Best ECN Forex Brokers UK

What is the best ECN broker UK?

In reality, there is no “best” ECN broker, as selecting the right platform for you will come down to a variety of factors.

First and foremost, you’ll need to consider what you want to get out of your trading. Are you a beginner looking to trade forex for the very first time?

Or are you an experienced trader looking to reduce your costs by choosing an ECN broker over a market maker? Working out where you fall on this spectrum will help you to make a more informed decision.

Typically, you’ll likely want to stick to FCA-regulated ECN brokers, as these will be subject to more stringent regulatory frameworks. Knowing that your broker is regulated can give you peace of mind that they’ll always act in the interest of you as their customer, rather than themselves.

Of the brokers on my list, only VantageFX has no authorisations from the FCA, and IC Markets is currently going through the process of cancelling its FCA authorisation, as of 12 October 2022.

Other factors you may want to take into consideration include:

Minimum deposit required

Platforms with a higher minimum deposit may be less ideal if you’re looking to trade small volumes or simply try forex trading for the first time.

The trading platform

Consider how user-friendly the platform is, especially if you’re a beginner. Many platforms offer a demo account or may include trading tools that can help you to refine your strategy, too.

Trading costs

While ECN brokers will simply show you differing spreads without profiting on this themselves, account fees and commission rates may vary across providers. It’s worth checking these before you open an account, as these fees can quickly add up and reduce the returns you might generate from your trading.

Range of assets

The greater the number of assets and currency pairs, the more choice you’ll have in how you trade. Of course, most ECN brokers will offer access to the standard major pairs, and some will have an even greater range of major and minor pairs for you to choose from.

Educational tools

If you’re a beginner, the ability to research and learn more about forex trading may be invaluable. In that case, choosing a broker with these educational tools available may be an important factor.

My UK ECN forex brokers list is a great place to start to find out about some of the best brokers available to UK traders.

Remember to properly research any ECN brokers you’re considering before you open an account, so that you find the right one for you. You may also want to seek independent investment advice if you’re unsure which broker best suits your trading needs.

What is an ECN broker?

An ECN or “electronic communication network” broker is like the stop-gap between the market and you as a trader. But unlike a traditional stockbroker or investment platform, an ECN account gives you direct market access for trading forex.

By trading with an ECN broker, your order is transferred directly to “liquidity providers”. These are typically financial institutions such as banks, investment corporations, hedge funds, mutual funds, and potentially even other traders.

As a result, you have direct market access to these liquidity providers through ECN trading accounts, rather than going through an intermediary.

Crucially, an ECN broker simply shows you all of the prices on offer from the various liquidity providers. That means you can choose from the best price available, rather than being restricted to the prices offered by an intermediary broker.

Generally, this means you can save money, as these intermediary brokers often make money by showing less competitive spreads for forex buy and sell prices.

Meanwhile, an ECN does not seek to make money from spreads. Instead, these platforms usually have account fees or commission rates where they make their money. This can be more cost-effective than trading uncompetitive spreads with other providers.

By using an ECN, you can trade at almost any time of day. This differs from market makers, which may charge an overnight fee if they have to roll your open trades over to contracts for the next trading day. I explain more about market makers later in my guide.

You can trade stocks as well as forex pairs with UK ECN brokers. However, these are typically the only financial markets you’ll be able to trade on in this way.

What is a “true” ECN broker?

“True” ECN forex brokers are those that exclusively meet the ECN criteria. For example, a true broker will do nothing more than facilitate access to a network of liquidity providers offering various prices on trades.

Traders using a true ECN broker will also be entirely anonymous to one another.

It’s worth noting that not all brokers that have some of these characteristics are ECN brokers by definition. Indeed, FxPro, IC Markets, and Pepperstone are all forex brokers with elements of being an ECN broker.

In the case of FxPro and Pepperstone, both of these platforms behave a lot like ECN brokers, while also retaining control of their platforms themselves like a market intermediary would.

Similarly, IC Markets is not an ECN broker in the strictest terms, but it does offer a pricing structure in line with how ECN brokers do.

It’s not necessarily a disadvantage to choose a broker that isn’t technically an ECN broker. But, if you do want a purpose-built ECN broker, you may want to look exclusively at platforms such as FXTM and VantageFX.

How are ECN brokers different to market maker brokers?

When looking up the best ECN brokers, you may come across the term “market makers”. Both ECN brokers and market makers offer access to forex markets, but the crucial difference is that market makers are the intermediaries I discussed above.

You might see market makers referred to as “dealing desk brokers” or even “non-ECN brokers”.

Rather than offering direct access to liquidity providers, market maker brokers offer an internal price on your forex. These prices are typically less competitive than those available across the market, as this is where they make their money.

As a result of the way they earn money from traders, market makers are often accused of deliberately manipulating prices to make the spreads more favourable to them. This is a notable downside, as it means your broker is essentially against you and might offer a spread that isn’t the optimum one for the market.

Meanwhile, ECN brokers are literally unable to do this, as they are simply showing you the range of available prices on the market, rather than setting these themselves.

The upside to using a market maker is that they guarantee your trade will be placed. With an ECN broker, there’s always a chance that you won’t find a buyer or seller for your asset, leaving you unable to make your trade.

So, by going through a market maker, your broker will be taking on the responsibility to make your trade, guaranteeing that it will happen – even though this may be for a less attractive price.

Pros and cons of using an ECN broker

ECN brokers come with a range of features and benefits that can make them useful for you. Of course, as with any decision like this, there are also potential drawbacks to bear in mind.

So, read about a few of the pros and cons you might want to take into account before you choose a broker.

Pros of ECN brokers

• Trade quickly at the best price

A key advantage of ECN brokers is that they’ll typically offer tighter spreads. As they are simply showing you real-time prices in the market, you’ll be able to choose the most suitable one for you. This will usually be executed without the need for requotes, too.

Furthermore, as your ECN broker is connecting you to multiple liquidity providers who are competing for the best prices, trades can be executed immediately if there are buyers and sellers available.

That means there’s no waiting for another intermediary to place your trade, and no risk of overnight fees that some market makers might charge.

• Transparency

As your ECN broker will find the best spread at any given time without taking a position against you, it’s impossible for them to manipulate prices for profit, just as some market makers might do in the spreads they offer.

This ensures that you’re always seeing the best prices for your trade.

Additionally, ECN brokers aren’t trading against you. As your winning positions are aligned, it again adds an element of transparency between you and your broker.

• Liquidity

ECN brokers are simply connecting buyers and sellers across the market. Typically, this means higher liquidity, as there are more institutions and liquidity providers competing for the best price on your trade.

This increases the chances of your trades successfully being executed.

• Trade outside market hours

As an ECN broker is simply connecting you to a buyer or seller, you often aren’t confined by regular market hours.

That means you can trade at any time of day, provided that there’s a buyer or seller for your chosen asset.

On the other hand, market makers might charge an overnight fee to hold your trade and place it on the following day if you attempt to make an order after markets have closed.

There is generally no risk of this with ECN brokers.

Cons of ECN brokers

• Higher fees or commission

While an ECN broker will find the best price with the lowest spread for an asset, they’ll typically charge fees or commission for each trade.

ECN broker fees vary depending on who you’re trading with, but these costs can quickly stack up depending on your trading volume.

Meanwhile, a market maker will generally be free from trading fees and commission, only making their money in the spread they offer you.

• No guarantee that your trade will be made

ECN brokers do not take a position when you make your trade, instead simply connecting you to another buyer or seller. As a result, there’s no guarantee that there will be a buyer or seller who wants your asset available at the time you want to trade.

This does not happen with market makers, as these brokers set the price and charge a spread, meaning they are directly involved in the trade.

• Typically not suitable for beginners

To use an ECN broker, you’ll generally need a greater understanding of how the market works.

As a result, this method is typically best left to experienced traders who fully understand these slightly more complex financial instruments.

Even though it can be less competitive for spreads, a market maker may be a more suitable broker for you if you’re just starting out forex trading, as their services take a great deal of the legwork and administration off your shoulders.

Best ECN Forex Broker UK FAQs

Please note

CFDs are complex financial instruments and more than half of retail CFD accounts lose money when trading CFDs. Please make sure that you know these risks before you start trading and that you’re aware there’s a high chance of losing money rapidly on your investment.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.