ECN vs Market Maker(MM) Forex Broker

By ecnforexbrokers


ECN Forex broker vs Market Maker - What is the main difference between the ECN Forex Brokers & Market Maker?


Market Maker basically "make" the Forex market. That is, if you are with the trading currency pairs with a market maker, you do not get direct access to the Forex market. Instead, the broker is sitting on the other side of the terminal, and pretty much trades against you.

With a Market-Maker:
1st You see frequent stop requotes & Hunting
2nd They lose money on trades that seem otherwise profitably
3rd Your currency feeds are manipulated and
4th When (and if) you earn money, you have a hard time withdrawing it to your bank.

The biggest reason why the market maker away with this because they are not regulated.

All these problems) can be solved by Broker Moving into an electronic communications network (ECN. Like a Straight Through Processing (STP) brokers, Forex brokers are regulated by both ECN and known.


We all know Forex Brokers manipulate prices, and spreads. How they do it? Why does not someone stop them?

It may surprise you, as one that come Forex market is not as transparent as their counterparts such as equities and options markets. In contrast to these markets, it is not centrally controlled or vary in the same way, so the exchange rate can be between brokers. The main providers of liquidity are the big banks and hedge funds, as they are known to inter-bank market. In this sense, we see how ECN broker and market maker fit into the picture.

Market Maker Broker As the name suggests, they "make" the price, such as changing bid and ask values. Say for example, 1 pip spread they get from the interbank market on EURUSD, but for us 3 pips spread display (spread is the difference between bid and ask). Agents can vary from time to time and sometimes show even tighter spreads on demo accounts, but when you open a live account, it is a completely different story.

Every time you open and close a trade you will lose the spread. This adds up to a considerable value when you trade frequently. Not only is this, but Market Maker Broker notorious for the production of spikes, they do this to stop it is to customers. Some brokers and market makers freeze its platform in the news announcements, or increase by 20-30 pips spreads, which is quite common. Since Forex is not fixed, regulated than other markets, there is not much you can do NFA and similar organizations.

The only advantage of using a Broker Market Maker is that it means less open to account, and usually offer platforms that are easy to use required. They also provide greater leverage to benefit s are questionable. Read more leverage in Forex trading help?

ECN BrokersECN Brokers simply offers the best possible price that is the dissemination of the best current market participants. The price on the platform is straight out of the interbank market and there is no manipulation of spreads. Spreads, as you know are the bread and butter Broker Market Maker. Since there is no impact on spreads for ECN broker, the only way they can raise money on commissions and fees. This fee is not different from what you pay when buying or selling stocks. From my personal experience of the Commission are negotiable and you can quote a broker for another bid the lowest commission. Also works from an economic commission payments as higher spreads on market-making platform. I have done several times when there was no spread at all (BID = ASK)

If there are drawbacks, the most common is the lack of user-friendly platform. Most ECN broker platforms are difficult to navigate, and it takes time to get used to it. But once you are familiar, you can take advantage of the pre-order types that are typically not available to comment on other platforms.

I've created a thread, about a new ECN platform, xTrader. They say that it's going to be released soon. How soon, i don't know. From the look of it, seems that this drawback of non-user-friendly platform will be gone. So im guessing we will be getting one big step closer of going to the true markets. MM times are getting close to an end.

I don't no much about ECN. But I do know that if any of those things were really true for MM one would immediately notice it and the broker would get a really bad name and loose all there clients (if this would even be legal). So if you have a MM-broker that has a good reputation no way that any of this is true.

What I do know (I read) about ECN is that no ECN can guarantee that your open trade is closed on your stoploss. But they don't mention this in your article.

And i know for certain, that with MM such thing as liquidity does not exist. Smoke in your eyes. You are trading only vs MM himself.

Yes but unless you're trading millions I don't see what the disadvantage in this is. Is the end result not the same?

No. In ECN is a true market. No manipulation.

exactly. good examples are dukascopy and fxopen.

Lots of brokers these days claim to be ECN. Its almost like ECN has replaced STP as the accronym of choice. The reality of it is that so many of the 'ECN's talk out of their arse. What banks are they passing trades to that will accept $10,000 trades? Banks don't trade in those sizes. If people are going to trade in less than 1 lot sizes then they would be btter off going to an STP provider who has no manipulation - there are plenty of them out there. There are also brokers that profit from losses without manipulating trades - Oanda being one of them.

With all the different ECN's and self claimed ECN's what are the experiences from people on this board with them? Which ECN's are reputable by people here that acutally have used them.

Im ready to take my account to the next level and ECN's are the only way Ill be able to do this. I havent pulled the trigger due to lack of actual experience by people that know.

ECN is the future of trading. MM times are over. I guess the best way to find out is to try it out yourself. Make a small deposit and experience the real forex market

I really want to give my 2 cents on this one. I know a lot of people are going to be upset by my post and no I am not a broker. Basically the idea that you are dealing with a market maker is a bad thing is simply not completely true. Basically whether you like it or not you are dealing with market makers. This is because even if your broker is ecn, he himself is dealing with a market maker. The issue isn't market makers but dishonest brokers. Look Citi is now a broker and they are the biggest market maker out there and I think it's safe to say that you can trust them. Heck they don't even accept your account unless it's above 10k. I think what one should be looking at is abnormally increasong spreads and incorrect prices. One thing I like to do is check Yahoo for the current price or just check another broker. So the question shouldn't be am I trading with a market maker (because you are), but if you are getting the market price with a fair spread. I honestly don't care where the money comes from as long as I can withdrawl my profits.

Agree as long the price execution is good & the price feed is not manipulated only market maker charge his spread it not an issue. Problem is when we have requotes or spikes only to hunt stops with only this broker.

13

Im about to recalculate the

Peperstone Razor offer vs trade volume vs trade commissions.

https://pepperstone.com/trading-acco...unts-razor.php

Before i do that, does someone have a opinion about them.

About the order execution and customer service. Faster than Oanda?

Seems their spread is not so bad.

There is nothing wrong with a market maker. In fact, without the market makers, we did not have the market. At least not as we know them today, so we need to appreciate that. The market making became a problem when brokers started to take advantage of their ability to control the liquidity, prices etc. The temptation to earn money from their clients' losses was too much for them and they started to make manipulations. Over the years, this phenomenon was dramatically reduced, but it still exists and will always be there. Therefore, you should find ECN brokers, but real ones and not MM that just using the ECN titles. From my experience, I found out that Alpari and ACM are real ECN brokers that you can relay on. I have also started checking Sunbird fx demo accounts, and so far it looks like a trustful ECN broker and they also have mt4 and mt5.

I think it will be Dukascopy.

Testing their Demo at the moment. Nice.

btw. Having a real ECN and using MT4 (or5) is not the right way.

Its like going to a indi500 race with a Honda Civic.

How do you view MM when you are starting to make money / profit from them?

cheers

Spreads are very good, London session mean is in the range of 0.3-0.4 pips. However they have had regular downtime with their server, several times last week.

Hi guys, I was reading this thread and I was thinking to say that I am lucky to have a STP Broker right now, before I was working with Ava Fx and I was getting connection failures and peaks in some currencies. Actually I had some problems to get support to tell them that I had wrong prices in their charts! After a few time I got my money back but they still doing the same thing and I closed my account with them! I opened an account with SunbirdFx and I never had problems, no requotes, instant action, and the support is very good! I really like this new broker that I am trading now!

ive never heard of this broker before

where are they located and under which body are they regulated?