Best ECN Forex Brokers in Australia

How to compare Australian ECN brokers

ECN brokers use high-speed communication to find the best pricing available from a pool of liquidity providers in their network and execute trade orders as quickly as possible. The more liquidity providers How many liquidity providers an ECN broker uses varies, and this should always be considered alongside how fast an ECN executes trades, the more liquidity providers an ECN broker has access to, the better pricing the trader will receive. When comparing ECN brokers, always consider:

Trading cost: Australian Forex traders seek out ECNs brokers because of their low trading costs. Trading costs on ECN accounts are a combination of the spread and a commission. Trading costs for one lot of EUR/USD at ECN brokers will range from 6 USD to 18 USD, depending on the broker’s trading conditions. Bear in mind that not all ECN brokers will have lower trading costs than brokers with a dealing desk.

Execution quality: A combined metric used to discuss execution speed, slippage and rejection rate, execution quality describes the connection between the broker and the market and will directly impact the level of control a trader has over their positions. The best Australian ECN brokers will have fast execution speeds, which leads to less slippage in pricing between when the order is executed and when it is opened, and less order rejection due to unavailable counterparties. Better execution quality will always produce fewer unintentional losses.

Number of liquidity providers: ECN brokers do not operate a dealing desk and are never counterparty to client trades. Instead, it uses its network to place trades directly with liquidity providers, also called execution venues. The more liquidity providers an ECN broker has access to, the more competition there will be for its client’s trades, leading to tighter spreads and lower overall trading costs. Some ECN brokers will only have a single liquidity provider, which defeats the purpose of an ECN completely – as there is no competition for a trader’s business and trading costs will be higher than they should be. Avoid these types of ECN brokers.

Tradable Assets: A good ECN broker will offer clients a larger number of FX Pairs and other CFD assets to trade. Having a limited set of trading assets can negatively affect the traders, as they would miss out on trading opportunities.

Regulation: Regulators monitor the activities of the broker and the trading desk. Unregulated ECN brokers are dangerous as there is no way of telling if they are ECN brokers without making a deposit and opening a trade. Brokers regulated by the FCA (UK), ASIC (Australia) or MAS (Singapore) have better reputations for enforcement and thus ensure their member ECN brokers strictly follow protocols designed to protect clients and their trades.

Trading tools: Leading ECN brokers will offer traders a free Virtual Private Server (VPS) service, guaranteeing high-quality execution around the clock. Other trading tools offered by the best ECN brokers include indicator packages to assist with automated trading and in-platform market analysis tools such as Trading Central or Autochartist.

What are ECN Brokers?

ECN brokers connect traders to a network of liquidity providers, unlike Market Maker brokers which operate a dealing desk and take trades on to their own books.

ECN stands for Electronic Communication Network. An ECN broker sits at the centre of this communication network, like a spider in a web. In Australia, the other members of the network are liquidity providers like AA rated Australian banks, hedge funds and other brokers.

Every time a client places a trade with an ECN broker it collects prices from the members of this network and presents the trader with the tightest spread it could find to fulfil the volume requirement. Because the liquidity providers in this network are competing for your trade, ECN brokers have very tight spreads which can approach 0 pips.

Do ECN Brokers Charge a Commission?

Most Australian ECN brokers do not make any money from the spread. Instead, they will charge a commission for every trade, which is their fee for routing your trade to a liquidity provider in their network. Traditional brokers (Market Makers) have wider spreads because they charge their fee in the spread.

Are ECN Brokers Expensive?

No, ECN brokers are not expensive to trade with and most ECN brokers have a lower cost of trading than the industry average. Even so, some of the best market makers in Australia (such as IG Markets or AvaTrade) will have trading costs as low as the best ECN brokers.

Is there a Conflict of Interest when Trading with an ECN Broker?

Australian traders may prefer to trade with ECN brokers because there is no conflict of interest between trader and broker. Most market maker brokers will trade against their clients in their role as the counter-party, which means the broker makes money when their clients lose. 

Because ECN brokers only act as an intermediary for a trade, they do not make money when traders lose. In fact, the reverse is true. Over time, successful traders pay more in commission to an ECN broker, so ECN brokers want their clients to be profitable.

Do ECN Brokers have Slippage and Requotes?

ECN Brokers have a higher risk of slippage and requotes. Because ECN brokers rely on liquidity providers to match their client’s trades, these trades are not always posted instantly. This can be a problem at times of high volatility – usually after a large event or data release – or at times of low liquidity – such as when most of the markets are closed.  This also means that the market can move past your stop-loss orders, and your losses may exceed your expectations.

What Trading Platform can I use with an ECN Broker?

ECN Brokers usually offer MetaTrader 4 (MT4), MetaTrader 5 (MT5) or cTrader. The best ECN brokers will offer all three platforms.

MT4 is the most popular trading platform in the world and is famous for its automated trading via trading robots and signals, but it does not natively support share CFD trading.

MT5, on the other hand, does support share CFD trading, has a wider range of chart tools and lines than MT4 and has a more sophisticated back-testing facility.

cTrader is an ECN-only platform with a more modern interface than either of the MetaTrader platforms, cTrader also features automated trading through custom-made cBots and indicators. 

Most ECN brokers will not offer their own trading platforms and prefer to support one or more of the third-party platforms listed above. 

What are the Minimum Deposits at ECN Brokers?

The last thing to be aware of with ECN brokers is that they generally require a larger minimum deposit – setting up and maintaining an ECN brokerage is an expensive business and traders will be charged more as a result. ECN Brokers require higher minimum deposits.

Should Beginner Traders use an ECN Broker?

Serious beginners should not be afraid of using a good Australian ECN broker. ECN brokers have a reputation for being more complex and less beginner-friendly than market maker brokers: ECN trading costs are more complicated to calculate, ECN spreads are always variable and can fluctuate wildly at times, ECN trades are more susceptible to rejections and requotes, and ECN brokers tend to require higher minimum deposits and provide less Forex education. All these things can put some beginner traders off, but ECN brokers usually offer lower ongoing trading costs and some of the best Australian ECN brokers will have excellent Forex education and low minimum deposits. 

Which is the Best ECN Broker in Australia?

Axi is the best ECN broker in Australia. With competitive pricing on raw spreads, high liquidity, and fast execution Axi won our Award for Best ECN Broker of 2020. 

Axi also has a detailed and well-structured course for beginners and leading market analysis for all clients. Axi combines exceptional ECN trading conditions with world-class regulatory oversight. Read our full Axi review here.

All Australian Brokers with ECN Trading Accounts

Here is our list of all ASIC-regulated brokers with ECN trading accounts that we have reviewed – sorted by overall score. 

Scroll for more details

Broker

Overall Rating

ASIC License

Regulators

Min. Deposit

Cost of Trading

Trading Commission

No. of FX Pairs

Compare

4.61 ^/5

Read Review

414530

AUD 100

USD 6.90

From 7 USD / lot - Razor Account

80+

4.46 ^/5

Read Review

335692

AUD 200

USD 8

7 USD / lot - Raw Spread Account

64

4.34 ^/5

Read Review

318232

AUD 5

USD 12

7 USD / lot - PRO account

80+

4.28 ^/5

Read Review

286354

AUD 100

USD 7

6 USD / lot - RAW Accounts

60+

4.23 ^/5

Read Review

403863

AUD 50

USD 10

Fees Included in Spread

65

4.18 ^/5

Read Review

424700

AUD 5

USD 12

7 USD / lot - ThinkZero Account

40

4.10 ^/5

Read Review

254963

AUD 200

USD 10

6 USD / lot - GoPlus+

50+

3.93 ^/5

Read Review

385620

AUD 200

USD 8

$7 per 1 lot

46

3.78 ^/5

Read Review

428901

AUD 200

USD 14

On ECN Accounts

40

3.74 ^/5

Read Review

417482

USD 50

USD 11

Zero Accounts

85

What is the difference between an ECN Broker and a Market Maker Broker?

When you place a trade with an ECN broker, the counter-party to your trade will be a liquidity provider from the broker’s network. When you place a trade with a market maker broker, the broker themselves will be the counterparty to your trade. Market Makers create an artificial market for their clients – hence the name.

Market Makers are also known as dealing desk brokers, as all trades will be filled at the rates set by the broker’s internal dealing desk.  This business model, which means a market maker will always profit from their clients’ losses, generates an inherent conflict of interest that many traders are cautious of.

Currently, most well-regulated market makers are well regarded in the industry, despite the conflict of interest, and they go to great lengths to ensure their clients are not being unfairly treated. These would be brokers like IG Markets, FxPro, AvaTrade, XM and eToro. 

But, Market Maker brokers are not a common choice for experienced Forex traders in Australia. Traders are limited to trading with one counter-party who is always trading against you and never on the open market with dynamic spreads.

However, if you do want instant execution of your trades and you don’t want to pay a commission, a trusted market maker is a good idea.

How to Identify an ECN Broker?

There are a few ways to check: ASIC-regulated ECN brokers will describe their execution model in their legal documents, ECN brokers will always have variable spreads, ECN brokers will not have any trading restrictions (trade size, stop-loss limits, scalping or hedging bans), and traders with an ECN broker will experience both negative and positive slippage.

Read the Broker Agreement

All regulated brokers are required by law to publish a Client Agreement and Order Execution Policy stipulating their execution methods. Some ECN brokers will also act as Market Maker in certain circumstances, so this is not always a foolproof method of determining a broker type. See below for an extract from Pepperstone’s execution policy showing that they are an ECN broker.

Check that Spreads are Variable

ECN’s offer tight spreads and charge a commission per trade, and the spreads will also be variable. Fixed spreads are only offered by Market Makers, as they are not taken from a live and dynamic market. Below you can see that Axi publishes its live spreads on its website, these are variable and are taken from their network of liquidity providers.

Look for Trading Restrictions

ECN brokers will never restrict your trading methods or trade size. This means that all automated trading, scalping, hedging and large order sizes (anything of 5 lots or over) will all be allowed. If a broker restricts any of these then it is not an ECN broker.

A good example of a broker with these restrictions is Plus500, a well-known market maker:

Slippage will be Positive and Negative

Slippage is the difference between the execution price and the order price at the time the order is submitted for execution. Slippage is a normal aspect of trading with ECN brokers, particularly for orders of a larger size and during times of thin liquidity and/or volatile market conditions.

Slippage can both positively and negatively impact your trading position. If you find that you are only experiencing negative slippage, then your broker is not using an ECN execution method. Another well known ECN broker is FxPro, which is dedicated to full transparency and always publishes its slippage statistics, see below for its 2019 figures:

Summary

So, while ECN brokers do not have the inherent conflict of interest present with market makers, commission will always be charged on your trades. ECN accounts will also require a higher minimum deposit – putting them out of reach for many beginner traders.

Are ECN brokers objectively better than market maker? This is not necessarily the case. All brokers we work with are trustworthy and well-regulated and broker choice is always down to personal preference. Whether you go with an ECN broker or a market maker, if you choose one from our list of the best in South Africa you will be in good hands.

FAQs

What is the difference between an ECN Account and a Standard Account?

ECN Accounts will have tighter spreads than a Standard Account, but you will have to pay a commission per trade. Standard Accounts will not have any commission, but spreads will be wider.

How do ECN Brokers Make Money?

ECN Brokers make money by charging traders a commission per trade. Because they pass pricing on directly from their liquidity providers, they do not charge a fee in the spread.

Which is better, ECN Brokers or ECN/STP Brokers?

ECN/STP brokers are better because they will have less slippage and a faster execution speed than a pure ECN broker.

STP (Straight Through Processing) is the method of the transaction – with STP your order is sent directly to the counterparty through the Financial Information Exchange (FIX) protocol. The FIX protocol decreases trade execution time, reduces slippage, and ensures that traders get the best available pricing.

The STP protocol can be used by market-maker brokers as well as ECN brokers, and some brokers use a hybrid formula, where they will sometimes be the counterparty, and other times use an external liquidity provider. While this does lead to less slippage, it does mean that some trades will have a conflict of interest.

In most cases choosing a hybrid broker is the best way to go, as they will give you the most options.

Forex Risk Disclaimer

Trading Forex and CFDs is not suitable for all investors as it carries a high degree of risk to your capital: 75-90% of retail investors lose money trading these products. 

Forex and CFD transactions involve high risk due to the following factors: Over-leveraging, unpredictable market volatility, slippage arising from a lack of liquidity, inadequate trading knowledge or experience, and a lack of regulatory protection for clients.

Traders should not deposit any money that is not disposable. Regardless of how much research you have done, or how confident you are in your trade, there is always a substantial risk of loss. (Learn more from the FCA or from ASIC)

Our Methodology

Our State of the Market Report and Broker Directory are the result of extensive research on over 100 Forex brokers. The explicit goal of these resources is to help traders find the best Forex brokers – and steer them away from the worst ones – with the benefit of accurate and up-to-date information.

With over 150 data points on each broker and over 3000 hours of research and review writing, we believe we have succeeded in our goal. 

In a world where trading conditions and customer support can vary based on where you live, our broker reviews focus on the local trader and give you information about these brokers from your perspective.

All research has been conducted by our in-house team of researchers and writers, gathering information from various company representatives, websites and by sifting through the fine print. Learn more about how we rank brokers.