| Even if you have not been trading forex for very | | | | have to pay for fixed commission per transaction |
| long or you have just started, you will know that | | | | that you do. That's how they earn money from |
| there are plenty of forex brokers out there in the | | | | forex trading. |
| market, right? When you trade, the prices you see | | | | Market makers, on the other hand, they 'decide' or |
| and get from your own broker will vary from other | | | | set the price based on their systems where they |
| brokers, and the spreads will be different too. | | | | think it's the best for themselves and the other |
| Though there are many brokers in the forex market, | | | | parties. So when you buy a currency pair, they must |
| but there are only 2 types of brokers. What are | | | | sell it to you and vice versa if you sell. |
| they? One of them is Electronic Communication | | | | Many of the market makers will try to cover your |
| Network (ECN) while the other type is Market Maker. | | | | orders by passing them to somebody else who |
| ECN has a big network where they take prices from | | | | trades opposite of you or they will just take your |
| several banks, institutions, market makers or other | | | | order themselves and trade against you. That's why |
| forex traders in the ECN. From there, they will be | | | | sometimes you will see a spike in your trade and |
| able to filter out the best bid/ask price and display in | | | | your trade was stopped out. Oops. |
| their forex trading platform. Usually for very liquid | | | | Below are the pros and cons for the 2 types of |
| currency pairs like EUR/USD, USD/JPY etc, | | | | forex brokers. |
| sometimes there are no spreads but then you will | | | | |