📖 Financial Lexicon Term
What is ECN?
Electronic Communication Network. A system that automatically matches buy and sell orders for securities in the market without a middleman.
Detailed Explanation
ECN brokers provide traders direct access to other market participants, including banks, hedge funds, and other retail traders. They offer raw interbank spreads (often starting at 0.0 pips) but charge a fixed commission per trade. ECN accounts guarantee no conflict of interest.
💡 Practical Trading Example
IC Markets uses an ECN model to provide 0.0 pip spreads on EUR/USD, charging a $7 round-turn commission per lot.