ECN (electronic communication network)
An electronic system that matches orders from multiple participants. Brokers use ECN to describe accounts that route orders to external liquidity, usually with raw spreads plus commission.
Strictly, an electronic communication network is a venue where buy and sell orders from many participants (banks, funds, other brokers) meet and are matched. Prices come from the best bids and offers available at that moment, so spreads can be very tight and change constantly.
In retail forex marketing, "ECN account" usually means something looser: an account where the broker passes your orders through to one or more outside liquidity sources, shows you something close to the raw market spread and charges a separate commission.
Typical features
- Variable spreads that can be close to zero on liquid pairs in busy hours and much wider in quiet periods or around news.
- A commission per lot, quoted per side or per round turn.
- Market execution: orders fill at the best available price, which can involve slippage in either direction, rather than requotes.
Worked example
On an illustrative ECN account, EUR/USD shows a spread of 0.1 pips and the commission is 3.50 dollars per lot per side. One round-turn standard lot costs 1 dollar of spread plus 7 dollars commission: an all-in cost of 8 dollars. At 22:00 UK time the same spread might be 1.5 pips, taking the all-in cost to 22 dollars.
Common misconception
"ECN" and "STP" are not regulated categories. A broker can call an account ECN while still internalising part of its flow. What matters is the execution policy, how slippage is handled, the typical spread and the regulator. See ECN, STP and market maker execution.
Not investment advice. This is general information and education, written without knowledge of your circumstances. It is not a recommendation to buy or sell any instrument. Past performance is not a reliable indicator of future results. Trading leveraged products carries a high risk of losing money. Risk warning