MetaTrader 4,The Most Popular Forex Trading Platform
Since ECNs work differently, it only makes sense that the way you can access them via MetaTrader 4, would require some tweaking to the original technology. We are going to cover that with this piece. We will also clear up some of the misinformation floating around about MetaTrader.
In making the ECNs work with MetaTrader 4, there was a need to create a new way of bridging the gap in technology. You see, the way the regular software works does not allow one to access the inter-bank foreign exchange market.
So, the MetaTrader 4 ECN bridge was developed to be the technology that would allow any of the users to access the interbank foreign exchange market that makes up the bulk of what ECNs offer.
MetaTrader 4 was developed to help brokers, and the clients can pass orders to the wholesale forex market. In our previous pages, we explained how electronic communications are the backbone for this whole operation.
As a response to what MetaTrader developed to help ECN traders and brokers, there have been other developments of third-party software meant to create the Straight-through processing bridge that allows the MetaTrader 4 server to pass orders.
The orders passed through here are placed directly by the clients to the ECN, and the confirmations are sent back to them automatically.
The Inception of Bridging Software MetaTrader 4
There is a lot to learn about this, but we will briefly go through the background. That will allow you to know where all this comes from and why it is so important. The retail forex brokers for ECNs are divided into two categories:
Dealing Desk Brokers
They are the market makers who execute orders and keep the position in the liquidity pool. A dealing desk broker is particular because they have dealers who have the option of accepting or rejecting the orders from the retail traders.
These deals are the re-quotes and will affect the outcome of the trade, depending on whether or not the broker is interested in accepting the orders made or not. The point is, there is a middleman here, and you have to use them, via regular MetaTrader to get what you want.
The middleman stands to make something from the trade. This happens either through spreads and a commission, or a combination of both. From this, we gather that they can sometimes against your best interests to make money.
These are the brokers who have direct market access. When you get a broker via this category, the broker's job is to pass the order on to the network. They do not tamper with it. This quality is what makes them so desirable to many who wish to use the true ECN brokers.
ECN trade brokers give you, as the client, direct access to the other people participating in the same markets. They consolidate their price quotes from many participants and then offer clients narrower bid/ask spreads than would not be easy to find under different circumstances.
Because the ECN brokers only match the trades between participants in the market, they cannot trade against a client. As you no doubt have heard or known, retail forex brokers are often accused of doing this.
Metatrader 4 makes it possible to do all this with ease by bridging the network used by ECNs and the software to make it easy for you to trade.
MetaTrader 4 Platform
This platform was designed for the first category of dealing desk brokers. However, over the years, the platform became so popular because of the many features it offers that you cannot find anywhere else.
It only makes sense that ECN traders would consider the MetaTrader 4 for use. Retail forex traders and brokers have adopted it for ECN trading, and it seems to deliver amazing results. So, how does this happen?
Well, using something we call bridge software. Let's look through the details that make up this ingenious invention that makes it possible to use MetaTrader 4 for your ECN trading.
The Bridge Software MetaTrader 4
Over the years, it was not easy to mesh the network used by ECN trading and MetaTrader. However, many people attempted to bridge the technology that would allow a MetaTrader 4 server to connect with an ECN.
Finally, in 2006, the first practical solution showed up. The attempts to bridge MetaTrader 4 and ECN seemed to have borne some fruits.
At the moment, two methods have been developed to make this bridging technology work. We have the STP and ECN models. They have some differences that we will mention here;
The Differences Between MT4 ECN Bridge and MT4 STP Bridge
The client’s orders go directly to the marketplace, where they are displayed. The client has permission to see and use the market depth on level 2 access. Implementation of partial execution is possible. However, the STP model cannot do any of these crucial things.
With ECN, you have direct access to the market that allows you to interact with the other individuals there. The orders you make are displayed in the market where others can see them. These traders are capable of introducing their orders, and if the prices are a match, the deal is practically done.
The Main Features of This Bridged Software
The things that make this bridged software so useful include:
- There is true execution ECN-style. With this MetaTrader 4 bridge, you can trade with other traders, orders are there for you to see. This makes it transparent and easy to navigate.
- You will be offered tight spreads. The only difference you will see is between the best bid and the best offer prices if a client puts up an order with a better price, the spread changes.
- The execution is fast. Usually, the orders take about .3 seconds on the side of the servers before they are placed.
- Even when there might not be sufficient liquidity, you can still get a partial execution where the order can go through on what is available. Then the rest will always be displayed and visible to the marketplace.
- You will also be able to get market depth using an add-in module. It is known as Level 2 and will show you the numbers of the measure of volume available for the transaction, on a particular instrument.
As you will find out, the use of MetaTrader 4 is going to offer you many things you may not be able to access other platforms that claim to provide the same levels of competent connections. There are some downsides with this platform and style of trading, but they are negligible compared to what the entire system offers you.
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