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What is ECN Forex Trading?

ECN, which stands for Electronic Communication Network, really is the way of the future for the Foreign Exchange Markets. ECN can best be described as a bridge linking smaller market participants with its liquidity providers through a FOREX ECN Broker.

This linkage is done using sophisticated technology setup named FIX Protocol (Financial Information Exchange Protocol). At one end, the broker obtains liquidity from its liquidity providers and makes it available for trading to its clients. On the other side, the broker delivers clients' orders to Liquidity Providers for execution.

The ECN automatically matches and executes the orders requested, which are filled at the best available prices. One of the extra benefits of ECNs, over and above the existing legacy online trading venues, is that the networks can be accessed and are often more efficient during "after hours" trading, which is a particularly relevant benefit for FX transactions.

ECNs are also highly efficient for traders operating EAs (expert advisors) for automated trading, as the speed of execution is accelerated. Certain ECNs are configured to serve institutional investors, others are designed to serve retail investors, others are compiled to cross over between both sectors, ensuring that retail traders can experience similar levels of quotes and spreads to that of institutions.

An ECN broker benefits from commission fees per transaction. The higher trading volume the broker's clients generate, the higher the broker's profitability.

That unique trading model ensures ECN brokers never trade against their clients and that ECN spreads are much tighter than those quoted by standard brokers. ECN brokers also charge clients a fixed, transparent commission on every transaction. Trading with TRUE4X as part of the efficiency delivered by an ECN, results in lower fees, whilst there is the added benefit of additional trading time availability. Because we gather price quotations from several market participants, we are able to offer our clients tighter bid/ask spreads than would be otherwise available.

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What are the TRUE4X - ECN advantages?

Anonymity.

ECN trading activity is anonymous, this allows traders to take advantage of neutral pricing, ensuring that real market conditions are reflected at all times. There is no bias against the client's direction based on either: forex trading strategies, tactics, or current market positions.

Immediate trade execution.

TRUE4X-ECN clients can trade forex instantly, taking advantage of live, streaming, best executable prices in the marketplace, with immediate confirmations. The TRUE4X-ECN model prevents interference by price makers, therefore all TRUE4X trades are final and confirmed as soon as they are dealt and filled. There is no dealing desk to intervene, there are never any re-quotes.

 

Client, liquidity access.

The TRUE4X ECN model offers clients the opportunity to trade in a global liquidity pool of regulated, qualified and competitive financial institutions.

Automated forex trading/market data feed.

Through the use of TRUE4X API, clients can easily connect their trading algorithms, expert advisors, models and risk management systems to the live market data feed and the price matching engine. TRUE4X live, neutral, executable market data includes the most competitive bid and ask prices available at any given time in the market. As a consequence, the trading process remains reliable and consistent when either back testing trading models, or for live trading.

Variable spreads.

TRUE4X differs from a dealer or market maker as TRUE4X does not control the bid/offer spread and therefore we cannot provide the same bid/offer spread at all times.

On an ECN, clients have direct access to market prices. Market prices fluctuate reflecting the supply, demand, volatility and other market conditions. The TRUE4X-ECN model enables clients to trade on tight bid/offer spreads, which can be lower than one pip on some majors in certain market conditions.

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Risk Warning: Forex and CFDs are leveraged products which carry a high level of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risk involved. You should ensure you understand all of the risks and seek independent advice if necessary.
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