5 True ECN Forex Brokers (2023)

Do not invest more money than you can afford to lose.

ECN explained

Traders are looking for ECN brokers for a reason. The network brings many benefits, all of which will be discussed in the following article. Still, before we get to the brokers in particular, we’ll provide you with enough information about ECN so that you can make an informed decision when picking a broker to trade with.

As the name suggests, ECN (Electronic Communication Network) is a network and essentially a cutting-edge technology that provides clients with direct access to the interbank foreign exchange market and operates on a peer-to-peer basis, connecting traders with one another. The middleman is eliminated, traditionally making ECN trading more efficient and cost-effective, which may sound weird as you have a broker, but let us explain it further.

Like many banks, most Forex brokers act as market makers, i.e., buyers and sellers of foreign currency. The brokers provide liquidity, but they act as counterparts, meaning they are always on the other side of the trade. And with that being so, they make money from spreads (Buy and Sell difference). A market maker broker is a classic example of a broker, where the company acts as a middleman in the transaction.

Unlike market makers, however, ECN brokers act differently as they become providers of access to the interbank market, which is considered to have many advantages over the traditional market maker method. Instant market execution and lower spreads, but at the same, higher costs are usually related to ECN brokers, so let’s get into details.

ECN Advantages

We can outline five major advantages:

• No dealing desk. The fastest execution possible, as all your trades go straight to the market. The moment you click at a Buy/Sell price, you already have an open position.
• Lower spreads. The difference between Bid and Ask prices is dramatically lower for two reasons. First of all, there is much more liquidity, volume, participants and competitiveness, in general, which tightens spreads significantly. On the other hand, ECN brokers do not make money from spreads as maker markets do. Their job is to provide you access to the ECN network, and when they do so, they’ll charge a commission (usually per lot), as this represents their business model.
• Transparency. In the interbank market, all participants have access to the exact same prices at the exact same moment. And combined with the ultra-fast execution speed, this guarantees that you have your position at the price you wanted. This also limits the possibility of price manipulation.
• More currency pairs. In the interbank market, you have access to more currency pairs and more asset classes, in general. This allows you to become more flexible in your strategies, and you also have access to many exotic instruments at a lower price.
• Dynamic prices. The prices change in milliseconds and reflect even the tiniest events on the market. That’s ideal for scalpers who want to enter and exit really quickly, making money from short-term movements up and down.

ECN Disadvantages

The advantages are many, but let us talk through some disadvantages. We can see two major ones, which in our view, are subject to discussions, and it may turn out that these are no disadvantages at all, depending on the broker you trade with.

• Commissions. This is certainly the number one argument. ECN brokers collect commissions, but it’s due to their business model. They let you use their platforms to gain access to the interbank market, so they charge you a commission; it’s as simple as that.
• Minimum deposit. It’s accepted that ECN brokers have higher deposit requirements, which is true to some extent, but keep in mind that nowadays, access to the ECN market is not so expensive, as you’ll see later in the review.

ECN Platforms

When talking about ECN, we should talk about platforms, and the first one to mention is MetaTrader 5. It is a sophisticated trading terminal for Forex and CFDs that provides advanced charting with multiple timeframes and technical analysis tools. It has a built-in programming language (MQL5) for creating custom indicators and automated trading strategies, which allows automated trading through expert advisors (EA). MetaTrader 5 is available for desktop, browser-based and mobile trading so that you can always access and monitor the markets while on the go.

We exclusively talk about it because the platform was initially created as ECN trading software. MetaTrader 4 could also do it through bridge technology, but MT5 was designed with ECN in mind. Also, MetaTrader 5 is currently the most popular platform for retail Forex trading, so with some knowledge about the electronic communication network, let’s see the brokers we picked. But before we do that, we should note that nowadays, it’s hard to label a broker true ECN, as most brokers act both as market makers and ECN providers. The rest of the article is dedicated to brokers and particular products that present true ECN experience.

FXTM

FXTM is another leading brokerage that adheres to strict regulations, making it a reliable choice for new traders. The broker provides all the necessary tools and resources to get started, including competitive spreads and top-notch trading platforms such as MetaTrader 4 and MetaTrader 5.

The product here is the Advantage Account with a $500 minimum deposit requirement and variable spreads starting from zero. The commissions are very low – an average of $0.4 to $2, depending on the volume traded. Also, with all leverage regulations in mind, we should note that the ratio can expand to 2000:1 (where permitted). The deposit is high, but the commission fees are among the lowest you can find.

Another thing you should have in mind is that FXTM has two other account types (Micro and Advantage Plus), where customers do not pay any commission fees at all. That said, those accounts are not ECN, but with the micro account, you can trade the largest FX and CFD markets for as little as a $10 minimum deposit – it’s worth checking out.

HFM

HFM is a well-established broker with a global presence and licenses on three continents. It boasts favourable trading conditions and various trading accounts. For the purposes of our review, we should focus on the commission-based ZERO Spread Account, which has variable spreads starting from 0.0 pips, and relatively low-deposit requirements – $200. The commission is very competitive – $6 to $8 per round turn, depending on the CFDs traded. For EUR/USD and other majors, the commission is $6 per lot, while for the rest of the pairs, it may reach $8.

XM Group

XM Group is a highly acclaimed broker for its wide range of trading products, low deposit requirements, and advanced trading software. The commission-based account of the broker is the XM Zero, which is really affordable for traders, as it’s available for just a $5 initial deposit. Expectedly, the spreads are variable, starting from 0.0 pips, but unfortunately, we don’t have information about average spreads. As for commissions, the advertised charge is $3.5, so for the round turn, it is $7 per lot traded. That’s not the lowest charge, but it’s certainly competitive, and we can forgive them as they have one of the lowest deposit requirements.

Tickmill

Tickmill is a multi-regulated broker holding licenses in Europe, Africa and Asia. It is known for its superior trading conditions, ultra-fast execution, the safety of clients’ funds and the advanced trading software provided, including the industry leaders MT4 and MT5. The Tickmill’s Pro Account is ECN, with variable spreads starting from 0.0 pips and a commission fee of $4 per round turn – trading conditions that perfectly match the standards. The minimum deposit for Pro Account is $100, a competitive requirement, we should say, but we’d like to pay more attention to the VIP Account, where the commission is even lower – $2 per round turn. What’s interesting about the VIP Account is that there is no minimum deposit but a balance requirement – clients should have $50 000 or more to get it. So, if you started with $100 and grew your account to $50 000, you’ll be a VIP and will pay just $2 per lot traded; that’s not too bad!

IC Markets

IC Markets’ Raw Spread accounts are typical ECN – variable spreads starting from zero and commissions. However, there are two types of Raw Spread accounts – one for cTrader, while the other is for the MT platforms. What’s interesting about both is that the commission fees differ – $6 per round term for cTrader and $7 for MetaTrader. The figures are pretty much standard, so whichever one you choose, there won’t be a big difference, and it depends on your software preferences. The minimum deposit for both accounts is $200.