We are talking about ECN, which is decrypt-ed as Electronic Communication Network. It is considered as a path to future for the Foreign Exchange market.We can describe it as channel linking smaller market traders with its liquidity provider through a forex ECN broker.
In order to make this link flexible, a smart technology called “Financial Information Exchange Protocol” has been set up. There is a link between liquidity and client, on the one side liquidity is obtained by broker and provided to the client for trading and on the other side the orders from the client is provided to the liquidity provider for execution by the broker.
ECN giving transparency
In modern trading industry ECN is having a great value because of the transparency, smoothness and its lot of advantages. Since it provides direct access to liquidity providers, which is done by automatic matching that’s why it is said to be as a way to vast majority of foreign exchange trade throughout the world.
With its automated components of trading it has became as much as forex market mechanism, since it is responsible to make connection between banks, traders or other brokerages in the whole industry, hence in reality it eliminates the position of opportunist. In this way traders are having directly access to a number of participant’s trading platform on variety of prices and can check best bid and prices available in the market.
No-Dealing Desk is better
If someone is having ENC account they have full transparency regarding every scenario because he knows how directly broker connects his order to different market participants. It has “No Dealing Desk” technology which gives the confidence that no re-quotes will be done here. When market volatility is high it shows very low or even no spreads (spreads may enhance in specific time interval in a day which depends on the condition of the market since spreads are floating).There is arability of a great bid and ask price because a number of market participant involves themselves. There is trading condition for this account, for example, one need to deposited 1000 Dollar as an initial deposit. Spreads are floating from-1pip whereas leverage is up to 1:500. There is no trading limit underthreshold open position and undecided orders and order volume could be from 0, 1 to 500 lots with 0, 1 steps. This account trades in 25 currency pairs, except ECN support swaps -free trading and free insurance of funds are ordered to all kinds of account.
When Liquidity provider provides best ask and bid price, it is known as ECN zero. In which one can optimize full advantage of the superior condition of their traditional ECN account, without any commission charge. So all this concludes that ECN account is a tool which facilities a flawless and transparent badge between traders and liquidity providers which show a way to future for forex.