ECN vs MM ?

[fxnewbie]

What is the difference between an ECN and a Market Maker? Anyone here with practical experience of the two types of brokers/dealers? What is your preference?

[Alb]

A market maker takes the other side of your trade. This is good if you need liquidity, but they then trade on an ECN to pass on your position (skimming the spread and maybe more). An ECN does not participate in your trade, they just pass the transaction through for clearing. I think that is the main difference.

Have you compared any? I think an ECN has smaller spreads?

[infudibu]

An ECN usually has smaller spreads, but they charge a commission. An ECN usually allows you to enter a trade even if your limit is between the bid/ask. The actual cost may be very similar on an average trade, but I've hear horror stories of traders being exploited by Market Makers.

In addition to the cost of trading, consider the following issues;
Speed of execution.
Slippage.
Accuracy of quotes (unbelievable spikes).
Safety of your money (does the broker have insurance).
Customer service/support.
Ability to exit a trade during computer failure (telephone service).
Usability/efficiency of their trade execution software/platform.
Ability to scalp. (MM will discourage this because they are competing with you).

[zyad]

HI ,

MORE DETAILS HERE :
http://www.associatedcontent.com/article/403679/ecn_forex_brokers_why_are_they_better.html