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ECN/STP Forex Trading with FXOpen broker

Dear Customers

First of all we would like to thank you for your vote of confidence in FXOpen. Thanks to your amazing participation and feedback. FXOpen is a leading MetaTrader 4 innovator and was the first one to offer true ECN execution over the popular MT4 platform.

As part of our ongoing service improvements and due to numerous requests we have recently introduced the first ever MetaTrader (MT4) ECN trading platform. This step is no less than a revolution in the Forex trading world and is recognized by all market participants seeking to emulate our success and technological superiority.

OPEN A LIVE ECN ACCOUNT

Select Add New Account →ECN in the menu.

OPEN A LIVE STP ACCOUNT

Select Add New Account →STP in the menu.

One Click Trading Level2 Plugin

Download and install the plugin to simplify trading operations in MT4.

OPEN DEMO ECN/ DEMO STP ACCOUNT

Download the MetaTrader software and start trading in 5 minutes!

Below you will find the introduction to our innovative platform and a user manual.

First of all a few words about ECN trading: ECN stands for Electronic Communications Network. Due to the Forex market being largely unregulated, there is no central exchange for Forex and trading is performed on an OTC (Over The Counter) market. ECN trading gives you direct access to the Forex market (interbank market) where you can trade with other traders and your orders are actually displayed in the market and are seen by others, who in turn can introduce their own orders and if the prices match, a deal is complete.

ECN is the next step in Forex trading bringing the Forex market closer to the stock market model and is the route all brokers will take one day. Right now, FXOpen is the first broker who successfully brought you the ECN trading model in the familiar and preferred MetaTrader (MT4) interface.

Guide to FXOpen’s ECN MT4 platform:

What are your spreads?

ECN environments more appropriately use the word difference instead of spread; Difference or (DAB) refers to the difference between the best BID and the best Offer (ASK). DAB is variable and not fixed. FXOpen provides True ECN pricing which means that you will see the best BID and best Offer (ASK) as they appear from our clients and other Liquidity Providers who participate in our ECN liquidity pool. FXOpen does not manipulate or add any pips to the BID or ASK.

What is the Depth of market?

A measure of the size of volume available for transaction purposes for a particular instrument at a particular point in time. The best Offer (ASK) and the best BID are displayed in a table with the size available to buy or sell.

Market depth displays orders that are currently in the market. When two orders match (a buy and sell order at the same price), the orders are filled, and they disappear from the market depth, and are registered in the trade history.

Additional market data, available in a Live trading environment, is also known as level 2 market data, the orders book, where the depth of market is needed to trade using trading systems that follow the order flow, such as scalping trading systems and advanced volume based trading systems and includes the following information:

  • Highest Bid prices: The best 5 prices that traders are willing to accept to sell.
  • Bid Volumes (in millions USD): Available at each of the price levels.
  • Lowest Ask prices: The best 5 prices that traders are willing to accept to buy.
  • Ask Volumes (in millions USD): Available at each of the lowest ask price levels.


Market Depth (Level 2)

There are several types of orders you can use with FXOpen’s MT4 ECN trading platform to effectively control and monitor your trading. Stop Loss, Take Profit, Limit, Stop and Market Orders are all available for FXOpen’s clients.

Limit Orders

This type of order allows you to control the price at which the position will be bought or sold. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher, meaning that if your order will get filled it will get filled at a price you indicated or better. When you place a market order, you can't control the price at which your order will be filled. True ECN pricing means that you will see the best BID and best Offer (ASK) as they appear from clients and Liquidity Providers who participate in ECN. According to the principles of ECN Limit Orders:
Lowest Bid price or lower to Short (Sell) Limit Orders, can be lower than Lowest Ask price, in another words, inside the DAB - referring to the difference between the best BID and the best Offer (ASK).
Highest Ask price or higher to Long (Buy) Limit Orders, can be higher than Highest Bid price, in another words, inside the DAB - referring to the difference between the best ASK and the best BID.

During times of high volatility Limit Orders or Take Profits, even if set at best Bid or Ask levels, might not get executed because the market has already moved. For example: A Buy Limit Order was placed exactly at the Best Ask but market price changed direction quickly. The Buy Limit Order wouldn’t be executed and would become pending until the market price returned to that level or the Order was changed.

ECN Brokers transmit their clients’ Limit Orders to the Marketplace. Participants of the ECN can see all Limit Orders and Take Profits Orders in the Market Depth table.

For example: A Client wants to place a Buy Limit Order of AUD/NZD at 1.24200 of a volume of 7.0 standard Lots (see Fig.1.). The DAB when the order was placed was: Bid - 1.24170 and Ask – 1.24230 (see Depth of Market window Fig. 1.). After the Buy Limit Order was successful placed – 1.24200 with a volume of 700000 AUD became the Best Bid order level (see Depth of Market window Fig. 2.) which means that Buy Limit Order was added to the ECN Order Book.


Fig. 1.


Fig. 2.

Stop Loss and Take Profit orders can be attached to a Limit order (See Fig. 3.). After a Limit order is triggered, its Stop Loss and Take Profit levels will be attached to the open position automatically (see Fig. 4.).


Fig. 3.


Fig. 4.

Limit Orders make up the book of viewable volume at which clients want to buy or sell at a given time. During periods of high volatility or low liquidity, Limit Orders may be partially executed. This means that the position will get filled immediately fully or partially if the price is met and the rest will be displayed on the market until the price is met.

For example: Client placed a Buy Limit Order of AUD/NZD at 1.24227 for 30 standard lots of the volume. See appropriate Journal entry on the (Fig. 5.).


Fig. 5.

The Buy Limit Order was executed partially because at the time the market touched the limit price the ECN did not have a matching counter-order of 30 lots on the market. One 30 lots Buy Limit Order was displayed in the market and was gradually filled by 7 orders as they were entered by other market participants at the Limit Price, see Fig. 6.1 - Trade and Fig.6.2 – Account History.


Fig. 6.1


Fig. 6.2

Margin Trigger:

The ECN Broker transmits the clients Limit Orders to the Marketplace which causes the illustrated in Fig. 7 to occur. Once a limit order is placed in the Marketplace the Client must put up the margin for the position. However, at the moment when the Limit Order price is triggered and the margin is not met, the necessary margin is added to the client’s account automatically (Credit In) and then the position is executed. As soon as the order has been executed, the credited amount will be automatically deducted from the account according to the Credit Out procedure. If the margin level after the deduction (credit out) is less than 50% - order will be closed immediately according to the Stop Out procedure. All Clients should carefully monitor their trading accounts to prevent such situation from occurring. If the margin level after the deduction (credit out) is higher than 50% - the order will remain open until the SL or TP level is reached or the client closes the position manually.

Below you can see Logs for situations when the Limit Order price is triggered but the margin is not met.

Sell Limit 30 Lots GBP/USD was opened at 07:38:09 server time (see journal logs above).


Fig. 7.

The trading account was automatically credited by system – Credit In $60 467.09 - because at the moment when the Limit Order price was triggered the margin was not met and just after Sell Limit was opened credit was withdrawn – Credit Out -$60 467.09.

Sell Stop or Buy Stop Orders

A pending order becomes a market order when a specific price level is achieved and broken. A stop order is placed below the current market value of that currency for Short (Sell) positions and above for Long (Buy) positions. When the price reaches the level of Sell Stop or Buy Stop, the position will be opened automatically at the current market price similar with Market Order execution. The price when Stop Sell or Buy Order is executed may not always be the price you set up. This may be especially true in fast-moving markets where currency prices are more volatile.

To a pending order Stop Loss and Take Profit orders can be attached.

Examples of Stop Orders


Fig. 1. Pending Buy Stop Order

Current Market price: Bid - 1.24460, Ask – 1.24490

Order Price Level: 1.24523 must be above Ask of Current Market price. When the price reaches Order Price Level, the position will be opened automatically at the current market price similar with Market Order execution.

Stop Loss: 1.24512 must be below of Order Price Level. When the price reaches level of Stop Loss, the position will be closed automatically at the current market price similar with Market Order execution.

Take Profit: 1.24531 must be above of Order Price Level. When the price reaches level of Take Profit, the position will be closed automatically at the Take Profit Level or better similar with Limit Order execution.


Fig. 2. Pending Sell Stop Order

Current Market price: Bid - 1.24420, Ask – 1.24485

Order Price Level: 1.24409 must be below Bid of Current Market price. When the price reaches Order Price Level, the position will be opened automatically at the current market price similar with Market Order execution.

Stop Loss: 1.24450 must be above of Order Price Level. When the price reaches level of Stop Loss, the position will be closed automatically at the current market price similar with Market Order execution.

Take Profit: 1.24395 must be below of Order Price Level. When the price reaches level of Take Profit, the position will be closed automatically at the Take Profit Level or better similar with Limit Order execution.

Market Order

Market Order is an order that lets you fill your order the fastest way. You can almost always expect your order to be filled, however this might not be at the best price you want. During volatile times the gap between the price you see when you enter the order and the price you get your order filled at may be wide, but when the market is fast moving this might be the only option in order to fill your position before the market moves further away.

Example: When you click the market buy or sell button, you can expect the order to be filled at the price the market was trading when the participating qualified destination received your order. This price may not be the same market price you may have noted when you initially placed the order due to the size available when the order is processed. In order to provide clients with the best execution, the system automatically matches the client’s order, with other orders and executes as a block or in multiple smaller transactions.

For example: Client 1 wants to open short position of 400,000 GBP/ JPY using a market order but currently one buyer has placed an order of volume 300,000 GBP/ JPY at 1.5876 and another buyer has placed an order for a volume 200,000 GBP/ JPY at 1.5878. Thus Client 1 receives his short position of 400,000 GBP/ JPY at 1.5877 because: (200000*1.5878 +200000*1.5876(part from the 300000 at 1.5876)) / 400000=1.5877.

Example of Open Market Order


Fig. 1.

Please be aware that “Notice! At order by market execution, the price will be quoted by dealer.” doesn’t correspond to the ECN module.

When client uses the “Market Execution” to open position(s) he/she cannot add Stop Loss(es) and Take Profit(s) but, the system allows the addition of these parameters to already opened orders with the Modification mode. As you can see in fig. 1, the Quotes window’s best price to open a Short position in GBP/USD is 1.62875 for the Volume of up to 10 standard Lots. The Client wants to open 7 Lots of GBP/USD and to open such a Short position, the Client has to click on the “Sell by Market” bottom.

Open Market Order Confirmation


Fig. 2.

Immediately after a Market Order execution, the screen will show the Confirmation window (See Fig. 2). We can note that the Order was executed with the full requested volume, 7 Lots, at 1.62884 which is 0.00009 better than price in the Quotes window at the moment the opening was initiated. As said, the system automatically matches sell order with incoming prices from clients and Liquidity Providers enter the Marketplace just after the moment of initiating the short position. It can work in both directions and depends only on the liquidity of the Marketplace.

In the Client’s Journal they could find logs detailing the open of the position:

  • 1. 2009.06.25 05:30:42 '2625': order sell market 7.00 GBPUSD sl: 0.00000 tp: 0.00000
  • 2. 2009.06.25 05:30:42 '2625': request was accepted by server2009
  • 3. 2009.06.25 05:30:42 '2625': request in process
  • 4. 2009.06.25 05:30:43 '2625': order was opened : #267378 sell 7.00 GBPUSD at 1.62884 sl: 0.00000 tp: 0.00000

Close Market Order


Fig. 3.

As you see on Fig. 3, the best price to close the Short position is 1.63075 with volume of 18 standard Lots. To close the position, the client has to click the “Close #... sell 7.00 GBPUSD by Market” on the bottom (Yellow Button).

Close Market Order Confirmation


Fig. 4.

Immediately after the Close Market Order is executed, the screen displays the Confirmation window (See Fig. 4). We can note that the Order was executed with the full volume of 7 Lots at the 1.63074, which is 0.00001 worse than price in the Quotes window at the moment the closing was initiated. The system automatically matches the closing sell with incoming prices from clients and Liquidity Providers. The Client can find logs regarding the closing of this position in the Journal (see Fig. 4).

Stop Loss (SL) and Take Profit (TP) Orders

Stop Loss and Take Profit Orders can be included in a pending order or modified on an existing position. After a pending order has been triggered, any inputted Stop Loss and Take Profit levels will be attached to the open position automatically.


BUY LIMIT ORDER – STOP LOSS and TAKE PROFIT available for set up.

Stop Loss

This order is used for minimizing losses, once the Financial Instrument price has started to move in an unprofitable direction. If the price reaches the set level, the position will be closed automatically at the current market price similar to Market Order execution. The price when your Stop Loss Order is executed may not always be the price you set. When a Stop Loss Order Level falls to a level at which a Price Gap has occurred, the Order is executed at the Quote which is presented in the Price Flow, once the Price Gap has ended. The Client can place a SL only together with an already open position or a pending order (Limit or Stop orders). If a Stop Loss Order Level is set very close to the pending order open price it may cause the immediate close of the just executed pending order. The Terminal checks long positions with the BID price for meeting of order provisions, and the ASK price for short positions.

Take Profit

The Take Profit order is intended for closing a trade in profit when the Financial Instrument’s price has reached a certain level. Execution of this order results in the closing of the position following the rules of a limit order execution. The TP will be closed at the level picked or better, however, in a case with low liquidity, there is the possibility of a partial fill, resulting in part of the position still being open. The Client can place TP only together with an already open position or a pending order (Limit or Stop orders). The Terminal checks long positions with the BID price for meeting of order provisions, and the ASK price for short positions.

Important:

  • Stop Loss and Take Profit orders can only be executed for an open position, but not for pending orders;
  • Market Buy and Sell orders, as well as Pending Buy Stop and Sell Stop Orders, may be rejected if requested price differs from the best price, at which this order can be actually executed, by more than the maximum allowable slippage value. This mechanism is designed to protect customers from undesirable high slippage in fast-moving markets. For more information, please, refer to FXOpen Knowledge Base;
  • Historical Charts are drawn only for BID prices in the MetaTrader terminal. However, there is an option to see ASK prices for some charts. To enable the display of the latest ASK price, select the "Show Ask line" in the terminal settings.
FXOpen ECN Marketplace Market Maker Brokers Details
Client Anonymity Yes No When an order is sent to the ECN there is no account data passed along.
Order Matching Yes No ECN matches your orders with other clients, banks and any other ECN participants.
Re-Quotes No Yes ECNs do not have re-quotes, a market order will receive the best price available.
Depth of Market Display Yes No ECNs allow the client to view the market depth (Level2).
Pending Order Limitations No Yes ECNs allow limit orders to be placed within the spread, limitations that Market Maker Brokers does not allow. (This comprises the market depth)
Trading Economic Releases Yes Yes Although you may receive re-quotes during economic data releases when trading with any Market Maker, ECN relies on its participants to fill its book, illiquidity can occur during releases.
Volume Available at Requested Price Yes Yes ECNs will have various available volume, at different prices, in its market depth; Any Market Maker will fill orders at requested prices contingent that the market is still trading at that price or Re-Quote.

If you have any questions about the ECN platform, please don’t hesitate to contact us.

OPEN A LIVE ECN ACCOUNT

Select Add New Account →ECN in the menu.

OPEN A LIVE STP ACCOUNT

Select Add New Account →STP in the menu.

One Click Trading Level2 Plugin

Download and install the plugin to simplify trading operations in MT4.

OPEN DEMO ECN/ DEMO STP ACCOUNT

Download the MetaTrader software and start trading in 5 minutes!

FXOpen is a leading MetaTrader 4 innovator and was the first one to offer true ECN execution over the popular MT4 platform.

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FXOpen provides the same trading opportunities to individuals and private companies that have been traditionally only offered to large financial institutions.

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FXOpen NZ Limited is duly registered with the Financial Service Provider Registry in New Zealand (FSPR License Number: FSP192685) and is a member of the Financial Dispute Resolution Scheme as obligated by law.
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