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Are ECN brokers better?

  • #1
  • First Post: Jul 31, 2011 10:29am Jul 31, 2011 10:29am
Hi,

I'm having a lot of difficulty deciding on a broker.

My plan was to start an account with around €1.000 which is enough for micro/normal accounts with EUR/USD spread of 2-4 pips and no commission.
Then there is the option with some brokers to open an ECN-account which is minimum €2.000 euro but with lower spreads + commission.

What are differences between an ECN-account and a regular account and are they worth thinking about or what should be the basis of my choice?

Should I just start with a regular account and then move to ECN at a later date? Or get the €2k and just start with ECN?

I'm planning to trade shorter timeframes / semi-scalping for 10-20 pip at a time.

Hoping for some wise words.
/Jesper
  • #2
  • Aug 1, 2011 1:16am Aug 1, 2011 1:16am
This should be a no brainer.

If you are scalping you need lower spread and fast execution, no delays, no news disconnects. You also need to be confident the broker isn't going to object to your scalping and close you down.

ECN all the way!
  • #3
  • Aug 3, 2011 6:06am Aug 3, 2011 6:06am
either ECN or STP :
1-no dealing desk .
2-fast execution.
3-no re-quotes.
4- no slippage .
5- no news disconnects .
  • #4
  • Aug 3, 2011 6:56am Aug 3, 2011 6:56am
Thank you both.

Actually it is a no brainer
I just opened a demo-account with a ECN-broker, and eventhough there is a commission of $3.5 per lot, its still easier with the much lower spreads to make a profit

I'll just demo for another month while getting the other €1.000 needed to open a real account.

Kind regards
Jesper
  • #5
  • Aug 3, 2011 7:27am Aug 3, 2011 7:27am
Quoting Skovjuul
Hi,

I'm having a lot of difficulty deciding on a broker.

My plan was to start an account with around €1.000 which is enough for micro/normal accounts with EUR/USD spread of 2-4 pips and no commission.
Then there is the option with some brokers to open an ECN-account which is minimum €2.000 euro but with lower spreads + commission.

What are differences between an ECN-account and a regular account and are they worth thinking about or what should be the basis of my choice?

Should I just start with a regular account and then move to ECN at...
The really objectionable thing about non ECN brokers is their meddling with where you can set entry prices. I never trade at market price but always enter with stop/limit orders. You'll then find that non ECN brokers will prevent you from placing a pending order stop (and sometimes price too) "too close to the price". The gap varies based on news, volatility etc. Oanda are usually at 10 pips as are Forex.com and Alpari but the "good guys" (ie the ECN guys) don't have any artificial constraint. Provided the price/stop is the right side of the price you can place them anywhere. I spent hours trying to program my way around the stop/entry limitations of non ECN brokers before realizing it wasn't a worthwhile game to play. Totally invalidates your back-testing too.

The other problem with the dealing desk brokers is that the price can be anything they want it to be... it doesn't have to represent deals being done in the real-world - only the ones at their own dealing desk.

Medran
  • #6
  • Aug 3, 2011 1:37pm Aug 3, 2011 1:37pm
ECN is actually a pool of liquidity providers.
Can anybody explain me why a ECN is better above for example a DD??
Who cares if MY broker for example Saxo gives me the liquidity or CityFX or Goldman or Deutsche Bank? I get my liquidity from a bank anyway.
I start to doubt if ECN is really that good. Ok with a DD they see your stop and so on but do you really think that a DD is going to push prices 50 pips to get your stops? Have you any idea how much money that costs to move EURUSD 50 pips? :-) And with ECN you have no fixed spread. So I wonder if ECN is realy so holy as many think.... Please explain.
  • #7
  • Aug 3, 2011 2:17pm Aug 3, 2011 2:17pm
I found that not being able to put SL/TP less than 10 pip away was a big problem for me when scalping.

The fixed spread is actually not a good thing. I tried one broker with fixed 2 pip on EUR/USD and 4 pip on the GBP/USD. My current ECN-broker has often 0.6 on the EUR/USD and just around 1.4 on the GBP/USD in the London/NY overlap, so that is much better.
Granted there is a $3.5 commision per lot traded but its still cheaper than the fixed spread.
2 pip spread = $20 cost per trade of 1 lot
0.6 pip spread + $3.5 = $9.5 per trade of 1 lot (plus you already start earning after 0.6 pip making $14-$9.5 = $4.5 in just the 2 pip that would have cost you $20 if you have fixed spread)

And its lightning fast as far as I can tell, no slippage worth noting.

Just my observations
/Jesper
  • #8
  • Aug 3, 2011 2:17pm Aug 3, 2011 2:17pm
I have an account with both, just take the trade with the broker with the best spread at the time or the broker with the best rollover interest if trade is not a scalp
  • #9
  • Aug 3, 2011 7:31pm Aug 3, 2011 7:31pm
Quoting Skovjuul
I found that not being able to put SL/TP less than 10 pip away was a big problem for me when scalping.

The fixed spread is actually not a good thing. I tried one broker with fixed 2 pip on EUR/USD and 4 pip on the GBP/USD. My current ECN-broker has often 0.6 on the EUR/USD and just around 1.4 on the GBP/USD in the London/NY overlap, so that is much better.
Granted there is a $3.5 commision per lot traded but its still cheaper than the fixed spread.
2 pip spread = $20 cost per trade of 1 lot
0.6 pip spread + $3.5 = $9.5 per trade of 1 lot (plus...
Which broker is this Jesper? Sounds good to me too.
  • #10
  • Aug 4, 2011 12:42am Aug 4, 2011 12:42am
I'm not sure if I'm allowed to "advertise" brokers in this section?
But its a finnish broker - then I haven't said too much
  • #11
  • Aug 4, 2011 1:35am Aug 4, 2011 1:35am
If ECN broker, i prefer Dukascopy.com
  • #12
  • Aug 4, 2011 2:48am Aug 4, 2011 2:48am
Just to clarify (which I just did with livechat) - I pay $7 roundtrip per lot. $3.5 per open and close.
  • #13
  • Aug 4, 2011 2:52am Aug 4, 2011 2:52am
Quoting MT4Broker
If ECN broker, i prefer Dukascopy.com
From what I've read about Dukascopy I just got a bad impression. But are they fast, low spreads and what is their commission?

Problems depositing/withdrawing?

Do they provide Level II quotes?

Are their platforms better than Metatrader?

Can I open an ECN-account with €2000?

Kind regards.
  • #14
  • Aug 7, 2011 12:26pm Aug 7, 2011 12:26pm
Quoting Skovjuul
I'm not sure if I'm allowed to "advertise" brokers in this section?
But its a finnish broker - then I haven't said too much
K gotcha Skovjuul, thanks...
  • #15
  • Aug 13, 2011 4:57am Aug 13, 2011 4:57am
My experience with Dukascopy is quite good.

 

  1. Good customer service
  2. No bad experiences with executing trades
  3. Over all a very trustworthy feeling


Hope to have contributed.

  • #16
  • Last Post: Aug 15, 2011 4:24am Aug 15, 2011 4:24am
I'm also deciding among ECN brokers.

Integral is an ECN right? If so, what other ECNs are there and which are the best? How important is it to sign up with brokers that networked with reputable ECNs?

Also, I live in the US, so how it important is it to sign up with a broker within US borders?

How important is to be regulated by NFA/CFTC?
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