What is ECN Forex Trading?
ECN, which stands for Electronic Communication Network, really is the way of the future for the Foreign Exchange Markets. ECN can best be described as a bridge linking smaller market participants with its liquidity providers through a FOREX ECN Broker.
This linkage is done using sophisticated technology setup named FIX Protocol (Financial Information Exchange Protocol). At one end, the broker obtains liquidity from its liquidity providers and makes it available for trading to its clients. On the other side, the broker delivers clients' orders to Liquidity Providers for execution.
An ECN broker benefits from commission fees per transaction. The higher trading volume the broker's clients generate, the higher the broker's profitability.
NSD ECN Advantages:
All ECN trading activity is totally anonymous. Anonymity enables traders to deal on neutral prices, which reflect the real market conditions only and are not biased against the client's direction based on forex trading strategies, tactics or current market positions.
Instantaneous Trade Execution
Clients trade forex instantly on live streaming, best executable prices with immediate confirmations. NSD Markets does not provide a "last look" to price makers, so NSD Markets trades are final and confirmed as soon as they are dealt. There is no dealing desk to intervene, so there are no re-quotes.
Client to Liquidity Trading
The NSD Markets ECN model allows clients to trade on the global liquidity of qualified and competitive Financial Institutions.
Automated forex Trading/Market Data
Through the use of our API, clients can connect their trading models and risk management systems to our market data feed and matching engine. NSD Markets's live, neutral, executable market data includes the Most Competitive Bid and Best Ask prices at the time. These attributes of our data make it robust in back testing trading models and powering them for live trading.
Unlike a dealer, however, NSD Markets does not control the bid/offer spread and therefore can not provide the same bid/offer spread at all times. NSD Markets offers variable spreads.
On an ECN, clients have direct access to market prices. Market prices fluctuate reflecting supply and demand, volatility and other conditions. The NSD Markets ECN enables clients to trade on tight bid/offer spreads, which are as low as 1 pip on all majors in normal market conditions.