Introducing Brokers ECN-Electronic Currency Network

Here is currently we will discuss about the broker / ECN broker, what it is and what its advantages ECN? First we start with an extension of the Electronic Currency Network ECN if taken literally is a network / network electronic currency, so it is a network that serves to conduct currency transactions and is done electronically. Still not clear? Well let me ask one question first, have you ever asked what is the real exchange rate pricing for example between Rupiah (IDR) with the U.S. Dollar (USD), how does the mechanism is the price of 1 USD = 9000 IDR can be changed to 9500 IDR or down, how the hell how to determine that price? The mechanism name is the price formation mechanism.
Now we discuss first the mechanism of price formation, the simplest is an example when we want to buy a T-shirt at the Mangga Dua shopping center, for example, I went to a store called Clothes Lester then I saw a black shirt with the words ROCK golden, then I ask the price , was worth 100,000 dollars. I am a buyer then I want is the lowest possible price at Mangga Dua and because there are many clothes shops, I look first to another store, and it turns out not far from the store before I found the Save-shirt shop, there's clothes exactly the same and immediately I asked the price. Apparently the price is 150,000 dollars, the buyer immediately instinct to work and from the mouth of unspoken "Oh, really expensive! On the other stores that expensive nga kok! ". Save-shirt seller in the store responded with ingenious "So in other stores given how much? I love cheaper!".
The incident above is actually the beginning of the formation mechanism of price, buyers want the lowest price possible while the seller wants the highest possible price, but these two opposites. Fortunately in the above events there is competition among sellers so that they are competing to provide the best price, if store A sells for $ 100,000, then store B will sell for $ 99,000 so that buyers prefer to shop B. Well here we can see how prices could move down because the sellers compete to sell their products and automatically bring down prices further.
If there is competition between the sellers then there is also competition among the buyers, if competition among sellers, the price could move down then instead of competition among buyers make the price could move higher. We continue the story above, I end up not buying that day because choosing a good meal instead of buying clothes, then the next day I went back and looked in Efficient Clothes shop turned out clothes that I would've sold. Then forced to return to the store and happen to her dress-shirt Sustainable living 1, I bid from 100,000 to 90,000, but suddenly there is another buyer to come and bargain clothes for 95,000 and it was also because I've really bought it my intention Rev my offer to 100,000, nga need to use a discount, eh fact that other buyers also raise the bid higher to 110,000.
Competition on the competition among buyers which pushed the price to rise. Up here we have to learn how the price could go up and prices can fall because of competition on the buyer and seller. Next is the determination of market prices, meaning the market price here is the price at which all parties, both buyer and seller agree to conduct transactions. One thing to note here is that the seller must know the price offered by another seller to be able to give a lower price (competing), the same thing with the buyer. Transactions will continue to happen as long as buyers look at affordable prices offered by the seller, the seller will still sell for a price not too low. It is this process which will bear the price of an existing market where price is the equilibrium price between the seller and buyer, but if the buyer more then the price moves up, otherwise if more sellers then the price moves down.
Formation of clothing prices in Mangga Dua occurred with the sellers seek each other out and adjust the price of other stores, so prices are cheaper or at least the same. While buyers do comparison by visiting the shop one persatus. What if the trade is the currency and the transaction is the buyers and sellers are not in a single building is not even within one country, how they can communicate to know the price the seller or another buyer, this is where the use of electronic networks so that sellers and buyers to monitor the price offered by the seller and buyer.
Electronic Currency Network is a system of forex transactions occur at market price formation / market.Artinya not the brokers who determine prices in the platform but was benarh prices that occurred in the forex market today. Parties involved are banks, financial institutions, private sector, government, and also dankelompok retail investors through brokers. All proposed prices to buy and sell according to their respective interests, whether for speculative purposes, or any hedging transaction import export. The parties entered into the transaction in a network is centralized through an electronic network.
As an example we see the rupiah exchange rate - U.S. dollar in the bank. Usually in the bank we could see buying and selling U.S. dollars, the time this article was written to U.S. Dollar exchange rate is 1 USD = 10,800 Rupiah. It usually appears on the board rates as below:
Buy 10,800 - 11,500 Selling
And we all know Buy or Sell in question is from the banks, so banks want to buy only at the price of 10,800 dollars and want to sell dollars in the price of 11,500. This means that the Bank is only willing to buy U.S. Dollars from us a price of 10,800 dollars for every 1 USD and the Bank agreed to sell U.S. dollars at our price of 11,500 dollars for every 1 USD. It's the same concept that you see forex trading platform you are on the Bid and Ask prices. With the difference between 10,800 to 11,500 is called the spread. Large spreads too well? 700 rupiah in this case.
ECN broker is a broker that facilitates its investors to trade on the ECN network, with no dealing desk as a pool of transactions before they were distributed to the market. Now what's the difference brokerage firms with non ECN ECN? Market Transparency! The point at ECN broker we can access the market directly or often called a Direct Market Access (DMA). But how can distinguish with certainty where the ECN and who is not? Here is an ECN broker characteristics

    * Spreads are not fixed / not fixed but based on market spreads, the broker ECN sometimes we can find a spread of 0.5 points. It is also likely to cause ECN broker MUST wear a transaction fee because they do not mark up / down to price in the market, their income from transaction fee only. (Spreads are the difference between the value of Buy and Sell)