From Reservoir Pips
Most foreign exchange brokers offering accounts to retail traders operate in one of two ways. It is doubtful that you’ll be enrolling with a broker who has their own dealing desk. Rather more likely, you will be looking at either an ECN broker or a market maker.
ECN currency exchange brokers use the Electronic Communication Network, a world online marketplace that caters for many different sorts of trader from retail to the massive banks and market makers. The spread on the ECN is little, often just about non existent, so brokers using this network will often either add a couple of pips to the genuine spread or charge commission or charges per deal. You can often get better prices from an ECN broker but take a detailed look at their fee structure and consider what it would mean to you on a typical deal.
ECN brokers are usually better for scalpers and will even welcome them because they are dealing at once with a big market. Slippage is not most of a problem either for scalping or at times of forex reports reports. They’re also often well regulated.
On the other hand, the variable spread can mean more doubt when setting stop losses and limit orders. ECN brokers also tend to offer fewer charts and can have a less user friendly dealing platform because they aren’t especially aiming to attract amateurs. They generally tend to presume that you know what you do and have a paid subscription to do your technical analysis elsewhere.