Market Makers vs. ECN brokers

When you’ve got all facts and are ready to start trading on Forex, the decision of choosing the broker must be made. Since there are only two types of currency brokers it comes down to deciding between Market Makers and Electronic Communications Network Brokers. Don’t jump to conclusions based solely on what you’ve heard and invest a little time on research as well, to make sure you maximize your chances of profit on the long run.

The reason behind choosing a Market Maker is that these foreign currency brokers will offer you an intuitive and easy to navigate interface. For newcomers who have little of no expertise in Forex trading these kind of advantages weigh heavily, and free charting software or news feed are much appreciated. Additionally the prices provided by the market makers are less volatile compared to the Electronic Communication Network Brokers.

On the flip side, you risk the forex currency broker turning against you, by manipulating the prices to cause you diminishing profits, simply because they’ve taken a losing position against you. Inexperienced traders won’t even realize this and they will probably miss the fact that some of the prices offered are worse than what ECN best currency brokers come up with. Last but not least, big slippage of prices can happen during rush hours or their platforms will prove unable to react during high volatility.

The advantage of choosing Electronic Communication Network brokers is that they have no interest in taking a position against you, so you can rest assured they will do theist best to maximize profits. The absence of a conflict of interest is the best guarantee that they will not interfere in the trade results, since the ECN brokers are not competing against their clients. These currency brokers allow traders to post bid/ask rates as they see fit, so the quotes will fluctuate more. Having access to multiple resources will result in better prices, but they may be less stabled as those provided by Marker makers.

The spreads between bid and ask are significantly decreased at times of liquidity and more volatile prices will provide better opportunities for scalping. Another advantage is that your order will get filled at the price you suggested or won’t be filled at all, hence preventing slippage during news. On the bad side, with ECN brokers you will not benefit of any integrated charting and news, at least not with the most of them.