The post Best US ECN Forex Brokers by Dan Schmidt appeared first on Benzinga. Visit Benzinga to get more great content like this.
In addition to forex trading’s nebulous regulatory standards and high leverage trades, you’ve got an unprecedented number of forex brokers to choose from. Unfortunately, it’s sometimes hard to tell if your broker has your best interests at heart.
If peace of mind is important to you (and who would say it isn’t?) you might be interested in learning about ECN brokers. ECN stands for electronic communications network and it helps bring transparency to the currency markets.
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Quick look: Best US ECN Forex Brokers
- Best Overall: FOREX.com
- Best for U.S Clients: Interactive Brokers
- Best for Low Spreads: Pepperstone
3 Popular ECN Broker Options
Surprisingly, United States customers aren’t shut out from ECN brokers! You might not be able to use MetaTrader, but U.S. traders can still enjoy the benefits of ECN trading. Each of the following brokers uses an actual ECN to match buyers and sellers and doesn’t deal against its own customers.
1. FOREX.com
FOREX.com is Benzinga’s top choice for the best forex broker, and is continually favored by brokerages and individual investors alike. A subsidiary of GAIN Capital, they have almost $1.5 billion in assets and $350 million available liquidity. FOREX.com is also known for executing 99.65% of their trades in under one second.
FOREX.com has extensive tools for beginners and advanced traders alike, offering live streams of market data, commentary, analyst research, screeners, and more. They also have an email newsletter that covers how the market is doing, along with entry and exit points.
Dedicated to helping you develop your forex trading skills, they offer courses for investors of all skill levels to continue learning.
You are able to trade FOREX.com’s 84 different currency pairs on their Advanced Trading Platform for your desktop, MetaTrader, and through their web trading. These platforms are also easy-to-use and customizable.
get started
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FOREX.com is a one-stop shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn’t a standard broker.
Best For
- MetaTrader 4 users
- Beginner forex traders
- Active forex traders
- Impressive, easy-to-navigate platform
- Wide range of education and research tools
- Access to over 80 currencies to buy and sell
- Leverage available up to 50:1
- Cannot buy and sell other securities (like stocks and bonds)
2. Interactive Brokers
Interactive Brokers accepts United States clients for its forex trading platform, which provides direct access to interbank market pricing. You’ll be able to trade 23 different currencies with commissions as low as 0.08 pips, but unfortunately, there’s no support for the MetaTrader platform.
Account minimums at Interactive Brokers are a bit high, though. You’ll need a $10,000 deposit in order to open an account, which may deter some smaller retail traders. But U.S. customers don’t have many forex brokerage options and Interactive Brokers is one of the best.
Additionally, its education library is loaded with different strategies and techniques for trading. If you’re just getting started learning how to trade forex, you’ll find a wealth of knowledge to get you started.
get started
securely through Interactive Broker’s
website
Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 135 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.
IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.
Best For
- Access to foreign markets
- Detailed mobile app that makes trading simple
- Wide range of available account types and tradable assets
- Comprehensive, quick desktop platform
- Mobile app mirrors full capabilities of desktop version
- Access to massive range of tradable assets
- Low margin rates
- Easy-to-use and enhanced screening options are better than ever
- Trading platform may be intimidating for new investors
3. Pepperstone
Pepperstone is an Australian-based forex broker with low spreads and low minimums. You’ll only need $200 to get an account open and spreads average between 1 to 3 pips for major currency pairs. Pepperstone isn’t open to U.S. traders but can provide leverage up to 500:1. MetaTrader is the platform of choice here and the straight-through processing (STP) system guarantees accurate pricing and fast execution. Both MetaTrader 4 and 5 are available if account holders want access to multiple markets.
Over 70 currency pairs can be traded, along with CFDs on indices, commodities, and cryptocurrencies. Pepperstone provides liquidity through 22 different major banks across the globe and customers don’t need to fear the firm trading against them. A great choice for new forex traders learning how to navigate the market.
Get started
securely through Pepperstone’s
website
Pepperstone is an Australian broker focused on providing international forex, CFD and cryptocurrency trading. Though U.S. traders currently cannot open an account with Pepperstone, the broker remains an affordable and comprehensive option for international traders.
Pepperstone offers traders access to over 61 forex markets, over 60 CFDs for index funds and stocks and 5 cryptocurrencies. Leverage options with Pepperstone are extensive; you may qualify for up to 500:1 leverage when trading currencies and up to 5:1 leverage when trading cryptocurrencies, for example.
There are a few areas where Pepperstone can afford to improve. We’d love to see Pepperstone add its own trading platform in the future instead of relying entirely on 3rd-party platforms. We’d also love to see direct stock and fund purchase options in the future. Despite these flaws, Pepperstone remains a very strong choice for international traders.
Best For
- International traders interested in trading CFDs from foreign markets and currencies
- Traders who are already familiar with the MetaTrader or cTrader platforms
- Traders who are looking for leverage when trading cryptocurrencies
- Access to over 61 forex pairs and over 60 stock CFDs
- Leverage available for both forex and cryptocurrency trading
- Wide range of educational tools and courses that both beginners and experts can use
- 24/7 customer service
- Not currently available to U.S. traders
- No option to purchase stocks, bonds or mutual funds directly; only CFDs are available
What’s an ECN Broker?
Currencies aren’t traded in centralized locations the way stocks are on exchanges. Currency trades happen all over the world, but most take place on something called the interbank market. The interbank market is where the world’s largest global banks exchange currencies to provide liquidity to the forex market. Retail traders don’t have access to this market, so they trade through either an ECN or a market maker.
ECNs are complex computer systems that connect buyers and sellers from every corner of the forex market. Since ECNs have access to traders on both on the interbank market and retail brokerages, counterparties to trades can be found without the help of a market maker. Buyers and sellers can easily be matched, which results in quicker trades and more accurate spreads.
ECN brokers usually charge commission and have high minimum account balances. But unlike market maker brokers, ECNs do a good job of executing your trade at the price you want and there’s no perverse incentive to trade against the customer. Since the market maker is the counterparty to a retail customer’s trade, conflicts of interest exist and that presents a risk in the largely unregulated forex market. The ECN broker works as a middleman, not a counterparty.
What to Look for in an ECN Broker
ECN brokers tout themselves as fast, trustworthy and anonymous. The SEC considers ECN brokers to be alternative trading systems because they match orders through third parties instead of directly on an exchange or with a market maker. But don’t let this label deter you. If you have the capital to open an ECN account, there’s a number of good reasons to do so.
Here are a few important things to consider when choosing a forex broker:
Peace of Mind
Because the forex market can be a wildly unregulated playing field, you want to choose a broker that can promise security and anonymity. Make sure your forex brokerage has a relationship with one of the primary forex regulatory groups like the Financial Conduct Authority (FCA), National Futures Association (NFA) or the Australian Securities and Investment Commission (ASIC).
Access to Forex Trading Apps
If you want to use MetaTrader 4 to trade currencies, make sure the brokerage you choose supports the platform! You’ll find a list of supported platforms and app on each individual broker’s website.
Smooth Trading Experience
Sometimes a huge news story or sudden flush of trading activity can cause slippage. During periods like this, trades can be executed at prices beyond the customer’s request or dropped entirely. The best ECN brokers provide uninterrupted trading at the best possible prices.
Affordable Spreads
You might find a ECN broker with which you are very comfortable, but that does not mean it offers the best prices. Check the spreads for all the currency pairs you prefer to trade. A broker with the most affordable spreads helps you save money over the long term. You might also register for more than one broker depending on the spreads they offer.
Final Thoughts on ECN Forex
Often, reviews from current or past customers can help you determine the best forex brokerage for you. You’ll need to find one that fits both your trading budget and style and doesn’t claim to be something it’s not. Sometimes brokers claim to be an ECN broker even if they’re actually a market maker, so check out a review or two before you sign up.
The post Best US ECN Forex Brokers by Dan Schmidt appeared first on Benzinga. Visit Benzinga to get more great content like this.
