3 thoughts on “What is the ECN mode in foreign exchange? What is the difference between it and the traditional market business model?”
Cheryl
Now foreign advanced scientific and technological innovation traders have been excessive to the ECN trading model. Friends who have played foreign exchange margin transactions basically know that there are few models on the market in this market: one is the ECN (Network, electronic communication network) model serving institutional customers; the other is to serve retail Customer inquiry and a single Market Maker model.
. Although most friends know the operating models of these two dealers, where are their essential differences? For investors, what are the help of these two models for transactions?
The so -called MM (that is, a single city merchant) model is that the trader's transaction order has not been put on the international financial market for transactions, but is completely directly traded with the trader. This is a more traditional model of dealers' operations. At present, most of the traders on the market operate through this method. If the dealer faced by investors is a large company, the MM model does not bring any risks to customers, because he has enough customers to hedge the transaction order. However, if investors encounter a black platform with a small scale and no supervision, the "dealer" may be completely played with customers in this way. In other words, when customers make money, the traders lose money - - That is, "gambling" in the traditional sense.
When the MM mode is used by some black platforms, there is a certain transaction risk for investors. At present, there is already a more advanced, more mature, and fair trading model in the international market. This is the "ECN model" that we want to reveal to readers below.
In fact, the so -called ECN model, the dealer itself does not participate in the customer's transactions (that is, there is no possibility of gambling with the customer), and the customer's transaction list will be directly put in the international internationally internationally internationally internationally internationally. Trading and matching in the financial market, the traders themselves only collect the fees of passing transactions and services. Then whether customers make or lose, they have nothing to do with them. They only provide a platform for customers to provide a transaction. Therefore, no matter what list, as long as someone is willing to pick up in the international market at that time, it will be sold immediately, and there will be no artificial intervention. Customers are long -term, mid -line, short -term, or even ultra -short -term transactions (that is, the "peeling scalp") have nothing to do with the trader themselves.
, although the point difference between the ECN system is generally a floating point difference, it seems that the trader will "have no bottom". But any friend who is familiar with the market or trades on the ECN system knows that when the market is active, the point difference is very small, and there are even negative points. Then the difference between BID/ASK trading and sale may be very different, but this is the real market price. It can be said that the role of the company using the ECN system is only a transmitter to pass the market price. The transaction is passed directly to the opponent's customers or more than 12 large banks (customers and banks seem to be a large pond water). These banks provide market liquidity, so the transaction has no upper limit. Their main currency is usually one point or no point, and sometimes the difference is negative. In addition, they allow the price limit between the point difference to the point of the minimum to 1/10.
ECN is an electronic trading network, a foreign exchange trading technology that uses a concentrated-decentralized market structure. This model is completed by close cooperation with banks, institutions, foreign exchange markets and technology suppliers. The trader's list is directly and anonymously hanging on this network. Each order is the same status, and the transaction is based on the optimized fairness of the price and time. Therefore, the price on ECN is a real market price, which is not fixed. ECN operators do not participate in the transaction, and collect a proportion of trading fees to traders. So they will provide customers with better services as much as possible. With the development of Internet technology, ECN dealers who serve individual investors, small banks, investment institutions, and hedge funds have begun to appear. ECN's business operation model is generally considered a typical fully automated electronic stock exchange by the US securities industry. DD inquiry and MM as a city business model (with a trader platform) Per investor to face a single inquiry and transaction to a single family, and the fairness of the offer depends on the integrity of the trader. The dealer itself is a city merchant. They generally summarize the price of the bank or ECN first, and then add their own profits to the customer. Therefore, the customer is actually a transaction with the market business (it is anonymous on ECN and anonymous True traders traded). Customers see that and transactions are not the real price of the market, and the execution price of the transaction is determined by foreign exchange markets, so it is not surprising that the transaction price is often conducive to the market merchants. After the customer's list enters the system of the city merchant, first of all, the internal hedge between the multi -header and the short position, and then take the remaining net position to the bank or ECN hedging they depend on. This is a non -hedge list belongs to the category of gambling.
Now foreign advanced scientific and technological innovation traders have been excessive to the ECN trading model. Friends who have played foreign exchange margin transactions basically know that there are few models on the market in this market: one is the ECN (Network, electronic communication network) model serving institutional customers; the other is to serve retail Customer inquiry and a single Market Maker model.
. Although most friends know the operating models of these two dealers, where are their essential differences? For investors, what are the help of these two models for transactions?
The so -called MM (that is, a single city merchant) model is that the trader's transaction order has not been put on the international financial market for transactions, but is completely directly traded with the trader. This is a more traditional model of dealers' operations. At present, most of the traders on the market operate through this method. If the dealer faced by investors is a large company, the MM model does not bring any risks to customers, because he has enough customers to hedge the transaction order. However, if investors encounter a black platform with a small scale and no supervision, the "dealer" may be completely played with customers in this way. In other words, when customers make money, the traders lose money - - That is, "gambling" in the traditional sense.
When the MM mode is used by some black platforms, there is a certain transaction risk for investors. At present, there is already a more advanced, more mature, and fair trading model in the international market. This is the "ECN model" that we want to reveal to readers below.
In fact, the so -called ECN model, the dealer itself does not participate in the customer's transactions (that is, there is no possibility of gambling with the customer), and the customer's transaction list will be directly put in the international internationally internationally internationally internationally internationally. Trading and matching in the financial market, the traders themselves only collect the fees of passing transactions and services. Then whether customers make or lose, they have nothing to do with them. They only provide a platform for customers to provide a transaction. Therefore, no matter what list, as long as someone is willing to pick up in the international market at that time, it will be sold immediately, and there will be no artificial intervention. Customers are long -term, mid -line, short -term, or even ultra -short -term transactions (that is, the "peeling scalp") have nothing to do with the trader themselves.
, although the point difference between the ECN system is generally a floating point difference, it seems that the trader will "have no bottom". But any friend who is familiar with the market or trades on the ECN system knows that when the market is active, the point difference is very small, and there are even negative points. Then the difference between BID/ASK trading and sale may be very different, but this is the real market price. It can be said that the role of the company using the ECN system is only a transmitter to pass the market price. The transaction is passed directly to the opponent's customers or more than 12 large banks (customers and banks seem to be a large pond water). These banks provide market liquidity, so the transaction has no upper limit. Their main currency is usually one point or no point, and sometimes the difference is negative. In addition, they allow the price limit between the point difference to the point of the minimum to 1/10.
ECN is an electronic trading network, a foreign exchange trading technology that uses a concentrated-decentralized market structure. This model is completed by close cooperation with banks, institutions, foreign exchange markets and technology suppliers. The trader's list is directly and anonymously hanging on this network. Each order is the same status, and the transaction is based on the optimized fairness of the price and time. Therefore, the price on ECN is a real market price, which is not fixed. ECN operators do not participate in the transaction, and collect a proportion of trading fees to traders. So they will provide customers with better services as much as possible. With the development of Internet technology, ECN dealers who serve individual investors, small banks, investment institutions, and hedge funds have begun to appear. ECN's business operation model is generally considered a typical fully automated electronic stock exchange by the US securities industry.
DD inquiry and MM as a city business model (with a trader platform)
Per investor to face a single inquiry and transaction to a single family, and the fairness of the offer depends on the integrity of the trader. The dealer itself is a city merchant. They generally summarize the price of the bank or ECN first, and then add their own profits to the customer. Therefore, the customer is actually a transaction with the market business (it is anonymous on ECN and anonymous True traders traded). Customers see that and transactions are not the real price of the market, and the execution price of the transaction is determined by foreign exchange markets, so it is not surprising that the transaction price is often conducive to the market merchants. After the customer's list enters the system of the city merchant, first of all, the internal hedge between the multi -header and the short position, and then take the remaining net position to the bank or ECN hedging they depend on. This is a non -hedge list belongs to the category of gambling.
The so -called MM model is controlled by the MM model. ECN is a bank trading channel. Customers' orders can be sent directly to the banking channel.