ECN broker is a type of forex broker whose business model operates on passing traders’ orders straight to the liquidity providers. It is often referred to as straight through processing as well.
ECN or electronic communications network are types of mini networks where trading activity takes place. Think of ECN’s as small groups of a circle of friends who trade baseball cards. The buying and selling is usually within this group with the exception of some big buyers and sellers (liquidity providers) who can dip into multiple groups or ECN’s.
As a retail trader your orders are classified as 'sell side' while the liquidity providers are classified as 'buy side' (not to be confused with going long or short/buy or sell).
An ecn broker facilitates trades between the retail trader and the liquidity provider which is the counter party to your trades. Unlike a market maker model where the forex broker fills your orders by taking an opposite position, an ecn broker merely matches your buy/sell orders with that of the liquidity providers. The main benefit of trading with an ecn broker is that there is no conflict of interest. In return for this 'service' the retail trader either pays a commission or a spread mark up, or at times both.
The following comparison table below at Allfxbrokers.com shows you the list of ecn brokers and the trading conditions, starting from minimum deposit, leverage to fees such as spreads and commissions.
If you are looking to trade with an ecn broker, pay attention to whether firstly the minimum deposit requirements matches your trading capital and then look at the fees. It is ideal to choose an ecn broker that charges only a commission or only a spread mark up. Of course, needless to say, cheaper the costs, better it is for the retail trader. Traders should also bear in mind that the minimum deposit is usually higher when trading with an ecn broker, compared to a market maker.