What is ECN?
ECN stands for Electronic Communication Network. ECN Broker is one that uses electronic communications networks (ECNs) to offer clients direct access to other market participants in the currency market. Because ECN broker consolidates price quotations from numerous participants in the market, it has opportunity to offer its clients tighter bid/ask spreads than other brokers. ECN can be described as a link connecting smaller market participants with tier-1 liquidity providers through a Forex ECN Broker.
This connection is achieved through sophisticated technology called FIX Protocol (Financial Information Exchange Protocol). On the first place, ECN broker receives liquidity from tier-1 liquidity providers (Major Banks) and offers it to its clients. Then, ECN Broker sends clients’ orders back to Liquidity Providers for execution.
An ECN broker benefits from commission fees per transaction. The higher the trading volume of clients, the higher the broker’s profit.
Beacon FX as ECN Broker
- Beacon FXis a full ECN broker which means total elimination of third parties in the execution of orders. Electronic system connects brokers with individual traders so that trading can be done directly without any third party.
- Beacon FX offers highly transparent trading environment resulting in instant execution without dealing desk interference and no price manipulation.
- Beacon FXas an ECN broker provides equal access to liquid markets and trades which are executed directly from variety of liquidity providers.
- Beacon FX allows foreign currencies, CFD’s or commodities to be traded on its platforms.
What makes ECN favorable?
ECN environment is much more transparent than the traditional broker model due to elimination of conflict of interest between client and broker dealing desks.
Not a Market Maker
ECN broker isn’t setting prices, there is no market making, only a flow of prices from liquidity providers to its traders. Beacon FX ECN model allows clients to trade on the global liquidity of world leading banks and qualified financial institutions.
Instant Trade Execution
ECN model ensures that all clients are equal and all have immediate access to prices. Clients can trade instantly on live streaming, best executable prices with immediate confirmations.
Beacon FX ensures that our clients trade at best prices. This makes our spreads lowest in the industry. On ECN, clients have direct access to market prices. Market prices fluctuate, thus reflecting demand and supply, volatility and other conditions. Beacon FX ECN enables clients to trade on tight bid/offer spreads, which are one of lowest in the market.