Advantages And Disadvantages Of Working with ECN Account

An ECN account isn't always the very best in most aspects. Understand one to discover the advantages and disadvantages prior to deciding to opt for an ECN account.

Two types of brokers exist in the Forex market, the ECN brokers and the market markers. ECN in full means Electronic Communications Network. An ECN broker thus allows several different clients orders to directly interact between each other. ECN account is thus the type of account that such Forex brokers provides their customers for daily trading activities. The kind of direct interaction between different orders is additional and is very beneficial to traders. The Forex broker using the ECN network is able to provide with a special marketplace for trading. This marketplace thus allows different traders to directly trade against each other.

Benefits of using ECN account

1. Security and privacy of trades

Privacy and safety of Forex trades is the foremost benefit of using ECN accounts. The Forex market has so many players and every person needs to enjoy utmost privacy and security. It is very possible to maintain high level of privacy and safety because the brokers are only acting as middlemen in the market but not market makers. So when a trader makes trade on an ECN network, he remains very secure and his trades can neither be distinguished nor traced by others in the market.

2. Trade continuity

Another benefit of holding this type of account is the continuity of the trade which is enjoyed by the traders. A trader neither requires nor does experience break between different trades. Using ECN account allows you trade continuously during news and events. We all know that continuous trading potentially increase the price volatility. This gives the trade opportunity to benefit from the price volatility thus becoming more profitable.

3. Enhanced execution

When using ECN account, the trader enjoys the benefit of an enhanced execution of trade orders. This is because you will not be trading with the broker but simply using their network to place your trade orders. This way, the ECN broker is by no means responsible for executing orders but rather matching them to other market participants. This is done as soon as possible allowing every trader to enjoyed enhanced trade execution.

Disadvantage of using ECN account

1. High fees

The high levels of fees and commissions charges are the greatest disadvantage of using ECN account. The design of ECN network is to charge commission on every trade. When these commissions are accumulated it becomes too expensive as more trades are executed every day. The profit level is thus lowered by the high commissions making it less preferred by many traders.

2. Dishonesty

Sometimes the market markets can practice dishonesty. The design of this account allows every participant to act as his own market maker. This promotes the practice of dishonesty to crop in the market. There are higher chances of dishonest people start introducing high volume trades so as to influence the market. Some people would decide to deceive others that they are ECN brokers while they are not.

Conclusion

ECN account is becoming one of the highly recommended platforms in the Forex market for all traders due to its interactive and great connectivity features. You have better opportunity to be highly profitable using this type of account even if you are new to the Forex market. This makes it very popular with starters and inexperienced traders in the market. This is considered to be the best type of account to hold if you want to be successful and enjoy trading Forex. Besides the benefits discussed above, using an ECN account allows you to enjoy many hassle free features offered by the brokers.