by Alan Robinson
The Forex market consists of two types of brokers, the market markers and the ECN brokers. ECN in full means Electronic Communications Network. An ECN broker thus allows several different clients orders to directly interact between each other. ECN account is thus the type of account that such Forex brokers provides their customers for daily trading activities. The kind of direct interaction between different orders is additional and is very beneficial to traders. The Forex broker using the ECN network is able to provide with a special marketplace for trading. It is this marketplace that makes it easy for different traders to trade against each other.
Benefits of using ECN account
1. Security and privacy of trades
Privacy and safety of Forex trades is the foremost benefit of using ECN accounts. There are many players in the Forex market and every participant needs to enjoy utmost privacy and safety of their funds. 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
Another benefit of holding this type of account is the continuity of the trade which is enjoyed by the traders. There is no break required or experienced between trades. Using ECN account allows you trade continuously during news and events. 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
The trader benefits from effective execution of trades orders when using an ECN account. This is because this method does not require the client to trade with broker but rather use his network to place 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. This can accumulate to a lot of amount of you executes several trades a day. The high commissions charged lowers profitability thus scaring traders from using this type of accounts.
2. Dishonesty
Sometimes the market markets can practice dishonesty. The design of this account allows everyone to be his own market maker. This promotes the practice of dishonesty to crop in the market. There are chances that dishonest people would start influencing the market by introducing massive volumes of trade. Some people would decide to deceive others that they are ECN brokers while they are not.
Conclusion
Due to the great connectivity and interactive features of ECN accounts, it becomes one of the best and most recommended for all traders in the Forex market. You have better opportunity to be highly profitable using this type of account even if you are new to the Forex market. This makes it very popular with starters and inexperienced traders 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. In addition to these benefits, using ECN account also enable you enjoy trading features offered by the brokers.
You have acknowledged the advantages and disadvantages. If you still going for ECN, I'd suggest a regulated ECN with really low minimal deposit. Check it out at <a href="http://fxbuild.com/pepperstone-review/">a review of Pepperstone</a>. If you think you can be greater with fixed spread, I suggest you visit <a href="http://fxbuild.com/forexyard-review/">ForexYard broker</a> for a fantastic regulated fx broker with fixed spread.
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New Unique Article!
Title: Benefits And Demerits Of Utilizing ECN Account
Author: Alan Robinson
Email: avalanche1601@gmail.com
Keywords: ECN account,forex,currency trading,investment,finance,business and finance
Word Count: 574
Category: forex
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