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Is ActivTrades An ECN Broker? or Market Market? Review broker?
Is ActivTrades An ECN Broker Or Market Maker? Comprehensive Broker Review
Introduction
When selecting a forex broker, traders often prioritize transparency, execution speed, and cost efficiency. One of the primary concerns is whether a broker operates as an ECN (Electronic Communication Network) broker or a Market Maker. This distinction significantly impacts trading conditions, spreads, and execution models. In this review, we will analyze ActivTrades, determine whether it operates as an ECN broker or Market Maker, and evaluate its overall reliability as a trading platform.
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What is an ECN Broker?
An ECN broker connects traders directly to liquidity providers, including banks and other financial institutions. This model allows for tight spreads, faster execution, and no conflict of interest between the broker and the trader. Key characteristics of an ECN broker include:
Direct Market Access (DMA)
Variable Spreads
No Dealing Desk (NDD) Execution
Commission-Based Fee Structure
Transparency in Pricing
What is a Market Maker Broker?
A Market Maker broker, on the other hand, creates a market for traders by acting as a counterparty to their trades. This means the broker may take the opposite position to a trader’s trade. Features of a Market Maker include:
Fixed Spreads
Internal Order Matching
Possibility of Conflict of Interest
No Direct Market Access
Higher Slippage Risk
Is ActivTrades an ECN Broker or Market Maker?
ActivTrades operates primarily as an STP (Straight Through Processing) broker, which means it does not function entirely as an ECN broker but does not fully align with a Market Maker model either. Here’s why:
No Dealing Desk Execution: ActivTrades does not operate as a pure Market Maker since it follows an STP model, ensuring orders are processed directly to liquidity providers.
Spreads & Commissions: ActivTrades offers variable spreads, which is a characteristic of ECN/STP brokers. However, the broker does not charge additional commissions, unlike pure ECN brokers.
Liquidity Providers: While ActivTrades connects to multiple liquidity providers, it does not offer direct market access in the same way an ECN broker would.
No Fixed Spreads: Market Makers typically offer fixed spreads, but ActivTrades provides floating spreads based on market conditions.
Execution Speed: The broker boasts fast order execution, which is a feature of ECN/STP brokers.
ActivTrades Trading Conditions
1. Spreads & Fees
ActivTrades offers competitive spreads starting from 0.5 pips on EUR/USD for Classic accounts and 0.0 pips on Raw accounts. Unlike traditional ECN brokers, ActivTrades does not charge direct commissions but instead incorporates costs into the spread.
2. Trading Platforms
ActivTrades provides access to MetaTrader 4 (MT4), MetaTrader 5 (MT5), and ActivTrader, its proprietary platform. These platforms support algorithmic trading, advanced charting, and risk management tools.
3. Leverage & Margin
Leverage varies based on regulatory jurisdiction:
EU Clients (FCA-regulated): Up to 1:30
International Clients (SCB-regulated): Up to 1:400
4. Asset Classes
ActivTrades offers a wide range of tradable assets, including:
Forex (50+ currency pairs)
Indices (DAX, S&P 500, NASDAQ, etc.)
Commodities (Gold, Oil, Silver)
Shares & ETFs
Cryptocurrencies (BTC, ETH, LTC, XRP)
5. Regulation & Security
ActivTrades is regulated by multiple financial authorities:
Financial Conduct Authority (FCA - UK)
Securities Commission of The Bahamas (SCB)
Commission de Surveillance du Secteur Financier (CSSF - Luxembourg)
This multi-jurisdictional regulation enhances security and ensures compliance with strict financial laws.
Pros and Cons of Trading with ActivTrades
Pros:
✔ Competitive Spreads – Lower spreads compared to Market Makers. ✔ No Commission Trading – Unlike ECN brokers, no commission is charged. ✔ Regulated Broker – Regulated by FCA, SCB, and CSSF. ✔ Diverse Trading Instruments – Offers forex, indices, commodities, and crypto. ✔ Advanced Trading Platforms – Supports MT4, MT5, and ActivTrader. ✔ Negative Balance Protection – Ensures traders cannot lose more than their account balance.
Cons:
✖ Not a Pure ECN Broker – Uses an STP model instead of full ECN. ✖ Limited Leverage in Europe – FCA regulations cap leverage at 1:30. ✖ No Fixed Spreads – Variable spreads can widen during volatility. ✖ Limited Cryptocurrency Selection – Fewer crypto assets compared to some competitors.
ActivTrades vs. ECN Brokers: A Comparison
FeatureActivTrades (STP)True ECN BrokerOrder ExecutionSTP (No Dealing Desk)DMA (Direct Market Access)SpreadsVariable (From 0.5 pips)Ultra-Low (From 0.0 pips)CommissionsNo CommissionsYes (Per Lot)Trading ModelNo Conflict of InterestNo Conflict of InterestSlippage RiskLow to ModerateLowMarket AccessIndirectDirect
Conclusion: Is ActivTrades the Right Broker for You?
ActivTrades is a reputable, well-regulated broker offering STP execution, which balances between Market Maker and ECN trading models. While it does not provide true ECN trading, it ensures fair pricing, fast execution, and no dealing desk intervention. Traders looking for tight spreads, a commission-free model, and a regulated trading environment may find ActivTrades an excellent choice.
