ECN
Market Structure
What it means
Electronic Communication Network: a system that matches buy and sell orders directly between traders, with no dealer in the middle. It often offers tighter spreads.
Example
On an ECN, your buy order for EUR/USD can be matched directly with another trader's sell order at 1.10500, with the ECN charging a small commission instead of widening the spread.
Mistake beginners make
Beginners assume "ECN = always cheaper." ECNs charge commissions that can outweigh the tighter spread on small trades; do the math on total cost, not just the spread.
Related terms
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