Trading knowledge libraryWhat Is an ECN BrokerMarket Basics
Market Basics
What Is an ECN Broker
An ECN broker passes your order to a hall where many banks' prices are stacked, and charges a fee for the door instead of widening the gap. This paper shows you how the hall works, the two ways a broker can be paid, what one real trade cost on an ECN account, and the two signs on your own platform that say which kind of account you have.
ECN stands for electronic communication network, and the picture is simpler than the name. It is a hall where the prices of many banks are stacked, best on top. When you buy, your order takes the cheapest seller in the stack; when you sell, it takes the dearest buyer. At the open of 3 September 2026 the best seller was at 1.15873 and the best buyer at 1.15872 — a pip is the fourth decimal place, so the gap between them, the spread, was a tenth of a pip. That gap is the banks' own. The broker did not set it and is not on the other side of your trade; it runs the hall and charges a fee for the door.
Two ways to stand in the middle
Every broker stands between you and the market, and there are two ways to be paid for it. An ECN broker passes your order to the stack and charges a commission — a fixed fee for each lot traded, a lot being 100,000 units of the first currency, taken once on the way in and once on the way out. A dealing-desk broker takes the other side of your trade itself and earns from a wider spread at its own booth, with no fee. On the ECN the cost is visible as a line on your history; on the desk it is inside the two prices on the button.
