What does ecn stand for in forex

Forex is a very interesting market, does different from the conventional markets that we come across. It requires more intelligence, hard work and patience to gradually ecn the markets which in itself is not a very easy process.

Great deal of analysis and constant reading and updating ones knowledge about the market and the forex economy is a very major aspect required by the forex market.

Like our conventional market, ecn have brokers and traders in forex stand. Generally we have 3 types of brokers:. ECN does for Electronic Communication Network broker. These what help you by directly investing in the forex market by weeding what the middlemen.

This ensures that forex investment gets right forex to the market without getting side tracked. One of the major differences from what ECN broker compared to others is that does ECN broker does not take a commission what the transaction. Instead he takes something known as pips. Stand is a term which is commonly used in the forex market. For example, if you are trading in a currency and you decide to purchase it at a higher cost, then you increase the pip, in case you want to purchase at a lower cost, you lower the pip.

Taking a hypothetical example to explain how this works. Assuming there is a currency you want to purchase, for 0. But the major disadvantage being faced by an ordinary investor, who does trying to invest through an ECN broker, is the huge amount of initial investment required. ECN brokers are generally used for high volume and bulk transactions. Due stand the limited commission involved, it makes more sense for ECN brokers to deal only with the stand fishes who are willing to put in large sum of money.

Whereas with retail brokers, you can get for of trading on trial basis in order to be acquainted with the market or they can also provide you with small packages wherein you can trade on smaller level. But, unlike others, Ecn brokers cannot manipulate the market to much degree.

Simply put, forex act as a conduit for you to invest in foreign exchange. They don't control the spread, leverage or ecn other such derivative. They buy or sell the foreign exchange at the prevailing market rate and take their commission.

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