The forex market has always been the biggest and most liquid market in the world, but as trading is becoming more and more popular, forex has grown to an impressively massive size.
If you want to join in on that action but you want to trade against other traders, then ECN forex brokers are what you need.
In This Guide
If you wish to see a quick list of the best forex brokers available globally right now, here are our top 5 suggestions:
If one of the mentioned platforms sounds interesting to you, read the following reviews to learn more about them and find out if one or more might be a good fit for you and your trading needs.
Let’s start with eToro, which is the best forex broker on the global stage, overall. The company has been around for nearly 15 years, after launching in 2007. Since then, it attracted over 20 million traders who frequently visit its platform for trading a variety of products, including forex, cryptocurrencies, stocks, and even ETFs.
The company has grown to be as popular as it is for a variety of reasons. For example, it offers a selection of around 50 forex pairs, all of which can be traded with leverage. The leverage is 30:1 for major pairs and 20:1for all others. If you have a professional account, the leverage is much higher — 400:1 — which opens up plenty of opportunities for expert traders to earn major amounts of money.
eToro also has built-in managed portfolios that users can invest in, based on their market strategy. These could be market copy portfolios, partner copy portfolios, or top-trader copy portfolios.
eToro is also among the favorite platforms of forex traders due to the fact that it is licensed and regulated by some of the most respected regulatory authorities around the world, including the CySEC, FCA, and ASIC.
And, let’s not skip the fact that the platform is extremely user-friendly and perfect for newcomers. Its minimum deposit is only $50, which is affordable to everyone, and far user-friendlier than some other platforms that require you to deposit hundreds, or even thousands of dollars in order to be able to make a deposit at all.
Speaking of user-friendliness, eToro is also extremely popular for its social trading section of the platform, which is where its copy-trading feature is located. Copy-trading is just what it sounds like — traders can use the platform to identify expert high-profile traders with the highest ratios of success, and then copy their actions. Since these traders know the market by heart, they know how to identify all upcoming opportunities and make profits, and with the copy trading feature, you can do it too even without prior knowledge.
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Finally, the last on our list is Capital.com. This is primarily a CFD brokerage that offers CFDs for forex, but also a number of other assets. This platform is popular thanks to the fact that it offers as many as 140 currency pairs, all with x30 leverage ratio.
It also supports MT4 in addition to its proprietary platform, and it is rich with all kinds of special tools useful for traders. The platform is very user-friendly, and that includes a minimum deposit of only $20. Plus, thanks to the fact that it offers forex CFDs, that means that you do not actually have to buy foreign currencies and sell them against another — you can simply bet on their price change, which makes it a perfect place to conduct your trading during bearish market, as all you need to do is predict the price movement as accurately as possible, and you will win the money even if the prices are falling.
79.17% of retail investor accounts lose money when trading CFDs with this provider.
Next up, we have Libertex, which is another forex broker, only this one has been around for much longer, and is about to celebrate its 25th anniversary next year. Obviously, a forex broker does not stick around for a quarter of a century if it doesn’t offer excellent service, and Libertex is especially popular among professional traders thanks to its 600:1 leverage ratio for currency pairs.
Retail traders still only enjoy a 30:1 leverage ratio, which is still more than enough for beginners. This platform is also strongly regulated, and it supports both MT4 and MT5. In terms of forex pairs, there are 51 of them, which include minor, major, and even exotic pairs. However, its greatest advantage for newcomers to forex is the fact that the minimum deposit is only $10, which is likely one of the lowest minimums in the industry.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Halfway down the list, we have AvaTrade. AvaTrade has always been a platform that has targeted professional traders more than retail ones, and it did a lot to attract them. It created a vast array of advanced trading tools and supported many advanced platforms, it made itself available in many regions of the world, and it made maximum leverage quite high — 400:1.
Traders should note that leverage for FX pairs depends on the traders’ country, but 400:1 is the maximum that can be obtained for trading foreign currencies. Other than FX, the platform also offers commodities, ETFs, bonds, forex options, and stocks. Also, it grants users access to AvaOptions, AvaSocial, AvaTradeGo, MetaTrader 4, as well as MetaTrader 5, so traders have plenty of options when it comes to choosing the right platform. Lastly, it is worth noting that it doesn’t charge commission and that it has rather tight spreads.
71% of retail CFD accounts lose money with this provider.
Nearing the end of our list, we have Forex.com, which is a broker dedicated to trading forex, as the name suggests. It is also one of the most trusted forex brokers in the world, and especially in the US. Forex.com offers more than 90 currency pairs, extremely low spreads, and a DMA account for active traders.
As such, it also allows users access to liquidity providers, which can result in even better spreads. But, as a primarily forex trader, most of its tools and platforms are FX-oriented. Still, that doesn’t mean that it doesn’t support other assets — on the contrary. With Forex.com, traders also get to access ETFs, stocks, commodities, indices, and even cryptocurrencies.
There is no guarantee you will make money with this provider.
ECN brokers are forex brokers that work in a specific way — by connecting market participants with one another directly, using an ECN (Electronic Communication Network). This is essentially a computer-based system that constantly monitors the market, looks for the clients’ buy and sells orders, and matches them by using a network of forex liquidity providers.
As a result, it is basically impossible for ECN brokers to manipulate the market or “make” it the way traditional brokers can sometimes do. In a sense, they are the purest form of brokers, and they act as real brokerage services between traders.
The difference between ECN forex brokers and market makers is something that every trader needs to understand before they decide to enter the market.
If we compare the two types of brokers, it is clear that ECN brokers have a slight downside due to their fixed commissions that must be paid whenever traders enter and exit positions, which tends to pile up and end up costing you a lot if you do it too often. Market makers, on the other hand, do not do this, which many see as an advantage.
However, market makers do charge a spread, which is usually fixed also, as well as an overnight fee for any position that doesn’t get closed by the end of the trading day. On top of that, market makers also bring another advantage, which is the fact that you always get an execution, no matter the conditions in the market. ECN brokers cannot guarantee the same.
Other than that, however, ECN brokers are better in every other way. They do not trade against the clients, and they cannot choose to display any price they want. Instead, they display the prices offered by other traders that use their platform. ECN brokers also offer tighter spreads, sometimes even zero spreads, as well as no slippage, instant execution, and alike. This makes them ideal for people who wish to engage in automated trading through various tools.
Lastly, ECN brokers typically make your connection to the forex market seem more professional through a number of features, such as level 2 order books, tight spreads in times of high volatility, and more, which makes them ideal for professionals to whom every advantage means a lot. Novices, on the other hand, might find market maker brokers to be easier to handle until they get some experience.
ECN forex brokers come with a number of benefits, many of which we already listed. But, for the purpose of practicality, let’s summarize them once more:
If you are determined to start trading at an ECN forex broker, then you should know that getting started with one is rather simple, and all you need to do is go through a handful of simple and quick steps.
The first thing you need to do is select a broker that you are going to use. Once you decide on that, head over to their website and sign up for an account. On many of these platforms, you don’t even need to create an account from scratch, and can instead log in with your Facebook, Google, or some other pre-existing account.
If you want to, you can still make a brand new account and don’t have it connected to any other account that you might be using. Finally, you will also have to verify your identity. These brokers are regulated, and as such, obligated to request that you go through a KYC procedure, so you will have to upload documents such as your ID, driver’s license, bank statement, or passport and wait for your account to be approved.
Once you are approved, you will be ready to deposit funds. Just look for the deposit option on your broker of choice, enter the desired payment method and the amount you wish to deposit, and hit the deposit button. This works very similarly on all ECN forex brokers, with the only difference being the minimum deposit and supported payment methods, so make sure to check those out before you choose a broker.
Once your money is deposited, you will need to select a trading platform. Most traders choose MetaTrader 4 or MetaTrader 5, although you can also go for cTrader, or some other professional traders on the web, or in the form of desktop and/or mobile apps.
Finally, all that is left to do is for you to select a forex pair that you wish to buy or sell, enter your position, and wait for the system to match you to another trader that wishes to do the opposite of you. As mentioned, the forex market is huge, and you likely won’t have to wait long for the platform to find a suitable trader for you to work with.
ECN brokers offer plenty of benefits, as we have listed above. However, new traders are still recommended to go to market makers until they get the chance to learn more about forex trading and develop the necessary skills to do it on their own, without the help of a third party. However, even then, many choose to use market makers as it is simply more convenient, even though ECN traders offer a number of advantages.
Whether you fall under the first or the second category, we can recommend eToro as the best option that will serve as an alternative to using an ECN forex broker. The company has over 20 million users, 50 forex pairs, low minimum deposits, and many other benefits that we explored above, including the copy-trade feature. You are free to use one of the other brokers if you so desire, but keep in mind that eToro is the biggest one out there, and not without a good reason for it.
In the end, all that matters is that you get a good trade while using a broker platform that feels the most convenient and profitable. For some, ECN brokers are just that, while others would rather turn to the convenience of market makers.
Regardless of which platform you choose, remember to not risk more money than what you can afford to lose, and to always keep learning more. Not only will it let you spot new opportunities, but it will also allow you to avoid plenty of pitfalls that traders usually do not notice in time.
A true ECN broker is a financial service that matches clients looking to buy/sell with others whose orders match the original clients.
ECN brokers make money by charging fixed trading commissions for every trade.
There are several ways to find out if a broker is a true ECN broker, such as checking their spreads (most offer variable low spreads), or checking the client agrees to see if the broker defines itself as an ECN.
Yes, provided that the broker has a large pool of liquidity providers.
The best way for active traders to reduce ECN fees is to check whether the broker has a rebate and cashback program. Note that some brokers do have them, while others do not, so check whether this feature is available before you commit to a platform.
Ali is an experienced writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profiled investment sites including CCN, Capital.com, BeInCrypto, Bitcoinist, and NewsBTC.
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