Heather McLean
Heather McLean

Should you consider using a Forex ECN platform?

Forex ECN platforms sound in theory like the ultimate utopian environment for trading. They can provide a place where orders are matched in real time in a collective bubble of liquidity provided by each of the market’s participants. However, as Heather McLean discovers, there is more to the world of the ECN than meets the eye.

It is important to first define the term ECN. Traditionally ECN stands for Electronic Communications Network, a term that came from the (then) new electronic means of connecting to the NASDAQ market place. Since FX lacks both a central global exchange and market handling rules, brokers have begun to stretch the definition to ECN to suit their particular systems.What is an ECN? Vladimir Kisyov, head of business development at Deltastock, adds to the definition: “The ECN basically provides a marketplace where individual and institutional traders, market makers (MM), prime brokers and banks trade against each other by placing competing bids and offers, thus generating liquidity into that electronic system. The ECN environment allows clients’ orders to interact with other clients’ orders. All trade orders are matched between counterparties in real time.”The FX ECN model can be described as a two way bridge where the broker is the traffic coordinator in the middle of the bridge, says Layth...continued

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