Source: 4X Pip Snager
Most forex brokers offering accounts to retail traders operate in one of two ways. It is unlikely that you’re going to be enrolling with a broker who has their own dealing desk. Rather more likely, you will be taking a look at either an ECN broker or a market maker.
ECN currency exchange brokers use the Electronic Communication Network, a worldwide online marketplace that caters for many different sorts of trader from retail to the massive banks and market makers. The spread on the ECN is little, sometimes almost non existent, so brokers using this network will usually either add 2 pips to the real spread or charge commission or fees per deal. You can often get better costs from an ECN broker but take a detailed look at their fee structure and consider what it might mean to you on a normal deal.
ECN brokers are often better for scalpers and can even welcome them because they’re dealing at once with a gigantic market. Slippage is not most of a problem either for scalping or at times of foreign exchange news reports. They’re also sometimes well controlled.
On the other hand, the variable spread can imply more uncertainty when setting stop losses and limit orders. ECN brokers also tend to offer fewer charts and can have a less user friendly dealing system because they aren’t in particular aiming to attract beginners. They generally tend to presume that you know what you are doing and have a paid subscription to do your technical research some place else.
