Within the last couple of years Forex has emerged as the single biggest name in the world of online trading.
This immense success of the system has led to an influx of a large number of brokers, who have made the trading platforms accessible to almost everyone.
In the present market the brokers working to provide trading platforms can be clearly distinguished into two categories:
Brokers that are conventional market makers and brokers that use an ECN system. There are also some brokers that are operating both ways, depending upon the customer needs and the type of the account.
ECN
Electronic Communications Network (ECN) refers to the system that the broker employs to transfer orders and receive quotes.
A broker using ECN simply provides the trader with a trading platform and then acts as a middle man between the buying and selling parties.
This system simply presents the best quotes after collecting them from liquidity providers without considering the source.
Market Maker
A market maker is a completely different experience. . A market maker makes his own market.
The broker determines the buy and sells quotes before presenting them in the market maker platform. As the market fluctuates the quotes also change according to its flow.
The choice of a Forex broker is indeed a very important one. Hence, before choosing any broker it is important to get familiar with the ways on which each of the systems operate and also determine their pros and cons to be able to make the best choice.
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