Advantages of a Fast Execution Forex Broker: True ECN Forex Broker

There are several advantages for a speculator able to execute fast trades… At least, that it what we are told by so many brokers. Why do Fx Brokers advertise their fast execution speeds so carefully? And therefore are there actually advantages to fast trade accomplishments? This post hopes to provide some regarding what benefits a fast execution broker can provide, when a trader might need such execution and once fast performance is actually a factor to consider when deciding on a Forex broker. fast execution broker

The main advantage that fast performance provides is decreasing the risk of slippage. Time it takes for the in an attempt to be opened by a trader is known as latency. Within this time volatile price motions might occur due to market conditions. As such, a trade intended to be opened or shut down at a certain price level, is unlikely to be processed at that price since some time has passed between the initial ordering of the trade and it finally being processed. Usually dormancy speeds are within moments, some brokers offer dormancy speeds below one second (calculated in milliseconds), irrespective of this, the risk of slippage is impossible to completely eradicate. Even so, the low the latency, the a fraction of the time for slippage to occur and then the less risk involved. Slipping can be potentially quite costly, good brokers will spend time and hard work trying to reduce this risk by investing in the technological infrastructure. 

Really worth noting that fast execution speeds are generally an advantage when trading with a non-dealing table broker. After all, a dealing desk broker creates their own internal market. Even if your deals are traditionally opened quickly, if the broker wants to delay or stop moving the order, they can do so. Brokers will do this because they open trades against their clients, which creates a conflict of interest. Furthermore, requotes can negate the traditional advantages that fast execution provides. As such, most traders will see that trading with a Marketplace Maker does not deliver many advantages with fast trade executions.

Trading with an ECN + STP FOREX broker will usually provide the most benefits to fast trade execution. Since purchases are made directly to Liquidity Providers, the natural conflict of interest that exists for market producers is removed. It is usually in the broker’s best interests to process the order at the earliest opportunity for clients in order to remain competitive among other brokers. A real ECN Fx broker won’t requote or trade against their clients. As such, the advantages that low latency offers shall no longer be negated.

Low latency also allows for more versatile strategies for traders. A large number of hedging and scalping Expert advisors as they are commonly referred to often rely on fast execution times. These auto-trading robots will benefit a great deal from a good technological infrastructure. Furthermore, low latency will allow for more trades to be opened up one after the other. Multiple trades can be opened up for high frequency trading, a technique commonly employed by hedge funds and professional traders. Even simply a 10% decrease in latency often means 10% more trades being opened or closed in the same period of time. This is very beneficial security wise, particularly if industry movement commences to turn badly. The more orders closed quickly, the faster you lower your direct exposure. This is a similar effect in regards to reducing the risk of slippage.

So what steps can you take, as a trader, to reduce latency? The main thing you need to do is find a better Forex Broker with fast execution times. It would be prudent and probably recommended to you should find an ECN+STP broker with the interest in processing your orders quickly. Other potential procedure for take may be to utilize a VPS or a FIX API system, check with your broker whether these would confirm useful, how much it would cost and placed up broker offers such Foreign exchange trading tools at all.

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