ECN (Electronic Communication Network)

An ECN (Electronic Communication Network) broker connects you directly to a pool of liquidity providers — banks, institutions, hedge funds, and other traders. Unlike market makers, ECN brokers don't create their own market. They simply match buy and sell orders from the liquidity pool.

The main advantages of ECN execution are tighter spreads, better price transparency, and reduced conflict of interest. Since the broker isn't taking the other side of your trade, they profit from commissions regardless of whether you win or lose. Spreads on ECN accounts can be as low as 0.0 pips during liquid hours, though commissions are charged separately.

True ECN execution isn't always what's advertised. Some brokers market themselves as ECN but actually use a hybrid model with some market-making. The telltale signs of genuine ECN execution include variable spreads that can reach zero, commission-based pricing, possible negative slippage and requotes during volatile conditions, and generally deeper liquidity.