their TickTrader platform or Gross and Net; each of which can be used for different trading strategies.
$100 (or equivalent in other currencies)
USD, AUD, CHF, EUR, GBP, JPY, RUB, SGD, Gold, mBTC
floating, from 0 pips
from $1.5 per standard lot ($100,000)
up to 1:500
🔼Minimum transaction size
🔽Maximum transaction size
FX Spot CFDs, Cryptocurrency CFDs, Shares CFDs, Index CFDs, Spot Metals CFDs, and Commodity CFDs
🤖Hedging, Expert Advisors (EA), Scalping
📊Market depth with level 2 quotes
How Do I Open a Demo ECN account?
- Select Demo Account on the FXOpen website.
- Choose the type of account you wish to open and complete the necessary forms to open the account.
- Provide your email address if it is a required field in the account opening process.
- Create a password for your main account if it is a mandatory step in the account opening process.
- The details for both your main and demo account will be displayed on the screen and also sent to your email. It is important to keep these details secure and save them in a safe place for future reference.
See Also: How to Open Account in FXOpen
Limit Order in ECN Accounts
Limit orders in ECN accounts allow you to set a specific price at which you want to buy or sell a position. A buy limit order will only be executed at the limit price or lower, and a sell limit order will only be executed at the limit price or higher, meaning that if your order is filled, it will be filled at a price you have indicated or better.
Market orders do not give you the ability to control the price at which your order is filled. True ECN pricing displays the best bid and asks prices as they are presented by clients and liquidity providers who participate in the ECN.
As per the principles of ECN limit orders in FXOpen, here are the details:
- Short (sell) limit orders can be lower than the lowest ask price, meaning they can be inside the difference between the best bid and ask.
- Long (buy) limit orders can be higher than the highest bid price, meaning they can be inside the difference between the best bid and ask.
- During times of high volatility, limit orders or take profit orders, even if set at the best bid or ask levels, may not be executed because the market has already moved.
If a buy limit order is placed at the best ask price but the market price changes rapidly, the order will not be executed and it will remain pending until the market price returns to that level or the order is altered. ECN brokers transmit their clients' limit orders to the marketplace, and participants can view all limit orders and take profit orders in the market depth table.
See Also: How is Depth of Market Used in Trading?
For example, if a client wants to place a buy limit order for AUD/NZD at 1.24200 for a volume of 7 standard lots, the difference between the best bid and ask when the order was placed was 1.24170 and 1.24230. After the buy limit order was successfully placed, 1.24200 with a volume of AUD700,000 became the best bid order level (see Depth of Market window below), meaning that the buy limit order was added to the ECN order book.
In FXOpen, stop loss and take profit orders can be linked to a limit order. Once a limit order is activated, the stop loss and take profit levels will be automatically linked to the open position (see below).
Limit orders make up the book of viewable volume at which clients want to buy or sell at a given time. During times of high volatility or low liquidity, limit orders may only be partially executed. This means that if the price is met, the position will be filled immediately, either fully or partially, and any remaining will be visible on the market until the price is met.
See Also: Guide to FXOpen Deposit and Withdrawal
Market execution in ECN accounts is designed to provide rapid execution and eliminates any dealer intervention in the process. However, this significant advantage may cause high slippage in rapidly moving and volatile markets.
To protect clients from high slippage, FXOpen implements a mechanism that compares the client's market order price with the best price at which the order can be executed. If the difference exceeds the maximum allowable slippage value, the execution process is stopped and the market order is rejected.
The maximum allowable slippage value can vary depending on the level of market volatility at the time a client initiates a market order from their terminal.
The same mechanism applies to pending sell and buy stop orders. Stop loss orders and automatic order closing according to the stop-out procedure are executed at the best available price, and the actual price may differ significantly from the order level or the calculation data, as per the stop out procedure.
A market order is a type of order that allows you to quickly fill your order. You can typically expect your order to be filled, but it may not be at the ideal price you desire. During volatile times, the difference between the price you see when you enter the order and the price you get your order filled at may be significant, but in fast-moving markets, this may be the only option to fill your position before the market moves further away.
When you click the market buy or sell button, you can expect the order to be filled at the price the market was trading at when the participating qualified destination received your order. This price may not be the same market price you may have noted when you initially placed the order due to the size available when the order is processed. To provide clients with the best execution, FXOpen system automatically matches the client's order with other orders and executes it as a block or in multiple smaller transactions.
John wants to open a short position of 400,000 GBP/JPY using a market order, but currently, one buyer has placed an order for a volume of 300,000 GBP/JPY at 1.5876 and another buyer has placed an order for a volume of 200,000 GBP/JPY at 1.5878. Therefore, John receives their short position of 400,000 GBP/JPY at 1.5877 because:
(200,000 x 1.5786 +200,000 x 1.5876) / 400,000 = 1.5877
How an Open Market Order Works
When a client uses "market execution" to open a position, they cannot add stop losses and take profits. However, the system allows for the addition of these parameters to orders that are already open using the modification mode.
Sell Stop or Buy Stop Orders
A pending order is converted to a market order when a specific price level is reached and breached. A stop order is placed below the current market value for short (sell) positions and above the price for long (buy) positions.
When the price reaches the level of the sell stop or buy stop, the position is automatically opened at the current market price, similar to market order execution. The price at which the stop sell or buy order is executed may not always be the price you set. This is particularly true in fast-moving markets where currency prices are more volatile.
Buy Stop Example
On the FXOpen order window above, the current market price is 1.24460 for the bid and 1.24490 for the ask.
The order price level is set at 1.24523, which must be above the ask of the current market price. Once the price reaches the order price level, the position will be opened automatically at the current market price, similar to a market order execution.
The stop loss is set at 1.24512, which must be below the order price level. Once the price reaches the level of the stop loss, the position will be closed automatically at the current market price, similar to a market order execution.
The take profit is set at 1.24531, which must be above the order price level. Once the price reaches the level of the take profit, the position will be closed automatically at the take profit level or better, similar to a limit order execution.
Sell Stop Example
On the FXOpen order window above, the current market price is 1.24420 for the bid and 1.24485 for the ask.
The order price level is set at 1.24409, which must be below the bid of the current market price. Once the price reaches the order price level, the position will be opened automatically at the current market price, similar to a market order execution.
The stop loss is set at 1.24450, which must be above the order price level. Once the price reaches the level of the stop loss, the position will be closed automatically at the current market price, similar to a market order execution.
The take profit is set at 1.24395, which must be below the order price level. Once the price reaches the level of the take profit, the position will be closed automatically at the take profit level or better, similar to a limit order execution.
Stop Loss (SL) and Take Profit (TP) Orders in ECN accounts
Stop Loss and Take Profit orders can be included in a pending order or modified on an existing position. After a pending order has been triggered, any input Stop Loss and Take Profit levels will be attached to the open position automatically. In FXOpen ECN account, the orders can only be executed for an open position, but not for pending orders.
Please note that even though a client cannot add Stop Loss(es) and Take Profit(s) when they use market execution to open position(s), the system allows the addition of these parameters to already opened orders with the "Modification" mode.
As an order used to minimize losses once the financial instrument's price has started to move in an unprofitable direction, the Stop Loss order will automatically close the position once the price reaches the set level.
The price at which the Stop Loss order is executed may not always be the price that was set. When the Stop Loss order level falls to a level at which a price gap has occurred, the order would be executed at the quote presented in the price flow once the price gap has ended.
See Also: What is the Best Stop Loss Strategy?
A Stop Loss order can only be placed with an open position or a pending order (limit or stop orders). If the Stop Loss level is set very close to the pending order open price, it may cause immediate closure of the pending order. The terminal checks long positions with the bid price for meeting order provisions and the ask price for short positions.
Take Profit is an order used to close a trade in profit when the financial instrument's price has reached a certain level. Execution of this order results in the closing of the position following the rules of a limit order execution.
However, in cases of low liquidity, there is the possibility of a partial fill resulting in part of the position still being open. A Take Profit order can only be placed with an open position or a pending order (limit or stop orders). FXOpen terminal checks long positions with the bid price for meeting order provisions and the ask price for short positions.
In conclusion, FXOpen has explained in great detail how their ECN account provides good and transparent pricing as well as market execution; similar to how ECN accounts are typically offered in other true ECN brokers. That's why it could be a rewarding experience to try ECN trading in FXOpen. You might start with their demo account and then move up to the live account if the FXOpen ECN account proves to be to your liking.
FXOpen is a forex brokerage that has been offering services since 2005. It is currently one of the most successful forex brokers in the world. Since the very start, FXOpen aims to make forex trading more professional, easy to access, and secure.