Meaning: ECN Account

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What is an ECN Account? How do I know what type of account I have? THANKS
 

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An Introduction to ECNs

This video provides an introduction to electronic communications networks (ECNs), systems that allow buyers and sellers of stocks to trade directly without an intermediary.

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Most forex traders participate in the forex market with forex brokers. There are mainly two types of forex brokers: market makers and electronic communications networks (ECNs). In this article we want to introduce the latter type of brokers, the ecn forex broker.

What is an ECN forex broker?

ECN forex broker is a financial expert that provides the clients with direct access to other forex participants in the currency market by using electronic communications networks (ECNs). Unlike market makers, which always trade against their clients to make profit, an ECN forex broker only creates opportunities of trading between forex traders.

How does an ECN forex broker work?

The ECN forex brokers provide a medium by passing on the prices for different market participants such as banks, market makers and other traders in the market. Then the best bid/ask quotes will be displayed on the trading platforms based on these prices. ECN forex brokers also serve as counterparties to forex transactions, but it is a settlement that they operate on instead of pricing basis. While fixed spreads are offered by some market makers, spreads of currency pairs can be very different, determined by the trading activities of the currency pair. In active trading periods, sometimes you cannot get ECN spread at all, especially in those very liquid currency pairs such as the majors (EUR/USD, GBP/USD, USD/JPY, USD/CHF) and some currency crosses.

Pros and cons of the ECN forex broker

The ECN forex broker has both advantages and disadvantages. The pros and cons of the ECN forex broker are as follows.
The pros of the ECN forex broker can be presented in following aspects.
Traders can usually get better bid/ask prices for they are derived from multiple sources.
At certain time traders may trade on prices with no spread or with only very little spread.
Genuine ECN forex broker will pass on the orders to a bank or other trading participants on the opposite side of the transaction instead of trading against the traders.
It is very likely that the prices on the ECN forex broker are more volatile.
Traders can take on the role of market traders to other traders on the ECNs since they can offer a price between bid and ask.
The cons of the ECN forex broker can be presented in following aspects.
Many ECN forex brokers do not provide integrated charting or new feeds.
Some trading platforms are not so easy for traders to use or operate.
Since there are variable spreads between the bid and the ask prices, it may be difficult to calculate stop-loss and breakeven points in pips in advance.
Forex traders are obligated to pay commissions for each transaction.

It is obvious that there are both pros and cons of an ECN forex broker. Traders have to take many factors into consideration when choosing a forex broker.


 
Good thread - True ECN Broker vs Not True ECN Broker
 

Forex Broker Types - MM,NDD,STP,ECN

This is small 10 minute education video about the following: the difference between Forex Broker Types - MM,NDD,STP,ECN


 

According to my experience - if you are placing the order together with stop loss and take profit on the same time (by same one action) so your broker is not ECN one. Because in case of ECN - you will be able to place sl and tp by modifying already opened order only.

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So, "ECN situation" is the following:

  • example - you are openning the order; order is opened without stop loss and take profit (because you could not place stop loss and take profit);
  • after that - you are modifying the order placing stop loss and take profit.

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There are EAs with the following parameter:

ECN = true (or false)

  • If ECN = false so EA is placing the order together with sl and tp.
  • If ECN = true so EA is placing the order and after that - modifying this order for sl and tp.
Basic Principles - Trading Operations - MetaTrader 5
Basic Principles - Trading Operations - MetaTrader 5
  • www.metatrader5.com
is an instruction given to a broker to buy or sell a financial instrument. There are two main types of orders: Market and Pending. In addition, there are special Take Profit and Stop Loss levels. is the commercial exchange (buying or selling) of a financial security. Buying is executed at the demand price (Ask), and Sell is performed at the...
 
Sergey Golubev #:

According to my experience - if you are placing the order together with stop loss and take profit on the same time (by same one action) so your broker is not ECN one. Because in case of ECN - you will be able to place sl and tp by modifying already opened order only.

------------

So, "ECN situation" is the following:

  • example - you are openning the order; order is opened without stop loss and take profit (because you could not place stop loss and take profit);
  • after that - you are modifying the order placing stop loss and take profit.

------------

There are EAs with the following parameter:

ECN = true (or false)

  • If ECN = false so EA is placing the order together with sl and tp.
  • If ECN = true so EA is placing the order and after that - modifying this order for sl and tp.

Is this the situation today? Has this limitation been removed?

 
Suminda Dharmasena #: Is this the situation today? Has this limitation been removed?

No, it is no longer the situation. The limitation has been removed. Currently, you can set the stop-loss and take-profit while placing the order irrespective of the type of account, be it ECN or not.

 
Suminda Dharmasena #:

Is this the situation today? Has this limitation been removed?

I think - it is about how the traders can understand - they have ECN trading account or not:

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So, "ECN situation" is the following:

  • example - you are openning the order; order is opened without stop loss and take profit (because you could not place stop loss and take profit);
  • after that - you are modifying the order placing stop loss and take profit.

------------

 
Sergey Golubev #:

According to my experience - if you are placing the order together with stop loss and take profit on the same time (by same one action) so your broker is not ECN one. Because in case of ECN - you will be able to place sl and tp by modifying already opened order only.

There is no need to open an order and then set the stops. Simplify your code - do it in one step. TP/SL on OrderSend has been fine for years.
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