Why Trade With An ECN Forex Broker?

Why Trade With An ECN Forex Broker?

You have taken the decision that you want to start trading forex. Next comes the big question: Who will I choose as my forex broker? Before you take this decision, make sure you are aware of what an ECN broker is.

What is a forex broker?

A forex broker is a company which offers its clients a trading platform with which to access the forex markets. On this platform it is possible to buy and sell currencies, in other words trade currencies. Forex brokers, also known as a retail fx brokers, actually only make up a very small portion of the total volume traded on global currency markets.

The way these brokers make money is through the spread wrapped around the market bid-ask price. This means that the larger the spread the more expensive the trade is to make. Trading comes down to profits. Just like a business makes profits from low costs and higher revenue, trading works on a similar basis. In order to make a profit trading, you need to have low trading costs and high trading gains. Tighter spreads mean lower costs.

What is an ECN broker and how does it help me?

This is a broker that uses Electronic Communications Network or ECN to give its clients direct access to other participants in the market. To put another way, it could be considered as a bridge, which links smaller market participants (in other words you and I, the trader) with big, Tier-1 liquidity providers, ie the major banks.  This is done through an ECN broker using a sophisticated technological setup.

Whilst there are many advantages associated with ECN, perhaps the two most important for traders are, firstly, transparency and secondly tight spreads. Addressing the latter, ECN takes BID and ASK prices from several providers. This means that ECN spreads are usually tighter than what any single liquidity provider can offer. As we discussed earlier, as a trader, tight spreads mean potentially more profit, so it is paramount that the forex provider that you chose as your broker offers the tightest spreads possible.

Who is Vantage FX & Are They An ECN Broker?

Vantage FX is globally recognised forex broker, which has received an extensive number of awards, both nationally and internationally. It has received awards for its first rate offering and exceptional service.

As an ECN forex broker, the awards that Vantage FX is most proud of are the ones that have been won in the best ECN forex broker category.

The fact that Vantage FX has won many awards in the ECB Forex broker categories, makes it one of the most reputable brokers in the industry, offering some of the tightest spreads possible.