An ECN broker is a type of forex broker that uses the Electronic Communication Network (ECN) to match buy and sell orders in the forex market. An ECN broker connects traders directly to the interbank market, allowing them to trade currencies with other market participants, such as banks and financial institutions, through an electronic network. This provides transparent pricing, variable spreads, and fast execution without a dealing desk. ECN brokers typically charge a commission per trade instead of relying on spreads.
Sway Markets is one of the most popular offshore forex and CFD brokers that offer online trading services including Trade Currencies, Cryptos, Metals, Indices. If you are a trader who wants to use Sway Markets as your broker, you may wonder if Sway Markets is an ECN forex broker.
The answer is ‘Yes,’ Sway Markets is an ECN forex broker. The broker has an ECN execution model that passes clients’ orders directly to liquidity providers without any intermediaries. In this article, we will explore more about Sway Markets as an ECN forex broker, including its pros and cons, and answer the most common questions that traders often ask about Sway Markets..
Is Sway Markets an ECN Broker?
Yes, is an ECN Broker. The broker operates without a dealing desk, meaning that it does not take the opposite side of a client’s trade. Instead, it connects traders directly with other participants in the interbank market, ensuring that trades are executed at the best available prices from multiple liquidity providers.
Does Sway Markets offer an ECN Account?
Yes, Sway Markets offers ECN accounts. The broker provides VIP, ECN and Standard accounts as ECN options. These accounts are designed to offer traders direct access to the interbank market with competitive trading conditions. Sway Markets charges low and competitive commissions for its ECN accounts ($3.5 for VIP Account, $7 for the ECN and $7 Standard Account per lot per trade). These ECN accounts are suitable for scalping, copy trading, and automated trading.
How do I know if my broker is ECN?
To determine if your broker operates as an ECN (Electronic Communication Network), follow these steps:
- Check Client Agreement: Review the broker’s client agreement or Terms of Service. A true ECN broker will explicitly state their ECN status or mention if they operate as an ECN by association.
- Terms of Service: Look for details on order execution methods and liquidity sourcing in the broker’s Terms of Service. ECN brokers typically disclose their direct market access and transparency policies here.
- Order Execution Policy: Visit the broker’s Order Execution Policy page. Here, they should outline how orders are executed, including details about price aggregation from liquidity providers and the absence of dealing desks.
- Contact Support: If you’re unsure or can’t find the information, contact customer support. They can direct you to the relevant pages or clarify the broker’s ECN status.
Characteristics of an ECN Forex Broker
ECN brokers, known for their transparency and direct market access, provide traders with real-time prices sourced directly from liquidity providers. Here are the key features of an ECN forex broker
Direct Market Access:
ECN brokers provide traders with direct access to the interbank market, where transactions occur between major financial institutions and liquidity providers. Unlike dealing desk brokers, ECN brokers do not act as intermediaries; instead, they facilitate trades between market participants. For example, if a Trader named Jack wants to buy EUR/USD, the ECN broker connects them directly to Trader Sam or a liquidity provider looking to sell EUR/USD at the best available price.
Transparent Pricing:
ECN broker is transparent pricing. These brokers aggregate quotes from multiple liquidity providers, such as banks and financial institutions, to present the best bid and ask prices to traders. This competitive environment ensures that traders get the most accurate and fair prices.
No Fixed Spread
In an ECN environment, spreads are variable and reflect real market conditions. Prices come directly from liquidity providers without any markup from the broker. Therefore, during times of low market volatility, spreads can be as narrow as 0.0 pips. For example, during a period of high liquidity and low volatility, the spread for EUR/USD might be very low, whereas a market maker broker might offer a fixed spread. Market makers do not rely on liquidity providers; they act as counterparties. On the other hand, ECN brokers cannot offer fixed spreads because they do not control the prices; only market makers, who internalize their clients’ trades, can offer fixed spreads.
Commission-Based Model
Instead of making money through spread mark-ups, ECN brokers charge a commission on each trade. This commission is typically a small, fixed amount based on the trade size. For example, an ECN broker might charge a commission of $6 per 100,000 units traded. This model can be more cost-effective for traders, especially those who trade in large volumes, as the actual trading costs can be lower compared to brokers with wider spreads.
Market Execution
ECN brokers use market execution, which means that orders are filled at the best available market price at the time the trade is placed. This method reduces the likelihood of requotes and ensures faster trade execution. For instance, if a trader places a buy order for GBP/USD at 1.2500 and the best available price at that moment is 1.2501, the order will be executed at 1.2501. This type of execution is particularly beneficial in fast-moving markets where prices can change rapidly.
Anonymity
Trading through an ECN broker provides a level of anonymity, as trades are matched electronically without revealing the trader’s identity to the counterparty. This is beneficial for larger traders or institutions who do not want their trading intentions known. For example, a hedge fund placing a large buy order for USD/JPY would remain anonymous, preventing other market participants from potentially reacting to their trading activity.
Pros and Cons of Sway Markets as ECN broker.
Pros:
- Low Minimum Deposit Starting From as low as $10
- Offers a wide range of trading instruments including Trade Currencies, Cryptos, Metals, Indices.
- The maximum Leverage is as high as 1:500
- Low and Competitive Trading Fees: commission $3.5 for VIP Account, $7 for ECN Account and $7 fo Standard Account (Per lot per side)
- Transparent Pricing
- No Conflict of Interest
- No Dealing Desk: Provides direct access to liquidity providers
- Access to Deep Liquidity
- Fast Execution of Trades with Minimal Latency
- Competitive, Tight Spreads
- Suitable for Scalping and Automated Trading
Cons:
- Unregulated offshore forex broker
- Limited deposit and withdrawal options
- Beginners may feel uncomfortable paying a commission on each trade.
- ECN brokers are not suitable for news traders. News traders should look for fixed spread market marker brokers.
- Slippage during highly volatile news like NFP, Central Bank Policy, CPI, etc
Frequently Asked Questions: (FAQs)
What is Sway Markets?
Founded in 2023, Sway Markets is an online forex and CFD broker. It is an unregulated forex broker that offers 100+Â instruments including Forex, Cryptos, Metals, Indices, Stocks & Commodities. The broker allows all trading styles including scalping, hedging, news trading, etc. The maximum leverage of Sway Markets is as high as 1:500.Â
What is an ECN Forex Broker?
An ECN forex broker is a brokerage firm that uses electronic systems to connect traders with liquidity providers in the forex market. By offering direct access to the market without intervention, ECN brokers eliminate the conflict of interest that can arise with traditional market makers. They provide traders with access to deep liquidity pools, tight spreads, and fast execution speeds, making them popular among traders seeking fair and efficient trading conditions.
What types of Forex Broker is Sway Markets?
Sway Markets operates as a combination of ECN, STP (Straight Through Processing), and No Dealing Desk (NDD) forex broker. As an ECN broker, Sway Markets connects traders directly with liquidity providers, offering access to deep liquidity pools and competitive pricing. STP execution ensures orders are routed directly to liquidity providers without intervention, ensuring fast and reliable order execution. Additionally, Sway Markets operates as a No Dealing Desk broker, meaning it does not take the opposite side of clients’ trades, further enhancing transparency and fairness in trading.
Is Sway Markets an STP Broker?
Yes, Sway Markets operates as an STP (Straight Through Processing) forex broker. This means that all client orders are executed directly in the market without any intervention or dealing desk manipulation. As an STP broker, Sway Markets ensures efficient order execution, minimal slippage, and competitive pricing by connecting traders to its network of liquidity providers.
Is Sway Markets a Market Maker Forex Broker?
No, Sway Markets is not a Market Maker Forex Broker. Unlike market makers that create a market for their clients’ trades by taking the opposite side of the trade, Sway Markets operates as an ECN/STP broker model. This means that Sway Markets does not trade against its clients and instead facilitates direct access to liquidity providers, promoting fair and transparent trading conditions.
Is Sway Markets a CFD broker?
Yes, Sway Markets is a CFD (Contracts for Difference) broker that offers a wide range of financial instruments for trading. With over 1200 trading instruments available, Sway Markets provides access to forex pairs, commodities, stock indices, currency indices, shares, ETFs (Exchange traded Funds), and more. As a CFD broker, Sway Markets allows traders to speculate on price movements without owning the underlying assets, offering flexibility and opportunities across global markets.
Final Verdict:
Sway Markets operates as an ECN forex broker that connects traders directly with liquidity providers worldwide using the ECN system. This ECN setup ensures fast trade execution at competitive prices, without the delays or conflicts of interest common with traditional brokers.
The broker is not regulated by any regulatory authorities. It is an unauthorized offshore forex broker with flexible trading options including CFD trading. Sway Markets charges a competitive fee on its ECN account. The broker offers a wide range of trading platforms and tools for ECN accounts, including WebTrader, iOS, Android,Windows, MAC.
Sway Markets provides deep liquidity, fast execution, and tight spreads. Traders benefit from direct market access to a wide range of instruments, including forex, commodities, indices, and cryptocurrencies, making Sway Markets a preferred choice for those seeking efficient and fair trading conditions.
