The choice of an ECN broker is not very different from the choice of any broker. There are not many special factors to consider in ECN brokers that differ from what should be the usual considerations when looking for a broker.
When choosing any forex broker, you should think about how much money you want to deposit, what kind of instruments you want to negotiate, how often you want to negotiate and where you have your residence. Starting with these three factors, you should be able to eliminate several brokers from your list of candidates. An excellent news is that brokers that do not meet the minimum requirements of acceptability in an area are often the same that do not meet the standards required in other areas, so it is easier to remove them from the list of candidates.
Starting with the location, you may feel more comfortable with a broker located in your own country (or in a nearby country) or in a country that speaks the same language as yours or has a similar legal system. If you are a resident of the United States, you have special issues to consider, since the US It is quite restrictive with Forex trading and, if it is there, you have little choice, but it makes your choice easier. If you live in the United Kingdom, you may want a broker based there that offers a spread betting format for tax reasons, since you will not have to pay any income tax. This is probably the easiest place to start and will help you narrow down the list considerably to choose a Forex broker.
The next step to consider is the regulation and security of your deposit. This may not matter to you so much if you only intend to deposit a relatively small amount of money that is not very important to you. Otherwise, this is a very important issue. Some countries have a well-developed culture of financial regulation enforcement, which is always reassuring for the investor, and they are not simply places where big scam artists can thrive. Another big problem to consider is if any protection is offered for your deposit. For example, at the time of writing this article, the Government of the United Kingdom protects the deposit of any customer with any regulated broker with up to a maximum of GBP 75,000. This means that, if you deposit that amount or less with a regulated broker based in the UK and you are robbed or cheated or even if the broker simply goes bankrupt, you will eventually recover your government deposit. This is a significant advantage and provides a lot of peace of mind. If your deposit is an important amount, you should seriously ask if it is advisable to deposit it anywhere that does not offer deposit protection backed by the government. You should also turn to reputable financial centers, and turn away from small islands that you’ve never heard of!
The third factor to consider is the cost of negotiation. These days, there is no reason why someone with a significant amount of money to deposit has to support a total spread and a commission equal to more than 1 pip on the forex currency pair, the EUR / USD. One way to compare the spreads of different brokers is to open demo accounts in each of their candidate brokers to see what their spreads really are. A possible problem with this strategy, however, is that it is known that brokers often establish conditions in their demo accounts, including spreads, significantly better than those actually offered in their real trading accounts. Fortunately, there are some websites that compare the spreads of real accounts in real time through a range of different brokers, so looking here will be a good idea.
Another important factor to consider when choosing a broker is your style or style of trading, that is, how many operations you usually open and for how long. Is it or is it going to be a scalper, day trader, swing trader or position forex trader? If you place few positions in the market, but leave your positions open for several days or even for weeks and months, you should compare the commissions by open position in the night (swaps) that usually charge each day for positions open at 5 pm , New York time. For position traders, these commissions can be more profitable than spreads, at least to some extent. However, if you are going to leave the positions open only a few minutes or hours, but will open more positions, the spreads will then become a more influential factor and the night swap may not be a problem at all.