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What is an ECN?

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Hotspot FX ECN Advantages:
  • Totally Anonymous, Neutral Trading Environment
    All trading activity is anonymous. Anonymity enables traders to deal on neutral prices, which reflect market conditions only, not a perception of the client's direction based on trading strategies, tactics or current market positions.
  • Dynamic Depth of Market Display
    In addition to seeing the best bid and offer, clients can view all prices in the system as well as the available quantity at each price. This feature enables clients to gauge liquidity at different prices, improving trade execution.
  • Instantaneous Trade Execution
    Clients deal instantly on live, executable prices with immediate confirmations. Hotspot FX does not provide a "last look" to price makers, so Hotspot FX trades are final and confirmed as soon as they are dealt. There are no re-quotes.
  • Price Improvement and Bid/Offer Capability
    Hotspot FX clients have the ability to enter bids and offers. Using this feature, traders can fully manage their trade executions and benefit from price improvement. This feature enables all traders to "earn" a spread when their bid or offer is dealt on instead of having to pay away the bid/offer spread on every trade.
  • Client-to-Bank and Client-to-Client Trading
    The Hotspot FX ECN enables clients to trade on the global liquidity of member banks and also on the liquidity provided by all other clients in the marketplace. Client-to-client trades are transacted in the same anonymous fashion as bank-to-client trades.
  • Automated Trading/Market Data
    Through the use of our LiveLinkŽ API, clients can connect their trading models and risk management systems to our market data feed and matching engine. Hotspot FX?s live, neutral, executable market data includes full depth-of-book bid and offer prices as well as quantities available at all price levels. The attributes of Hotspot FX data makes it robust in back testing trading models and powering them for live trading.
  • Variable Spreads
    Unlike a dealer, however, Hotspot FX does not control the bid/offer spread and therefore can not provide the same bid/offer spread at all times.On an ECN, clients have direct access to market prices. Market prices fluctuate reflecting supply and demand, volatility and other conditions. The Hotspot FX ECN enables clients to trade on tight bid/offer spreads , which are consistently 1 to 2 points in normal market conditions.
It?s important to note too that a tight bid/offer spread may indicate a liquid market or it may not?the differentiator is neutral prices. A client who is looking to sell to exit a losing long position might see a bid/offer spread of 50-52 on an ECN, but on a dealer platform, where the dealer is aware of the client?s (losing) position, he can show a one point bid/offer spread, say 47/48. That?s a tighter spread, but is it a better price at which to sell or indicative of a more liquid platform?
 
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Foreign Exchange is a leveraged product and carries a high degree of risk to your capital and can result in losses that exceed your initial deposit. Forex may not be suitable for all investors, so please ensure that youfully understand the risks involved. Only speculate with money you can afford to lose. FTS Capital Group Ltd. is an referral/introducing agent for Hotspot FXi Europe Limited that receives a volume based referral fee for its services. Hotspot FXi Europe Limited is authorised and regulated by the Financial Services Authority. FSA number 230605.