Best ECN/STP Brokers

Eduardo Montero
Broker Features

XTB Broker
Featured

Go to XTB

Excellent 24-hour customer service. More than 3000 instruments to trade. Regulated broker.

(*) Warning: Your capital is at risk. 80% of retail CFD accounts lose money.

Order execution: XTB acts as a Market Maker or offers STP execution depending on the type of account chosen by the client.

Demo Account: Yes
Minimum Deposit: 0 €/$
Trading Platforms: xStation5, iOS App, Android App.
Execution: Market Maker / STP
Regulation: FCA, CNMV and IFSC
Web Page: https:/www.xtb.com

Pepperstone
Featured

Go to Pepperstone

Very low spreads on over 1,200 instruments. 24/7 support, fast execution and no requotes.

(*) Warning: Between 74-89 % of retail investor accounts lose money when trading CFDs.

Order execution: Depending on the trading account you choose, Pepperstone offers STP (Straight Through Processing) or NDD (No Dealing Desk) execution.

Demo Account: Yes
Minimum Deposit: 200 €/$
Trading Platforms: MetaTrader 4, MetaTrader 5, cTrader, TradingView.
Execution: STP / NDD
Regulation: FCA, ASIC, CySEC, BaFin, DFSA, CMA and SCB
Web Page: https://www.pepperstone.com

ICMarkets

Go to IC Markets

True ECN account with ultra-low spreads and ultra-fast execution designed for scalping and automated trading systems.

Order execution: IC Markets is an ECN broker that does not act as a counterparty to your trades.

Demo Account: Yes
Minimum Deposit: 200 $
Trading Platforms: MetaTrader 4, MetaTrader 5, cTrader.
Execution: ECN
Regulation: ASIC, CySEC and FSA
Web Page: https://www.icmarkets.com

EXNESS

Go to Exness

Low spreads as low as 0.0 pips. No swaps on most instruments. Instant withdrawals.

Order execution: EXNESS broker can act as a Market Maker or offer ECN execution depending on the type of trading account chosen.

Demo Account: Yes
Minimum Deposit: 10 $
Trading Platforms: MetaTrader 4, MetaTrader 5.
Execution: Market Maker / ECN
Regulation: FCA, CySEC, FSCA, FSC, CBCS, FSA and SDL
Web Page: https://www.exness.com

Eightcap

Go to Eightcap

Order execution: Eightcap offers premium liquidity and direct market access with full transparency, no dealing desk and no price manipulation.

Demo Account: Yes
Minimum Deposit: 100 $
Trading Platforms: MetaTrader 4, MetaTrader 5, TradingView.
Execution: STP / ECN
Regulation: ASIC and SCB
Web Page: https://www.eightcap.com

Axi Broker

Go to Axi

Order execution: Axi (previously known as AxiTrader) offers STP execution on Standard accounts and ECN execution on Pro accounts.

Demo Account: Yes
Minimum Deposit: 0 €/$
Trading Platforms: MetaTrader 4.
Execution: STP / ECN
Regulation: FCA, ASIC, FSA and DFSA
Web Page: https://www.axi.com

RoboForex

Go to RoboForex

$30 welcome bonus with a minimum deposit of $10 and bonuses up to $50,000 per deposit.

Order execution: RoboForex offers STP or ECN (non dealing desk) execution depending on the type of trading account you choose.

Demo Account: Yes, unlimited
Minimum Deposit: 0 €/$
Trading Platforms: WebTrader, MetaTrader 4, MetaTrader 5, cTrader, iOS App, Android App.
Execution: STP / ECN
Regulation: IFSC
Web Page: https://www.roboforex.com

FP Markets

Go to FP Markets

Order execution: FP Markets is an ECN (Electronic Communication Network) broker that does not act as a counterparty to its clients' trades.

Demo Account: Yes
Minimum Deposit: 100 €/$
Trading Platforms: MetaTrader 4, MetaTrader 5, IRESS.
Execution: ECN
Regulation: ASIC, CySEC and FSP
Web Page: https://www.fpmarkets.com

 

What is an ECN Broker?

ECN (Electronic Communication Network) brokers are those who act solely as intermediaries for their clients’ transactions in the foreign exchange Forex market or other types of financial assets; they do not conduct transactions on their own behalf, nor do they act as counterparties to transactions through their own trading desk. These brokers, called ECNs, integrate directly and electronically with multiple liquidity providers and market participants (such as banks, financial institutions, other brokers, other clients of the same broker, etc.), thereby creating a trading network and managing to offer their clients the best bid and ask prices for trading in the market at all times.

ECN brokers dynamically show their clients the best bid and offer price for each currency pair or financial instrument, as they receive it from their liquidity providers. In this way, they obtain the best prices, among several providers, so that the trader can invest with low spreads. However, they usually charge a commission for their services depending on the volume of transactions you make. Even so, in most cases the sum of the spreads plus ECN Broker’s fees is usually lower than that of other types of brokers who directly offer higher spreads (even if they do not charge any other fees).

ECN brokers belong to the group of “non-dealing desk” (NDD) brokers, which refers to brokers who only act as intermediaries and not as counterparties to their own clients’ transactions. The ENC broker looks for another participant to act as counterparty for its customers’ transactions, thus matching buy and sell orders. If, for example, a customer requests to buy a currency pair, the ENC broker looks for the seller who offers the best price and in the event that the customer requests a sale it looks for a buyer to complete the transaction. By acting in this way, no conflict of interest arises between the broker and its clients. The broker transmits the transactions to the market and charges a commission for its services, regardless of whether the transactions are winners or losers for the trader.

In the opposite case, we have the online brokers with money desk (DD or Dealing Desk), as, for example, is the case of the Market Makers: the broker is the one that acts as counterpart of the operations of its clients, therefore, in certain cases, conflicts of interest can occur. In other words, the broker can benefit from the clients’ losses; this is because it is the broker himself who assumes the sale when the client buys or vice versa. Sometimes, this way of trading can lead to non-transparent order execution policies or the prohibition of certain trading techniques, which could be beneficial to the trader (such as scalping, hedging, etc.). To avoid problems, a properly regulated broker should always be engaged and have an internal procedure for the resolution of conflicts of interest.

ECN brokers benefit from the more trades a trader makes, so they do not object to allowing certain types of trading: any trading strategy is allowed. They do not apply prohibitions against scalping, hedging or any other strategy. ECN Brokers are the best option for many professional traders today, especially those who do day trading.

What other types of brokers are there?

Within the universe of online brokers we can establish two perfectly defined branches:

– Brokers who have their own trading desk (called Dealing Desk) and who can act as the client’s counterpart.

– Brokers who don’t have their own trading desk (called Non Dealing Desk). They only broker on behalf of clients by transmitting their orders to the market. This is where ECN brokers are located.

Dealing Desk brokers are also called Markets Makers, because they themselves provide us with the market, giving us the corresponding counterpart. This means that if we buy, on many occasions it is the broker who sells to us and vice versa. Therefore, if we win, it will be at the expense of what he loses, hence the conflict of interest.

A Market Maker can have its advantages too, such as providing us with total and absolute liquidity and allowing us to generally trade smaller contracts or lots. However, we must find out if they have a conflict of interest management policy, normally (if the intermediary is serious) they usually have stipulated how any incident will be resolved and not remain in a series of arbitrary decisions. It is always important to work with brokers that are properly regulated by stringent international supervisory bodies, but in the case of market makers it is even more important than with ECN brokers.

Within the Non Dealing Desk brokers we also have the STP (Straight Through Processing) brokers who send the transactions you request directly to their liquidity providers (which like the ECN brokers are usually large financial institutions and international banks such as Bank of America, Deutsche Bank, JP Morgan, Barclays, Goldman Sachs, HSBC,…). Orders are executed electronically without manual intervention.

Also like ECN brokers, STP brokers’ spreads vary according to market conditions and the best prices obtained dynamically from liquidity providers, and there are no conflicts of interest with their clients as they do not act as counterparties to transactions.

The main difference between STP brokers and ECN brokers is that ECNs create an electronic network between liquidity providers, their customers and other brokers, thereby obtaining greater market depth, whereas STPs simply transmit transactions to a number of liquidity providers to which they connect electronically. With regard to fees, as we will see in detail below, ECN brokers usually offer lower spreads (even 0 pips on the most liquid Forex currency pairs) in exchange for a fixed fee per trade, while STP brokers generally have no fixed fee and somewhat higher spreads.

In any case, Dealing Desk brokers are mainly aimed at beginner traders or those who need total liquidity in their operations without worrying about price rectifications.

A requalification in the forex market means that the online Forex broker to whom we send the buy or sell order is not able to execute it at the price we requested. This happens particularly at times of high market volatility when there is important economic news because prices move up and down so quickly that by the time the broker wants to execute the order we send him has already changed the quoted price of that currency. At this time a recast occurs and it depends on how the broker operates directly recast at the possible price closest to the order and execute it directly or give us a warning with the possibility to execute or not the order at the new price.

Dealing Desk brokers also often offer welcome promotions such as deposit bonuses, no deposit bonuses, cashbacks, promo codes,… The requirements are usually lower, the leverage available higher,…

Non-dealing Desk brokers, such as ECN brokers, are aimed primarily at experienced traders or professional traders who trade larger volumes and/or a greater number of orders. They also target those who use strategies such as scalping (view a comparative table of brokers for scalping), hedging or automatic trading with EAs (Expert Advisors).

Expert Advisors are automatic scripts used by advanced trading platforms such as Metatrader 4 and Metatrader 5, which allow automatic trading without manual intervention. It can be used only as a signal ,that is, to warn when a certain condition occurs that has been programmed or to execute buy and sell operations directly based on a series of parameters that we previously configured.

Expert Advisors are widely used within the foreign exchange market (Forex) for automatic trading. Sometimes the trading platform is hosted on a VPS server so that it can perform transactions with maximum speed and lower latency. The script is programmed in the MQL language which is based on C languaje although with certain peculiarities and consists of at least two files which are the source code itself and the executable.

ECN brokers’ commissions are much tighter so they do not usually offer welcome bonuses, aggressive trading offers and initial deposit requirements, minimum trade size, … can be somewhat higher.

In addition to these types of brokers we have mentioned, there is another quite frequent one, the Hybrid Brokers, which are those that can act as market makers or as ECN/STP depending on the trading account opened by the client. In the most basic accounts they usually work as market makers (they are aimed at beginners, the leverage available is higher, they allow microlots,…) and in more advanced accounts they operate as ECN or STP brokers sending the operations to their liquidity providers.

Best ECN or STP Brokers for Forex Trading

Advantages of ECN Brokers

The main advantages of ECN brokers are

– There is no possibility of a conflict of interest between the ECN broker and its clients.

– Spreads are variable and tend to be lower, most of the time, than with market makers.

– Any strategy is allowed (scalping, hedging, automatic trading,…) without restrictions.

Disadvantages of ECN Brokers

– Not all offer micro accounts (for trading with microlots) and the minimum deposit is usually somewhat higher than for market makers (although there is less and less difference). They are also much less likely to offer welcome deposit bonuses or aggressive promotions.

– They are usually ideal brokers for experienced traders or those who carry out a high volume of operations (daytraders, scalpers,…). For a beginner it is usually easier to start with a market maker. Prices and variable spreads are more volatile, there may be recounts, slides,..

– Some Non Dealing Desk brokers work with very low spreads directly from their liquidity providers but apply a volume fee which is their profit.

ECN Broker fees

As we have seen above, although there may be certain exceptions, most ECN brokers derive their business profits in two ways:

– By applying a fixed commission for each purchase or sale order executed.

– In the form of a spread (difference between the purchase and sale price).

In addition to the spread, we can find the so-called Swap commission. We will analyze all of them step by step and calmly:

Spread

This is one of the most frequent and most influential fees on our trading account. Therefore, it is convenient that you know it in depth.

The Spread represents a differential or range between two prices. When trading in the Forex (Best Forex Brokers) currency market or through CFDs (Best CFD Brokers) on shares, indices, precious metals, energy, raw materials, etc., it is very common for brokers to obtain their fees through this type of commission or rate.

The ECN broker will always offer us two prices:

Bid: this is the selling price for the trader. In other words, if we decide to sell a certain financial instrument, either to open a short position or to close a long trade, this price will be applied to us.

Ask: is the purchase price for the trader. Unlike the previous case, this is the market price that must be assumed if you want to open a long position or close a short one.

There is a difference of a few points (pips) between the Bid price and the Ask price. This is known as the spread.

Normally, the trader will always buy the financial instrument a few pips above the price the broker is willing to offer him for selling it.

So let’s imagine that a certain currency pair is bought and immediately, before the price even fluctuates, it is sold. The result is that the trade will have ended with a loss for the trader, as he bought something more expensive than he sold the product. This is one of the ways the broker charges for the services he provides.

This is why trading always starts with a small loss: it represents the spread, i.e. the cost per trade.

As can be deduced, the monetary cost of the spread will depend on the value of each point. And the value of the point is established according to the size of the position to be opened.

Commission per transaction

The operations of ECN brokers are based on applying a lower spread than other brokers such as STP or Market Makers but adding a fixed commission when opening and closing a position.

As you might expect, this type of trading fee is often more advantageous for traders who have sufficient capital in their account to open positions with significant volume.

An important note is that the spreads are applied in the base currency of the financial instrument on which the trading position is opened; while the fixed commission is charged in the same currency used in our trading account.

Depending on the ECN broker, the fixed fee per trade may always be the same or may vary depending on the type of financial instrument involved.

Swap commission

The swap commission, also called “roll over” or “night premium”, corresponds to a financial cost that brokers establish, as a consequence of the money they must lend to make it possible to leverage the operations.

CFDs are derivative financial products, which involve trading with leverage. In other words, the trader does not have to invest the entire volume of the trade, but rather commits an amount as collateral and the broker multiplies this amount.

In an example of a 1:30 leverage for each dollar deposited as initial margin, the broker will allow us to open a market position of 30 dollars.

Leverage acts as a multiplier of the capital held in the account, it can achieve higher returns with very little capital, but it also carries a risk. When the market moves against the trader and loses 1% (for example), 1% of the total volume of the trade is lost, which can exhaust the margin of guarantee and, if no more money is contributed, the position will be closed and the losses will have to be assumed.

In short, the swap fee corresponds to the daily interest charged by the broker for lending us the money involved in the leveraged investment.

This commission is applied every day the trading position is open. The money that the ECN broker lends us for the trading operation is for one day, but the operation is automatically refinanced and earns new interest.

Therefore, this commission will not be applied if the trader closes the positions within the same day (performs a scalping or day trading style).

This commission is charged at 00:00 hours (depending on the time the broker has the server), for this reason it is called night premium or night refinancing.

Despite the fact that the Forex market remains open 24 hours a day from Monday to Friday, from the time indicated it is considered that one day has ended and the next begins, refinancing the trading position and earning the swap commission again.

There is a day on which this commission is triple, since the weekend is taken into account. Some ECN brokers apply the triple swap on Wednesdays. This is because spot market transactions are usually settled after two days, and so the weekend collection is brought forward from Friday to Wednesday.

The amount of the swap commission is influenced by the interest rates of the currency (or currencies) used in the transaction, to which a margin is added depending on the risk and market conditions.

What about the Swap Commission in the Forex market? When trading in the Forex market you invest in a currency pair. In other words, two currencies are involved in the trade. Thus, Forex trading involves a currency exchange, buying one and selling another simultaneously. You are always long on one currency and short on the other.

Therefore, the trader is charged interest on the sold currency and credited interest on the purchased currency. The result is no other than the direct application in our trading account of the swap spread between the two currencies, which can be either in favour or against the trader. In other words, it can be a debit or a credit to the account.

Cash Withdrawal Fees

Sometimes ECN brokers may charge a fee for cash withdrawals depending on the payment method chosen.

You can find more information about withdrawal costs according to the payment method used on the website of each broker or contact customer service and ask them directly.

Sometimes the fees can be applied to the trader by his own bank or means of payment (for sending or receiving money, foreign exchange,…) and are beyond the control of the ECN broker.

Regulation of ECN brokers

In the world of online trading, the regulatory bodies in each country are the ones that guarantee greater transparency and professionalism on the part of the brokers subject to their supervision and control.

Today there are a large number of ECN and other brokers in the market and it is increasingly difficult to differentiate their offerings or whether they are a reliable and secure company. Some brokers operate without any regulation and, although there may be exceptions, this is often a symptom of poor transparency, poor security over depositors’ funds and even practices that could become a scam.

Online trading in Forex or through CFDs (contracts for difference) has become very popular worldwide. Today you can trade the financial markets from anywhere on the planet at any time with a simple computer, tablet or smartphone.

ECN brokers typically accept clients from countries such as Thailand, Malaysia, Singapore, Vietnam, Indonesia, the Philippines, Taiwan, China, Japan, India, South Africa, Nigeria, Kenya, Senegal, Australia, New Zealand, United Arab Emirates, Saudi Arabia, Bahrain, Qatar, Kuwait, Israel, the United Kingdom,…. and although these brokers often have offices in some of these countries they are not always physically present in all of them.

The regulation of an ECN broker will depend on the location of its seat(s). A properly regulated broker must be supervised and authorised and licensed by the regulatory body where its head office is located. In other countries where it offers its services, it may register with the local registrars but regulation will be carried out by the body where its head office is located.

Some examples of regulators are:

The UK’s Financial Conduct Authority (FCA).

The Australian Securities and Investments Commission in Australia.

The National Futures Association (NFA) in the United States

The Cyprus Securities and Exchange Commission (CySEC) in Cyprus .

The Financial Sector Conduct Authority (FSCA) of South Africa.

For example, in the United Kingdom, FCA-regulated ECN brokers are subject to numerous requirements and controls on various factors that can have a direct impact on investor security, such as

– The broker’s financial situation: The FCA imposes high minimum capital requirements to ensure the broker’s financial health. It carries out monthly checks to verify that the minimum capital required still exists or the licence would be cancelled.

– Investor protection: The FCA controls the transparent advertising and marketing of products by the broker. The broker must demonstrate that its clients are treated equally and fairly and that any complaints are dealt with diligently.

– Audit: The FCA is empowered to visit without prior notice the broker’s headquarters and check its transaction records and client accounts for compliance with all regulations. In addition, brokers must also undergo an external audit by an independent company which will report its results directly to the FCA.

In short, trading with a reliable ECN broker is a determining factor and much more important than the trading conditions it offers. Our recommendation is to choose brokers regulated by prestigious international bodies, where we have sufficient guarantees of transparency and the security of our funds is controlled. The investor can access a dispute resolution procedure if necessary when contracting with a properly regulated broker.

How do I choose an ECN Broker?

A key aspect of safe online trading is to hire an ECN broker who can provide the service, guarantees and tools necessary for efficient operations.

These are the main points to consider when hiring a good ECN broker:

– Must be regulated

As we have seen in the previous point, an ECN broker, in order to carry out its intermediation activity legally with guarantees, must have a licence granted by the regulatory body of the country in which it is based.

In order to obtain the corresponding licence, the regulatory body requires you to comply with a series of requirements (sufficient capital, transparency, security of client funds, investor protection measures, etc.). In the same way, it is in charge of supervising the broker, with the impossibility of him disappearing with our money or committing any kind of fraud or swindle.

The regulator looks after the interests of investors and the transparency of the markets.

– Low fees

ECN brokers usually charge various fees. However, each broker is free to apply its own rates.

The most common commissions that we can find in an ECN broker are the spread, a fixed commission for opening and closing positions and the swap commission (for keeping the position open from one day to the next). However, there are brokers who may charge a commission for withdrawing funds, exchanging currencies or for any other concept.

When hiring an ECN broker, it should be assessed whether fees can be reduced without giving up the most important aspects of the service. That is to say, weigh up the fees against the rates applied in the industry and the level of service we get.

Any savings in fees has a direct impact on our performance. Most ECN brokers target an experienced or professional trader profile so their fees are usually quite tight, yet we can find differences from one broker to another so it is worth comparing.

– Trading platform

As a general rule (if not in all cases), the broker provides the investor with all the necessary tools to trade online with markets such as Forex, shares, stock indices, raw materials, energy,…

The trading platform is the trader’s main tool. From it the market is analysed, decisions are made, purchase and sale orders are launched and everything concerning our capital and our trading account (deposits, withdrawals, amount to be invested, etc.) is managed.

The trading platform offered by the broker must be simple, effective, powerful and intuitive. The trader must handle it with ease; it is the centre of all his investment business.

– Customer Service

Another important aspect when choosing an ECN broker is the support and level of service provided. Any doubt or question related to investment operations should be clarified quickly enough so that it does not cause us any harm.

What is important in this respect is that the broker can pay attention to us 24 hours a day.

Similarly, having several channels of communication with the broker (online chat, telephone, email, etc.) and if possible in our language is highly recommended.

– Possibility of using a demo account

A demo account is nothing more than a trading simulator. A trading account with a fictitious capital that allows us to trade as if it were a real account. It is extremely useful for testing the services of the ECN broker, its trading platform, developing our investment strategies, improving our operations, completing training and practicing in different scenarios (gaining experience), all without putting our money at risk.

Ideally, you should sign up with an ECN broker who offers you the possibility of trading on a free demo account.

Who are the best ECN Brokers?

After having tested and analysed numerous online brokers, in the comparative list at the top of this page, in our opinion, you can find what we consider to be the best ECN brokers for online trading. We hope that the details you can see in the table will be useful to you in finding the ECN broker that best suits your particular case.

This post is also available in Spanish: brokers ecn, Italian, Italy: broker ecn, German: broker ecn