Have you heard about Forex? What does it define? Forex defines about Foreign Exchange Marketplace in which the trading of currencies of different parts of the world is done. It is the leading and more important economic market of various currencies in the world. It has no federal market for trading and hence forex currency can be traded anywhere, anytime. This means that, the forex trading market is open 24 X 7 for those who want to purchase and sell currencies.
In recent times, a reliable way has opened for Forex trading. It is ECN Forex trading. Let’s try to get into details about ECN Forex Trading.
- ECN, that is Electronic Communication Network is a link between small market members and liquidity providers. This linking is mostly done with the help of Forex ECN broker.
- A high-tech technology named Financial Information Exchange Protocol, commonly called as FIX protocol is used to this linking.
- Brokers’ role is to gain liquidity from the providers and supply it to traders for trading. They also have to take orders from their clients and pass it to the liquidity providers for accomplishment.
What are the features of ECN?
- Work automatically– ECN works automatically to match and implement the requested orders, with justified prices.
- Easily accessible network- The most important feature of ECN is its easily accessible network. It can be accessed very easily at any point of time even after the trading hours and works more efficiently.
- Highly Efficient- ECNs are considered highly efficient for its users whom we called traders as they have specific configurations for specific type of investors. Some are designed for organisational investors; some are configured for retailers, etc.
- Profitable to brokers- ECN brokers earn money in the form of commission on every transaction. The more clients they operate with, the more they gain. Also, the commission placed by ECN is fair enough to be profitable to the broker.
What are the benefits of ECN Forex trading?
- ECNs introduce the traders to world-wide liquidity pool which consists of global banks and other financial organisations which are well-managed, skilled and modest.
- The orders placed by the traders are processed and accomplished immediately by the ECN forex brokers. So, the traders can trade quickly with prices at that very hour. This initiates the finalisation and confirmation of the deal instantly.
- ECN model is designed in such a way that there is no interference of the dealing desk s and no provision of re-estimate.
- With ECNs the trading activities appear to be unnamed. Hence, there is no chance of any particular trader being favoured and all the traders can position themselves on impartial prices. Hence, the market appears unbiased all the time.
- ECN has a distinct trading model to control the activities of ECN brokers. They always trade in favour of their clients. They charge a fixed commission and the process is always kept crystal clear.
By observing above features and benefits, one can say that the ECN forex trading is the best way for future Foreign Exchange trade comprised of Forex ECN brokers working towards the welfare of the traders.