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ECN broker

A broker that routes client orders into a shared pool of prices from banks, funds and other clients, charging a commission rather than marking up the spread.

In a true ECN model the broker does not take the other side. Orders meet external liquidity, the raw spread can occasionally touch zero, and the broker earns a fixed commission per million traded. See raw-spread-account.

The label is loosely used. Many firms advertising ECN actually aggregate a handful of providers rather than running a network, and some still internalise part of the flow. The meaningful test is the published commission, the average spread data, and the execution policy, not the marketing term.

Example: an ECN account charges $3.50 per side per lot. On EUR/USD at 0.2 pips of spread, the all-in round-trip cost is $7 commission plus $2 spread, or $9, versus $12 on a 1.2-pip spread-only account.

Related: stp-broker, raw-spread-account, commission-vs-spread, no-dealing-desk

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Bid-ask spread in an order bookSell orders stacked above buy orders with a gap between the best of each.SELLERS (asks)50.0690050.051,40050.0460050.011,10050.002,30049.99800spread = 0.03BUYERS (bids)
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.

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