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What is an ECN broker?

In one line: An ECN broker sends your orders to an electronic network where they match with prices from banks, other brokers and traders, instead of taking the other side itself.

Trading glossary · Updated 2026-10-21

The short answer

ECN stands for electronic communication network. It's a system that matches buy and sell orders from many places.

An ECN broker plugs you into that network. Your order meets prices from banks, other brokers and traders. The broker doesn't take the other side. It earns a Commission instead.

The other main model is a Dealing desk broker, which takes the other side of your trade itself.

The cost math

ECN accounts usually show very tight, "raw" spreads and add a commission. Dealing desk accounts usually have no commission but a wider spread.

Say you trade 1 standard lot of EUR/USD, where 1 pip is worth about $10.

These numbers are made up to show the math. Real costs vary by broker, pair and time of day. Always check the full cost, not just the spread.

Pros and cons

• Pros: tight spreads, prices from many sources, and a broker with no reason to want you to lose.
• Cons: commissions add up, spreads still widen at quiet hours and around news, and minimum deposits can be higher.

Why it matters

Costs come off every trade. A trader who trades often feels the difference most. The pip value calculator turns any spread into dollars for your size.

In stocks, the word ECN means the electronic venues themselves, which are part of how US stock orders get matched.

A common mistake

Trusting the label. "ECN account" is often a marketing name. Some brokers call an account ECN but still handle orders in-house. Read the broker's order execution policy to see how orders really fill.

In the US, retail forex brokers must register with the CFTC and be NFA members. You can look a firm up on the NFA's BASIC search before opening an account. Most US retail forex brokers act as dealers, so true ECN accounts are rarer there.

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