Why you need ECN Liquidity?

Advancement in technology has made it possible for retail traders to trade in the financial market such as forex securely and efficiently. However, the Electronic Communication Network (ECN) can be the future of the forex markets and really helps. 

Basically, ECN was described as a bridge that links smaller market participants with its liquidity providers. Other than that, ECN is a network of Tier-1 Banks, Prime Brokers, Hedge Funds, and FCMs that are connected to form a deep pool of liquidity available for trading. 

ECN liquidity also seems to guarantee the best trading experience. Keep reading here to know some of the key advantages of using ECN liquidity. 

Advantages of ECN Liquidity  

1) Price Feed 

– Clients are given direct access to other participants in currency markets with price quotations from several market participants. This can offer clients a tighter bid and ask spreads than would be otherwise available to them. 

However, it depends on the account type, either volume-based commissions or a competitive spread to the feed. This ensures client positions can comfortably be covered with third-party liquidity providers. 

ECN enables a low latency price feed and ensures that even small traders can access the best prices and spreads, just like institutional investors. 

2) No Conflict of Interest 

– ECN does not create a conflict of interest between the broker and liquidity provider as all risk is covered immediately, and the profit is the volume-based commission. There is no interference in the execution process and only benefits from a fixed fee per lot. 

3) Execution Speed 

– It is difficult to facilitate the execution of client trades without delay. However, with ECN liquidity, market execution can be provided immediately, ensure clients have the best chance of successful trading. 

4) Minimizing Slippage 

– The slippage occurs naturally when trades are either opened or closed using market or limit orders. It refers to an order being filled with a different price than was streamed by the price feed at the time of order request (or with a different price than requested when a limit order or stop is used). 

There are two forms of natural slippage. The first one is latency-based slippage that occurs in volatile markets as the price moves between the time of order request and the time an order is filled. The other is volume-based slippage and occurs when an order is too large to be executed at a single venue. It will be broken up and executed at multiple venues with different pricing levels and filled using a VWAP (volume-weighted average price). 

5) Enhanced Liquidity 

– The unique combination of capabilities provided by this industry-first solution empowers each partner to become an STP Broker. Backed by Prime ECN’s unsurpassed liquidity, each broker can leverage multiple liquidity sources. 

6) Privacy 

– ECN provides a level of anonymity to those concerned about privacy. With this, investors tend and are interested to make large transactions. 

Doo Clearing makes the process smooth and hassle-free for brokerages, fund managers, and other institutional traders. 

Additionally, our liquidity solution is designed for institutional and high-volume traders looking for easy and quick access to institutional FX and CFDs. 

For more information, please contact our expert support team: 

London Office 

Email: [email protected] 

Website: www.dooclearing.co.uk 

Hong Kong Office 

Email: [email protected] 

Website: www.dooclearing.com