ECN Prices and Spreads

ECN Prices

The ECN pricing format is different from traditional 4th decimal point pricing, typical of the Market-Maker model. ECN accounts are characterised with a 5th decimal point pricing format. They operate with 'fractional pips' where 1 'fractional' pip with 0.1 lot (10 000 units of base currency), is approximately equal to $0.1 (10 US Cents).


The term “DAB” is preferable in the ECN environment than the commonly used term “spread.” DAB stands for the difference between the best BID and the best Offer (ASK) and it is not fixed. DAB is constantly changing as a result of the influence of the available buy and sell orders in the Market. The floating DAB is a principle feature in distinguishing ECN from the Market Maker type of trading.

Market Maker model is usually pegged to a fixed DAB that varies from broker to broker. The fixed DAB is often associated with certain stability and thus, may inspire confidence, especially when you start your trading career in Forex. It is however, wider than the floating DAB, which may range within 2 to 4 pips on the major currency pairs.

The minimum possible DAB in the ECN environment is 0 pips and this parameter is related to all financial instruments. Thus being not so tight, floating DAB in the ECN model of trading – helps to save money. There may be some cases when an unfixed DAB may turn into a disadvantage; e.g., after a major news release or during the unexpected market events when a floating DAB can widen significantly and cause sizable losses.

One of the major attractions of ECN trading is that you are provided with real-time access to True ECN pricing. It means you can see the best BID and best Offer (ASK) prices along with the available volumes as they have been set by the Liquidity Providers. This is achieved through a special application – Order Book, commonly referred to as Level2 or Depth of Market, that helps obtain a complete picture of the market situation by showing full information on current orders, including Limit orders of the company’s clients. This application and its updates (One Click Trading Level2 Plugin) are strongly recommended to Forex traders for their trading activity.