A forex account is used to trade foreign currencies. Opening a forex trading account is a quite simple process these days given the growth of online forex trading. It requires some paperwork and few security steps, such as identity verification, and all can be done online. Typically, you open a forex account, deposit money and then buy and sell currency pairs or other trading tools.
What is ECN account?
The ECN account (Electronic Communications Network), is one of the forex account types commonly provided direct access to the market. ECN is an electronic system of order-matching execution by providing accessibility of orders being entered. ECN account is one of the most popular account types for forex traders due to the price transparency and ability to directly access the market. Typically, forex brokers provide this type of account as additional services to traditional accounts and charge a premium as commission fees per lot with a minimum deposit limit and lower leverage.
Advantages of ECN Account
There are several advantages of ECN account that can highly benefit forex traders.
- Lower spreads: In the forex trading the traders need to pay a spread which is the difference between the best available buy and sell prices. While the buyer needs to pay the best available sell price offered (Ask price), while the seller is required to take the best available buy price (Bid price). Since the ECN instantly matches orders from traders with the best available buy and sell prices, the ECN provide lower spreads.
- Execution speed: With ECN accounts execution can be relatively faster than other types of trades since all trades are carried out immediately without requotes. Liquidity providers are motivated to deliver the best prices and lowest possible rates beat the competition and attract traders.
- Fixed commission: It is highly beneficial for some of the trading strategies to execute trades with commission at lowest spread possible. Therefore, some of the traders prefers commission-based trades. In this case, it is important to choose the broker with the lowest commission per lot.
ECN Account from AximTrade
AximTrade provides one of the best ECN accounts in the forex market. The ECN account provides one of the lowest commissions per lot which is $3. The minimum deposit for ECN accounts by AximTrade is $50 and this is highly competitive as the majority of ECN requirements can be relatively very high for regular forex traders. The minimum trade volume is 0.01 lots while the maximum tradable lot is 50 lots. The average spread on major pairs is as low as 0 pips. Traders can open up to 200 orders at a time. This account offers flexible leverage up to 1:1000.
ECN account Vs Standard account?
Fundamentally, the real ECN account matches and executes orders without placing premiums on the raw spread. Initially, the ECN orders are commonly charged based on trading volume and these are a certain amount of commission per lot. While the Standard account is usually a type of account where the spread includes the premium of the market-marker without adding extra commission to the trading volume.
The cost of an ECN account tends to be cheaper when the trade is above of certain trading volume. Eventually, some might assume that long-term traders can benefit from ECN to avoid premiums on the quotes, but the reality is that it isn’t highly beneficial for a longer-term trader they tend to not worry about the cost of the spread so much.
Basically, the standard account is can come with a fixed spread or floating spread. Each type of spread can have its advantages and disadvantages. The EURUSD pair is usually the lowest spread, but it can get more expensive than an ECN during the news releases. Yet, the standard account can provide more stable execution and better cost for day traders. Although getting the best quotes is a considered major factor in choosing a forex broker and account type, they do not represent execution quality, slippage, commissions fees, or any other trading conditions that might affect your trading strategy in the forex market.
Original Article: Forex ECN Account: Everything You Should Know
Disclaimer: This post is from Aximdaily and it is considered a marketing publication and does not constitute investment advice or research. Its content represents the general views of our editors and does not consider individual readers’ personal circumstances, investment experience, or current financial situation.
