Today in forex trading market, there are only two main types of brokerage companies, they are: ECN and Market Maker. The ECN stands for Electronic Communications Network. These types of brokers don’t have a dealing desk with the human dealers, but they offer a complicated automated marketplace which consists of various banks and market makers. By trading with an ECN, the trader generally acquires a better price rather trading with a market maker.
Market maker is also a broker which is a company authorized to maintain and make a market for an instrument. They are generally a brokerage bank or affirm which quotes equally a sell and a buy price in commodities or a financial instrument, believing to create a profit on the bid or turn/offer spreads. The market makers are very much significant for maintaining efficiency and liquidity for definite financial instrument, because they make markets through taking a long or short position for a time, hence imaging some risk in return for expectantly creating a small profit on the ask/bid/offer spread.
The ECN brokers charge commissions for the forex trading. The ECN brokers offer the very best achievable price which is distribution of the best current market accomplices. The ECN brokers do not let the type of high leverage which is usual of market makers. For many of the people this is not so great loss, as it is usually not worthwhile to make use anywhere close to the leverage which is accessible at most of the retail market makers. The probable volatility is higher on ECN brokers, as their unfiltered portion of the forex market.
You can also get a ask or bid prices, as they come from the several different banks or institutions. The ECN brokers offer the traders the ability to post their own ask or bid rates. Therefore it depends upon the traders to go with the ECN or Market maker according to his requirement and choice.
