Benefits And Demerits Of Using ECN Account
Author: Arthur Bruno
An ECN account might not be the best in most aspects. Read one to discover the pros and cons before you decide to choose an ECN account.
Two types of brokers exist in the Forex market, the ECN brokers and the market markers. ECN in full means Electronic Communications Network. Therefore an ECN broker is one that allows for direct interaction of the several different clients’ orders. ECN account is thus the type of account that such Forex brokers provides their customers for daily trading activities. This kind of direct interaction of trade orders is additional and has proved to have several benefits to the trader. By using the ECN platform, the Forex broker is able to provide the traders with a special marketplace. It is this marketplace that makes it easy for different traders to trade against each other.
Benefits of using ECN account
1. Secrecy of trades
Privacy and safety of Forex trades is the foremost benefit of using ECN accounts. The Forex market has so many players and every person needs to enjoy utmost privacy and security. This high level secrecy is possible because the broker would only be acting as a middleman in the market rather than a market marker. So when a trader makes trade on an ECN network, he remains very secure and his trades can neither be distinguished nor traced by others in the market.
2. Continuous trades
Continuity of trade is another great benefit by many traders who are using this type of account. A trader neither requires nor does experience break between different trades. When you have an ECN account, you are allowed to trade during events and news. Price volatility significantly increases due to continuous trading. This ultimately creates more opportunity for the trader to be highly profitable trading Forex.
3. Enhanced execution
When using ECN account, the trader enjoys the benefit of an enhanced execution of trade orders. This is because you will not be trading with the broker but simply using their network to place your trade orders. This way, the ECN broker is by no means responsible for executing orders but rather matching them to other market participants. This is done as soon as possible allowing every trader to enjoyed enhanced trade execution.
Disadvantage of using ECN account
1. High fees
The high levels of fees and commissions charges are the greatest disadvantage of using ECN account. The design of ECN network is to charge commission on every trade. When these commissions are accumulated it becomes too expensive as more trades are executed every day. The high commissions charged lowers profitability thus scaring traders from using this type of accounts.
2. Dishonesty
The market makers can sometimes become dishonest. The design of this account allows everyone to be his own market maker. This practice in the market promotes knavery to crop in. There are higher chances of dishonest people start introducing high volume trades so as to influence the market. Some people would decide to deceive others that they are ECN brokers while they are not.
Conclusion
ECN account is becoming one of the highly recommended platforms in the Forex market for all traders due to its interactive and great connectivity features. You have better opportunity to be highly profitable using this type of account even if you are new to the Forex market. This is why it is very popular with inexperienced traders and starters in the market. This is considered to be the best type of account to hold if you want to be successful and enjoy trading Forex. Besides the benefits discussed above, using an ECN account allows you to enjoy many hassle free features offered by the brokers.
You have recognized the advantages and disadvantages. If you still opting for ECN, I would suggest a regulated ECN with very low minimum deposit. Check it out at a review of Pepperstone. If you think you can be greater with fixed spread, I suggest you visit ForexYard broker for a great regulated fx broker with fixed spread.
Two types of brokers exist in the Forex market, the ECN brokers and the market markers. ECN in full means Electronic Communications Network. Therefore an ECN broker is one that allows for direct interaction of the several different clients’ orders. ECN account is thus the type of account that such Forex brokers provides their customers for daily trading activities. This kind of direct interaction of trade orders is additional and has proved to have several benefits to the trader. By using the ECN platform, the Forex broker is able to provide the traders with a special marketplace. It is this marketplace that makes it easy for different traders to trade against each other.
Benefits of using ECN account
1. Secrecy of trades
Privacy and safety of Forex trades is the foremost benefit of using ECN accounts. The Forex market has so many players and every person needs to enjoy utmost privacy and security. This high level secrecy is possible because the broker would only be acting as a middleman in the market rather than a market marker. So when a trader makes trade on an ECN network, he remains very secure and his trades can neither be distinguished nor traced by others in the market.
2. Continuous trades
Continuity of trade is another great benefit by many traders who are using this type of account. A trader neither requires nor does experience break between different trades. When you have an ECN account, you are allowed to trade during events and news. Price volatility significantly increases due to continuous trading. This ultimately creates more opportunity for the trader to be highly profitable trading Forex.
3. Enhanced execution
When using ECN account, the trader enjoys the benefit of an enhanced execution of trade orders. This is because you will not be trading with the broker but simply using their network to place your trade orders. This way, the ECN broker is by no means responsible for executing orders but rather matching them to other market participants. This is done as soon as possible allowing every trader to enjoyed enhanced trade execution.
Disadvantage of using ECN account
1. High fees
The high levels of fees and commissions charges are the greatest disadvantage of using ECN account. The design of ECN network is to charge commission on every trade. When these commissions are accumulated it becomes too expensive as more trades are executed every day. The high commissions charged lowers profitability thus scaring traders from using this type of accounts.
2. Dishonesty
The market makers can sometimes become dishonest. The design of this account allows everyone to be his own market maker. This practice in the market promotes knavery to crop in. There are higher chances of dishonest people start introducing high volume trades so as to influence the market. Some people would decide to deceive others that they are ECN brokers while they are not.
Conclusion
ECN account is becoming one of the highly recommended platforms in the Forex market for all traders due to its interactive and great connectivity features. You have better opportunity to be highly profitable using this type of account even if you are new to the Forex market. This is why it is very popular with inexperienced traders and starters in the market. This is considered to be the best type of account to hold if you want to be successful and enjoy trading Forex. Besides the benefits discussed above, using an ECN account allows you to enjoy many hassle free features offered by the brokers.
You have recognized the advantages and disadvantages. If you still opting for ECN, I would suggest a regulated ECN with very low minimum deposit. Check it out at a review of Pepperstone. If you think you can be greater with fixed spread, I suggest you visit ForexYard broker for a great regulated fx broker with fixed spread.
Article Source: http://www.articlealley.com/http://arthurbruno.articlealley.com/benefits-and-demerits-of-using-ecn-account-2407180.html
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