Understanding ECN order flow when trading in forex

Within the current market for forex environment such as cfd trading South Africa, there are two types of brokerage the electronic communication market – the ECN and the market makers. Because the forex market is unregulated mostly, there are no central centers for the trading in forex. The ECN system got implemented to be able to provide traders with the immediate access to the forex market, thereby allowing them in matching themselves with the rest of the traders and doing transaction.

The ECN forex trading account is for experienced traders who are professional and investors and those traders that want to utilize the services of the social trading. It is the type of account which offers the highest annual percentage that gets to accrue on funds which have been unused and access to deep liquidity with spreads which are low floating.

The account for trading is created on the basis of the modern technology of ECN which provides access to the best market price, guaranteed and stable fast execution with no re-quoting and no conflict of interest.

Whenever a trader looks to sell or buy currency, they need to submit an order which mentions the price that you are willing to sell or buy, and the volume which is required of the currency. When some other trader finds the order which is suitable, a trade can be initiated.

What is an order flow trading?

Before beginning to understand the way the ECN uses the mechanism of order flow, it is important knowing the type of transactions that the mechanism uses. Order flow is used between traders that are out looking to perform the directional trades.

A directional trader is one that a trader assumes that a certain currency price is either going to move down or up. In case a currency is expected to move up, a buyer issues a buy order. On the other hand, in case a currency is going down, it is possible to submit a sell order.

Also referred to as transaction flow, the order flow is able to take place whenever a trader believes the price of a certain currency will change and thus, places a transaction which can be executed. The traders that look into adopting strategies which are aggressive within the market do place market orders.

A market order will need traders paying the difference that exists between the buying price which is available and the selling price. But, in case the traders aren’t seeking strategies which are aggressive, they also require the option of executing an order which is limited.

A limit orders also referred to as stop order, is one which allows the traders in defining the price at which the transaction has to be executed. Both forms of the trading do fall under the banner of order flow trading.

The market orders are mostly placed by the traders that require fast results and are not ready to wait for other traders. For the limit orders, there is a need of other traders within the market to get a trader deal which is acceptable before the execution.

What is your reaction?

In Love
Not Sure

You may also like

Comments are closed.

More in:Business