Why are BNFX spreads better?

In a decentralised over-the-counter (OTC) market such as FX, the spread is determined by the quality of the liquidity providers and institutional market participants. The spread is simply the difference between the best bid (the highest someone is willing to pay) and the best ask (the lowest someone is willing to sell) at any given time. When more and larger insitutional liquidity providers are connected to an ECN system, the spread will naturally be tighter. BNFX pricing is derived from market-leading technology systems that aggregate liquidity from multiple interbank sources so we're able to offer our clients some of the best spreads in the industry.

What is an ECN broker?

ECN stands for Electronic Communications Network. While this generic-sounding acronym seems confusing at first, it originated from the equity markets where ECN systems have created competition (and consequently, more competitive pricing for traders). The role of the ECN is simple: to provide an electronic system that matches buy orders with sell orders. In forex, the early generation of brokers employed a business model in which the broker itself would take the opposite side of customers' trades as a Dealing Desk (Market Maker). After the Dealing Desk business model imposed a strong conflict of interest with the company's clients, traders have since demanded "No Dealing Desk" brokers such as BNFX, offering an ECN or STP (Straight-Through Processing) business model, where trades are automatically passed through to the broker's institutional liquidity providers - eliminating conflict of interest.

What is one "Lot"?

In FX trading terms, one lot refers to 100,000 units of base currency (the currency on the left). For example, 1.00 Lot of EUR/USD is 100,000 Euros priced in US Dollars, which is $10 USD per pip of price movement. Today, most brokers offer fractions of one lot for trading. We currently offer trade sizes as small as 0.01 Lot - $0.10 (ten cents) per pip of price movement.
NOTE: If the quote currency (the currency on the right side) is different from the trading account's currency, you will need to convert it to the account currency to find the value per pip. The above examples are intended to illustrate the concept of a Lot size.

What is a "Pip"?

For most currency pairs, the pip value is the 4th number after the decimal point. For JPY-quoted pairs (pairs in which the Japanese Yen is the currency on the right side), the 2nd number after the decimal point is the pip value. For example: When EUR/USD moves from 1.3418 to 1.3419, it's said to have moved 1 pip. Likewise, when GBP/JPY moves from 143.22 to 143.23, it also moved up one pip.
NOTE: Most brokers including BNFX will now quote an extra digit, typically known as a "fractional pip", which gives most currency pairs a 5th digit (for JPY-quoted currency pairs, a 3rd digit). This does not change the definition of a pip to any professional trader, it just adds to the specificity of the quoted prices and, in many cases, allows you to trade with much tighter spreads.

Why is the demo account different from live accounts?

The demo account is intended for traders to learn the software and, in the case of beginners, practice the basic concepts of trading. While all reasonable efforts are made to simulate the real trading environment, traders should always understand that there are differences, especially for an ECN broker. In all No Dealing Desk business models, which pass trades on to institutional liquidity providers, the technology platform must: 1) quote the best bid and ask from the aggregate pricing from all liquidity providers on the ECN system; 2) accept an order from the trader to buy or sell; 3) pass that buy/sell order through the ECN to the liquidity provider that posted the bid/ask; 4) confirm the order was filled. For a system to do this in a real trading environment, the process is obviously different from a demo account in which all orders are simply a simulation.

Do you allow hedging?

Yes. We do not purposely impose any limitations on traders' strategies or trading styles.

Do you allow news trading?

Yes. However, please note that while we do not impose any limitations or purposely change conditions, the actual spreads and volatility around a major economic news announcement can be unpredictable and extremely risky to trade. News trading refers to the practice of purposely buying and selling immediately before or after a major economic news announcement (such as the Non-Farm Payrolls or an interest rate change from a country's central bank). While the strategy is used by some traders to capture immediate or premature reactions to news, it's also one of the most dangerous approaches to trading. Our pricing during news announcements is, as usual, based entirely on the liquidity providers connected to the system at the moment. Whether each of the liquidity providers uses manual or automated decisions, they remain decisions made at their free will. We cannot control their choices. Please be careful if you intend to trade around such periods.

Do you allow scalping?

Yes. We do not purposely impose any limitations on traders' strategies or trading styles.

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