This category needs careful scrutiny. This site is an electronic communication network. Your Grandma's toaster is an Electronic Communication Network.
The term ECN has loosly been used in today's Forex world and in most cases used to describe an execution method called Market Execution. In layman's terms this means that your order is exposed to execution market style.
Slippage, variable floating spreads and spread blowouts now have to be contended with alongside the direction you are choosing to trade.
What is an ECN really meant to be? How is this beneficial to me? These are questions one needs to ask. An ECN is meant to be a scenario whereby the broker you are trading with uses a network of feeds and liquidity providers to hedge orders. The broker does not make a market but essentialy bring lots of market makers (or other ECN's) to you.
Your order gets routed to another provider whilst the broker only "clips the ticket" with a commission or fee. Your order then is grouped into one or many other larger orders and is dealt with.
An ECN broker in its traditional meaning would be impartial to whether or not you make money or loose as ALL orders are passed on to another party (be it market makers or other ECN's). Sadly though, in today's market the term ECN has been used by market makers to describe variable spreads (but the order remains at the broker). All this to mask the harsh term making a market.
An ECN has a variable spread (could be fixed in rare cases) that widens in times of low liquidity. The price flickers and if you get your order in fast enough you can execute on or near the quoted price. Some take their feed and increase the spread.
They remove themselves from the role of risk management and rely on the maths and the volume of trading with lower leverages to make a buck and it is these that are termed to process straight through.
There are ECNs that trade the positions of their clients against each other and maintain coverage on the balance. There are ECNs that leave small accounts to run their course and take on the collective risk. All of these and many more programmable alternatives are designed for fine tuning via various settings on the interface.
The ECN is the grey as the term is so generic. The best designed ECNs can drastically cut straight to quality liquidity providers and cut the costs of trade. It makes sense then that because spreads are so dynamic that there is potential room for feed manipulation. Broker selection is a scrutiny of practices and scruples and holding an account demands a degree of trust.
That said, what a service is on offer. We can make tiny trades with 100s of times the purchasing power than our money provides, we have fantastic charting, and we can do it all day and all night if we want to.
Let's not kid ourselves, these are not DMA facilities. Wholesalers provide lightning fast execution on snazzy platforms. An ECN broker pretending to be DMA is the worst of sins, closely followed by the not so straight through processing outfit pretending to be so. If they are indeed straight to the bank then costs will be higher and smaller volumes not possible. If they are not straight through to bank then to whom are they straight through?