07.12 articleweb

ECN means Electronic Communication Network and the aim is to give market participants especially the smaller ones the option of trading with better liquidity. The ECN acts like a link between the traders and brokers. This linkage is done using sophisticated technology setup named FIX Protocol (Financial Information Exchange Protocol). At one end, the broker obtains liquidity from its liquidity providers and makes it available for trading to its clients. On the other side, the broker delivers clients' orders to Liquidity Providers for execution.

Looking at the past few years, it is important to state that there is a surge in the number of people who are now signing with brokers who now offer the ECN trading. However, it is important to note that even though there are some benefits to get from the ECN trading, note that there are some things you need to conssider. For example the broker will always charge you a fee for trading with the ECN platform. Therefore, don’t just signing up to a broker’s account without asking the right questions.

Note that when trading with ECN, there would be no delay in the market when orders are being executed. For example, the orders are executed directly as soon as they are placed. Then it has the advantage of being secured. For example, the information on the ECN platform is on a secure protocol and that is the financial information exchange protocol. This protocol is simply known as FIX and the good thing is that traders can make trades in just a few seconds without having to worry about delay. Let us not forget that instant trading remains a good feature and no wonder most new traders are jumping to the platform.

WB2016021

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