When you’re forex trading, you’ll have the option of whether you use an ECN forex broker or a dealing desk (DD) broker. In this guide, I’ll explain exactly what an ECN broker is, show you my picks for the best ECN brokers, and explain how to find the best ECN forex broker for you.
Also consider: Best MetaTrader 4 Brokers UK
Top 5 best ECN Forex brokers for November 2023
Browse my list below to see which are the best ECN Forex brokers for UK investors.
Top ECN Forex brokers at a glance
- IC Markets
Pepperstone is an FCA-regulated broker that differs from the other brokers on my list, as its fee structure is slightly different.
When trading with Pepperstone, you will face the low benchmark fee of $0.40 on a $20,000 long position held for a week on the GBP/USD pair. However, on top of this, you will also be asked to pay a $3.50 commission charge for every lot traded.
So, before you make a trade with Pepperstone, you should ensure that you’ve calculated your total trading costs properly.
The good news is, there’s absolutely no minimum deposit required when you first open your account with Pepperstone.
The broker has a wide range of securities for you to invest in, with over 60 currency pairs and more than 1,500 CFDs to choose from.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
If you are looking for the right platform to suit your experience and prefer to trade forex or CFDs, then I can recommend AvaTrade as an excellent option. The range of platforms available here is exceptional with the whole suite of MetaTrader platforms, as well as two proprietary platforms, a mobile app, a social trading platform, and a forex trading platform suited to professional traders.
Another strength of AvaTrade is the excellent educational content available. A comprehensive assortment of in-house material and third-party content is provided for all levels of trading.
The thriving community of traders also make AvaTrade an excellent option for copy trading. The AvaSocial mobile app allows you to research, copy, set budgets and limits, and access automated trading.
On the downside, the forex fees here are around average so you won’t save much in the way of costs and this isn’t a suitable platform for anyone looking for real stocks.
For the latest AvaTrade products, fees and platforms available, please read my detailed AvaTrade review.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
FXTM, also known as “Forextime”, is another broker offering an ECN account called the “Advantage Account”.
Through this account, you can trade directly on the forex through the MetaTrader 4 platform. As this is through an ECN, spreads are as little as 0.0 with commissions averaging between $0.40 and $2, depending on trading volume.
The market execution with FXTM ensures that you enter trades at market prices, and your orders will be filled within milliseconds.
You can also trade with leverage of up to 30:1, allowing you to potentially magnify your returns with a smaller upfront investment. However, remember that leverage can also magnify losses, meaning you may end up losing more than your initial investment.
One point to note with FXTM is that there is a minimum deposit requirement of £500. This is a fairly reasonable sum to start with if you’re intending to really focus on becoming a forex trader.
But if you’re looking to trade small volumes or you simply want to give forex trading a try, this slightly higher minimum deposit may make FXTM a less attractive option for you.
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
With access to more than 70 currency pairs across the forex market, FxPro is one of the best ECN trading platforms available to UK traders.
Most orders made with FxPro are filled in less than 14 milliseconds, meaning you can be confident that you’ll execute your trades at your chosen price before things change. Indeed, just 1.41% of all trades in 2021 received a requote – and 0.66% were even requoted at better prices than initially ordered.
You can use various platforms to trade on FxPro, including:
FxPro also supports CFD trading on its platform, allowing you to speculate on the future price movements of foreign currency pairs. However, you should bear in mind that as of 12 October 2022, 77.20% of retail investor accounts lose money when trading spread bets and CFDs with FxPro.
Technically, FxPro is not actually a “true” ECN broker, but rather a “no dealing desk” (NDD) execution service. That’s because, while true ECN brokers offer entirely anonymous trading between the two parties, this opens up the possibility of worse pricing or even trades falling through.
Meanwhile, as an NDD, FxPro simply executes orders on your behalf without having a stake in the trade. This offers greater transparency and, ideally, better pricing on your trades.
Capital at risk.
IC Markets is another great platform for trading forex via ECN, with more than 61 currency pairs and tight spreads from as little as 0.0 pips.
This ECN broker claims:
- No requotes on orders
- The best possible prices for your trades
- Average execution speeds of under 40 milliseconds
- No restrictions on trading conditions, such as trade size or stop-loss limits
- No restrictions on a particular trading strategy, including scalping and hedging.
Leveraged trading is available with IC Markets, which can be as high as 500:1 with this trading platform – far higher than the Financial Conduct Authority’s (FCA) maximum of 30:1 for retail investor accounts. This is because, as of 12 October 2022, IC Markets has applied to cancel its FCA authorisation.
Even so, the online trading platform must still meet standards in dealing with clients, meaning you can be confident that you have some consumer protection in case you need it.
Like FxPro, IC Markets is technically not an ECN broker in its own right, but rather a forex trading platform with an ECN pricing model – that is, you’ll have access to external liquidity providers like you will with most ECN brokers to ensure the best prices and fastest execution speeds.
So, you’ll still benefit from the attractive features of ECN accounts, offering you direct access to the foreign exchange market.
The VantageFX ECN trading account, known as the “Vantage RAW ECN Account”, is another of the best options for UK forex traders, offering spreads from 0.0, $0 deposit fees, and a $50 minimum deposit. Together, these elements make this platform highly accessible for beginner traders.
Through the next-generation RAW ECN trading environment, VantageFX claims that you’ll have access to one of the most cost-effective forex trading solutions.
The platform works with some of the largest institutions and banks to offer high liquidity in the market with no spread markup charged by the broker.
Instead, you’ll pay a small $3 commission on standard lot trades, per side. This can be an attractive prospect, knowing how much you’ll pay for your trades from the offset.
According to its website, this broker offers access to more than 1,000 tradeable assets. Having this many trading instruments at your disposal can be useful for finding opportunities in the markets that other brokers may not be able to provide.
One thing to note about VantageFX is that it is an Australian company operating globally, and is not authorised or regulated by the FCA in the UK.
As a result, you may want to take great care when dealing with this firm, as you are unlikely to be able to claim and get your money back if something goes wrong.
VantageFX is also therefore not subject to the 30:1 leverage cap for retail investors in the UK, offering leverage of up to 500:1. While this can be a benefit if you understand how leverage works and are proficient in using it safely, this could also see any losses you incur magnified.
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.
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.
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.
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.
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
Which broker offers ECN?
Are there true ECN brokers?
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.