ECN broker

In plain English

Your order is sent out to a pool of banks and other participants and filled at the best price in that pool, rather than being filled by the broker itself. The price you see is closer to the raw market, and the broker is paid by a stated commission instead of by widening the quote.

Why it matters

The execution model decides who profits when you lose and how your costs are presented. On an ECN account the cost is split into a visible spread and a stated commission, which makes total cost per round trip something you can calculate before funding rather than infer afterwards.

• ✓Cost becomes addable. Raw spread plus commission is a number; a marked-up spread is an estimate that changes with the hour.
• ✓It removes the position conflict. A broker routing orders outward has no book that gains when your account loses.
• ✓It is the model under which fast strategies are usually allowed to run at all — dealing-desk brokers are the ones that publish minimum holding times and scalping restrictions.
• ✓It matters in proportion to how small the average trade is, not to how often the EA trades — the reverse of the usual rule. Commission is a flat charge per round trip, so its share of a result is that charge divided by the profit the average trade makes. Priced on the fourteen runs published here it costs 3.4% to 38.1% of net profit, and the busiest of them, at 945 trades a year, comes fifth of fourteen.

How brokers define it

• ECN describes routing: the order leaves the broker and meets quotes from a pool of liquidity providers instead of the broker's own book.
• The quote passes through with little or no markup, so the spread can reach 0.0 pips on a major pair and widens freely when the pool thins.
• The broker earns a per-lot commission, stated separately on the deal — the honest signal that the account is not paying it through the spread.
• STP sits next to it: also routed outward, but usually with a small markup on the quote instead of a commission line.
• A market maker is the opposite: the broker takes the other side, which makes fixed spreads possible and creates the conflict of interest.

What differs between brokers

• Commission per standard lot, and whether the quoted figure covers one side or the round trip.
• Whether the raw account is a separate liquidity arrangement or the same book relabelled — the commission line is the check.
• How wide the spread runs at rollover and around releases, which a table of calm-hour averages cannot show. Probes run inside the tester here recorded 40 distinct spread values between 10 and 187 points on generated ticks, and 227 values between 10 and 350 points on real ticks.
• Which symbols are routed this way. Raw pricing on majors often sits beside marked-up pricing on indices and metals in one account.
• Minimum deposit and minimum lot on the raw account, often higher than the standard account at the same broker.

Impact on EA performance

• Commission is charged per lot and ignores the size of the target, so it taxes the small trade and the large one identically. At 0.1 lot and the $3.50 per side used below that is $0.70 a round trip, against per-trade profits of $1.84 to $20.52 across the runs published here.
• Backtests that model only the spread understate ECN costs, and the fourteen runs published on this site do exactly that: every manifest records commission 0, so each published net profit is a pre-commission figure. Charging the same $0.70 across their 9,690 backtest trades comes to $6,783.00 — 8.3% of their combined $82,104.33. Five of the fourteen give up more than a tenth of their net; none turns negative.
• A stop a few points away can sit inside the spread at rollover, so tight-stop strategies need a spread filter rather than an assumption.
• With no dealing desk intervening, market execution runs without requotes, so the EA's deviation setting is the only limit on fill price.
• Published mt5depot backtests state the broker and account type they ran on, so the cost model behind a result is readable rather than assumed — including where it is thin. Exactly one of the fourteen reports a measured spread, 19.14 points, because only that run had a recorder attached; the other thirteen take whatever spread their price history carries.

What to confirm before funding

• Commission per standard lot — one side or the round trip.
• Total cost per round trip on the EA's pair: raw spread plus commission, not spread alone.
• Automated trading and short holding times allowed in the client agreement, in writing.
• Typical spread in the sessions the EA trades, not the daily average in marketing.
• Raw pricing applies to the symbol the EA runs on.

Typical risks

• Paying twice: a low advertised spread that still carries a markup, plus commission on top.
• Comparing raw and standard accounts on spread alone, which flatters the standard one: the commission-charging account is usually cheaper.
• Assuming raw means stable. Raw spreads widen further and faster than marked-up ones, because nothing absorbs the move.
• Treating the ECN label as proof of routing. In most jurisdictions it is a marketing term, not a licensed category.

Example

The same trade priced on a standard account and on a raw account at the same broker. What changes is where the cost is written down, not how much of it there is.

The comparison only works when both sides are converted into the same unit. Spread alone ranks these accounts the wrong way round.

How it is used

The execution model is a question about routing and payment, and both halves need answering in the same unit before two accounts compare.

• Convert commission into pips on the pair you trade, so both costs sit in one unit.
• Weigh the cost against the average win, not the balance. The same 0.9 pips is trivial against a 100-pip target and a third of the edge against a 3-pip one.
• Read the spread during the hours the EA trades: a pair quoted at 0.2 pips in London can sit at 2 pips at rollover.
• Check the automated-trading clause in the client agreement, not the marketing page. Restrictions live in the agreement.
• Test the same EA on both account types at one broker if you can — the only comparison where nothing else differs.

The broker pages in this catalogue record execution model, leverage and negative balance protection as fields rather than prose, so accounts can be compared on the same rows.

Common mistakes

Frequently asked questions

Is an ECN account always cheaper than a standard account?

Not always, but usually for anything that trades often. The comparison has to be made per round trip: raw spread plus commission converted into pips, against the marked-up spread. On major pairs the commission-charging account typically comes out a few tenths of a pip ahead; on exotic pairs and metals the gap can go either way.

How can I tell whether a broker is really routing my orders out?

You cannot verify routing from the client side, but you can read the pricing. A separate per-lot commission means the broker is paid without widening the quote, which is only rational if it is not the counterparty. A broker quoting an ECN account with no commission line is being paid through the spread.

Does an EA need an ECN account?

It depends on how much the average trade makes, more than on how often it trades. Strategies holding positions for days are barely affected by execution model. Strategies taking a few pips at a time are decided by it, and are also the ones dealing-desk brokers most often restrict.

Why does my raw spread sometimes jump to 2 pips?

Because nothing is absorbing it. A raw quote reflects the pool it comes from, so it widens when liquidity thins — at rollover, at session gaps and in the seconds around a release. A marked-up quote hides some of that movement inside the markup.

Related terms

• Execution model How a broker processes an order — by taking the other side of it as counterparty, or by routing it outward to external liquidity providers.
• Spread The gap between the bid and the ask on a symbol. It is paid on entry, it is the cost every trade starts behind by, and it is the one MT5 shows least clearly.
• Slippage The difference between the price an order asked for and the price it was filled at. It can fall either way, but for a strategy that trades on speed it is a cost that backtests rarely model.
• Swap The financing charge or credit applied to a position held past the broker's daily rollover, derived from the interest rate differential between the two currencies plus the broker's own markup.
• Leverage The ratio between the notional size a broker lets an account control and the margin it has to set aside for it, quoted as 1:30 or 1:500.

Related resources

• ArbitrageStrategies
• Lot sizeGlossary
• Virtual Private ServerGlossary