+ Reply to Thread
Results 1 to 2 of 2
  1. #1
    Join Date
    Dec 2008
    Posts
    1

    Default Market Makers vs. ECN's

    For a beginner in the forex market, would you suggest a market maker or an ECN?

  2. #2

    Default

    Market markers make or set the prices based on what they think is best for themselves as the counter party. The reason is every time you sell, they must buy, and every time you buy, they must sell. That is why they can offer fixed spread since they are setting both bid and ask price. This can raise the conflict of interest between the individual trader and the market maker.

    ECN discuss the prices from several banks and market-makers, as well as from the other traders in the ECN, and display the best bid/ask prices based on these input. This is why sometimes you can get no spread on ECNs, especially in very liquid currency pairs. Many might think then how ECN makes money then? They make money by charging fixed commission on every transaction.

    Both have pros and cons and it depends on each trader which type of broker he is looking to go.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts