Forex Education Center / Part 03 / ECN Market
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The foreign exchange market is one of the biggest trading markets in the world. It is completely unregulated, so there are different market makers that often have a huge impact on the prices. However, if you are a trader in the forex market, there are many things that you should know about this trading platform. Most people often enter the world of foreign exchange trading in the hope of making better trades and maximizing their profit potential. However, since this is a completely unregulated market, most people often end up incurring huge losses before exiting the market.
Now, if you are a forex trader, there are numerous different things that you need to know. First of all, one of the best ways to trade in the forex market is on an ECN market. ECN stands for the Electronic Communications Network, which is a simple network designed to facilitate trades between low level market participants and large scale, tier 1 liquidity providers. Many analysts in the foreign exchange market have said that the Electronic Communications Network is going to be the way of the future. It is going to revolutionize the way people trade and it will completely alter the role of the brokers in the market.
Here are a few important things you should know about the Electronic Communications Network Market:
Trading is Anonymous;
One of the biggest reasons why more and more people are now opting to work with ECN brokers is because they allow you to trade in complete anonymity. ECN markets only work with neutral prices, which means there isn’t a bigger player that can have a huge impact on the market. As a result, the market prices remain neutral and only reflect standard trading conditions. The prices reflect volatility, demand and supply as well as other market conditions.
Automated Trading Data;
Many people often worry about gaining access to high quality data while trading on the forex market. However, if you are working with a reputable broker, you can use their API in order to connect to different trading models and management systems in order to gain access to market data from numerous different sources. Most people often follow a very information-centric trading strategy. They try their best to maximize their profits by getting as much information as possible before making any trade. A reputable broker will help you gain access to a plethora of different information and data that can greatly improve your trading strategy.
Variable Spreads;
In a standard forex market, the spreads are generally fixed. The bidding and asking prices are determined by the market makers. However, in an ECN market, the spreads are mostly variable. That’s because the prices are neutral and based on standard market conditions. As a result, variable spreads make it easy for people to make better trades without having to worry about market makers ruining their trading strategy.
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