ECN stands for “Electronic Communication Network” – a system that is developed to remove the part of an intermediary to be able performance. In easy terms this implies that when a trader signs up for ECN for ECN performance, they get immediate accessibility other members in currency trading – i.e. other personal investors, brokers, protect resources or financial institutions. A big benefits of ECN is that it also removes any issue of attention as the agent is no more deficiency of in the deal and is, instead, simply a company – so when investors reduce, the agent doesn’t benefit.
Many investors select to business with ECN agents for a number of reasons: the strong assets accessibility they get, the deficiency of requites the enhanced, quicker performance, and most of all – the spreads that are considerably reduced than these of an industry manufacturer, for example. Because of the high performance rate and low propagates, ECN dealing is particularly appropriate for scalpers and information investors.
There are two primary drawbacks of dealing with an ECN. The first one is that proven reality that investors need to pay a markup or a percentage along with the brokers’ propagates (this is how agents actually make money). The second con is that usually you need quite a big wind turbine to start an ECN consideration. However there are agents out there that let you business with ECN performance with less sized first down payment – take Trader’s Way, for example, where you only need $100 to sign-up an ECN account.