The acronym ECN stands for “Electronic Communication Network”, it is used to show that a broker is connected to an electronic trading system where several liquidity providers offer competing buy and sell bids. Brokers that directly send all of their orders to one or more liquidity providers with the “A booking” system do not what is market maker in forex clients’ risks internally, they simply act as an intermediary between clients and liquidity providers.
These brokers make money off of the trading volume via a commission on each trade or a spread markup. It is therefore in their interest that their customers earn money as long as possible, as they can continue to earn brokerage commissions. STP brokers also often lose their money. STP brokers are more reliable because they don’t make money off of their clients’ losses is therefore unfounded. Unregulated offshore companies have lost the trust of traders, who more readily choose to trade with regulated brokers in a reliable and recognised jurisdiction.
Market Maker licence and the regulation is less restrictive. STP broker, a Market Maker does not always cover its clients’ positions with liquidity providers, so it is obliged to pay its clients’ winning trades using its own money or the money of its losing clients, in other words its clients’ profits are losses for the broker. This model carries greater risk for the broker, but statistics show that the majority of clients lose their money. It is also worth mentioning that some offshore MM brokers do not have any licenses. STP license in a recognised jurisdiction in order to earn the trust of customers. The most important thing is to choose a broker that offers a guarantee on your deposits and good trading conditions. The main risk doesn’t come from the NDD or DD broker but from you, you control the risks you take whe you trade!