ECNs represent the future of Forex trading for the retail and institutional community as the demands of the modern day trader exceed that of the traditional market maker, single LP (liquidity provider) model. Todays forex traders demand tight spreads, deep liquidity, price transparency and anonymity in execution, low slippage and last but definitely not least, low latency. Meeting all of these demands is no easy feat, especially when every forex trader has different needs in terms of price and execution. ECN technology gives thebrokerthe ability to aggregate its LPs, building an order book and providing a best bid best offer to its clients. The collective volumes of thebrokersclients encourage price competition amongst the LPs and provide the leverage to demand better execution. In doing this the ECN model enables the efficient flow of liquidity between price markers and price takers, meeting the needs of clients to provide the best environment for the modern day trader.
Pepperstone, a forexECN brokerutilizes the True ECN pricing for all of its account types, this means that you the forex trader are offered direct access to our interbank prices feeds from over 50 different bank and dark pool liquidity providers. Trading in an True ECN marketplace allows traders to benefit from the best possible prices available from Tier-1 banks and dark pool liquidity providers.
ECNstands for electronic communications network. It is the technology that allows price makers to send executable streaming prices (ESPs, aka bids and offers) to the market, constructing a virtual order book in much the same fashion as a stock exchange would. A price maker is any participant of that ECN that has liquidity to offer in the form of a bid (buy limit) or offer (sell limit). By constructing a virtual order book with price makers consisting primarily of Tier-1 banks, Pepperstone is able to offer extremely deep liquidity with some of the best top of book pricing (spreads) globally.
An ECN broker likePepperstoneallows your orders to be executed using a straight through processing (STP) model where they are filled by one of our LPs. We continually work to improve the forex trading conditions for our clients to achieve our goal having the best execution ofall forex brokers globally.
One of the most important features of an ECN is the price competition the model generates.BrokerslikePepperstonewho STP client trades will generate more volume through the ECN, encouraging the LPs to price more aggressively as they compete for the flow.
Price competition can best be achieved through the volume centric ECN model due to the diverse liquidity mix that prices into the ECN. ThePepperstoneliquidity mix consists of up to 50 different LPs including tier-1 banks, non-bank LPs including dark pools, other ECNs and aggregators.
Clients can be filled on trade sizes from 1 micro lot (1,000 base currency) to 1,000 lots (100 million base currency) through our ECN. Our ECN sorts and ranks prices to allow real-time execution of large forex trades over multiple liquidity providers and their pricing tiers, this ensures the best price for any trade size.
Anonymity of client orders and trading is another key feature of forex trading through an ECN and is especially critical for forex traders wishing to protect their trading systems/intellectual property.Pepperstonedoes not disclose client orders to its LPs, these are held locally on our forex trading servers.
FOREX ECN brokersare driven by improvements in performance to attract moreb clients and more volume. Low latency trading is the next race forECN brokersas we strive to have client orders filled in the least time possible, times under 50ms from our trade server are now possible. Low latency environments benefit HFT/Algorithmic traders the most where every millisecond counts.
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Risk Warning: Trading Derivatives carries risk to your capital and you should only trade with money you can afford to lose. Information on website is for educational purposes only and does not guarantee that you will be successful even if you use the flawless strategy. Successful trading requires little practice and a lot of discipline.