50 FAQs About ECN Trading and ECN Brokers
Good to know terminology regarding ECN Trading
Basics of ECN Trading
The basics of ECN Trading for a better understanding, we did the research to uncover the 50 most asked questions about ECN Trading and the Brokers providing these trading conditions.
We hope this set of FAQs answer all your questions.
We have categorised the question into these segments:
Basics of ECN Trading • ECN Trading Mechanics • ECN vs. Other Trading Models •
Costs and Requirements • Technical Aspects of ECN Trading • Regulatory Aspects •
Trading Strategies with ECN • Market Conditions and ECN Trading •
Practical Considerations • Advanced ECN Topics
 | 4.8/5 |
IC Markets: ASIC | MT4, MT5, cTrader, TradingView | Raw spreads | True ECN | Low-latency execution | |
Star Rating | 4.8/5 |
Fxview: CySEC | MT4, MT5 | Raw spreads | Dedicated Account Manager | Low-latency ECN routing | |
 | 4.7/5 |
Fusion Markets: ASIC | MT4, MT5, cTrader, TradingView | Raw spreads | Forex VPS | Sub-ms latency via VPS | |
 | 4.8/5 |
BlackBull Markets: FMA, FSA | MT4, MT5, cTrader, TradingView | Raw spreads | True ECN | Ultra-low latency | |
 | 4.8/5 |
TMGM: ASIC | MT4, MT5 | Raw spreads | Low-latency execution | True ECN Broker | Dedicated Acc. Manager | |
 | 4.9/5 |
Fpmarkets : ASIC, CySEC | MT4, MT5, TradingView | Raw spreads | Forex VPS | Sub-ms latency via VPS | |
 | 4.3/5 |
GO Markets : ASIC, CySEC, FSC, | MT4, MT5, TradingView, cTrader, | Raw Spreads | Forex VPS Hosting | Ultra-Low Latency | |
 | 4.7/5 |
Global Prime: ASIC | MT4, MT5 | Raw spreads | True ECN | Low-latency agency execution | |
 | 4.7/5 |
Blueberry Markets: ASIC | MT4, MT5, cTrader, TradingView | Raw spreads | Forex VPS | Low-latency | |
Basics of ECN Trading
- What is ECN trading?
ECN trading refers to transactions conducted through an Electronic Communication Network, which directly connects buyers and sellers in the financial markets without the intervention of a third party. This system allows for more transparent pricing, faster execution, and generally lower spreads compared to traditional market maker models.
- What does ECN stand for?
ECN stands for Electronic Communication Network. It’s a digital system that matches buy and sell orders in the financial markets automatically based on price priority.
- How does an ECN broker differ from a standard broker?
An ECN broker provides direct market access to other participants in the network, including banks, market makers, and other traders. Standard (market maker) brokers often trade against their clients and create an internal market with their own prices. ECN brokers simply match orders between market participants and charge a commission for their service.
- What are the main advantages of ECN trading?
The main advantages include greater price transparency, faster execution, tighter spreads, anonymity, reduced conflict of interest, after-hours trading capabilities, and direct market access.
- Are there any disadvantages to ECN trading?
Yes, disadvantages include higher minimum deposit requirements, commission fees on top of spreads, potential for price gaps during volatile market conditions, and a steeper learning curve for beginners due to the complexity of the trading environment.
ECN Trading Mechanics
- How does ECN order matching work?
ECN platforms automatically match buy and sell orders based on price and time priority. When a buyer’s bid price matches or exceeds a seller’s ask price, the trade is executed instantly without any intermediary.
- What types of orders can I place with an ECN broker?
ECN brokers typically support a full range of order types including market orders, limit orders, stop orders, stop-limit orders, trailing stops, and sometimes more advanced order types like OCO (One-Cancels-the-Other) and iceberg orders.
- How do ECN brokers make money if they don’t trade against clients?
ECN brokers primarily earn revenue by charging a fixed commission per trade or a small markup to the raw spread. This aligns their interests with their clients, as they profit when clients trade more, not when clients lose money.
- What is the difference between an ECN and an STP broker?
While both provide forms of direct market access, ECN brokers connect multiple liquidity providers in a network where orders can interact with each other. STP (Straight Through Processing) brokers simply route orders directly to liquidity providers without allowing interaction between client orders.
- Do ECN brokers offer leverage?
Yes, most ECN brokers offer leverage, though it may be lower than what market maker brokers offer due to the increased risk management requirements of direct market access. Leverage typically ranges from 1:30 to 1:500 depending on the jurisdiction and regulatory framework.
ECN vs. Other Trading Models
- What’s the difference between ECN and market maker brokers?
ECN brokers act as intermediaries that connect buyers and sellers, while market maker brokers create markets by taking the opposite side of client trades. ECN brokers offer more transparency and eliminate conflicts of interest, while market makers might offer more consistency in liquidity.
- Can ECN brokers manipulate prices?
True ECN brokers cannot manipulate prices as they simply display the best available prices from their liquidity providers and other participants in the network. Any attempt to manipulate prices would be visible to all network participants, making it nearly impossible.
- Is DMA trading the same as ECN trading?
Direct Market Access (DMA) and ECN trading are similar but not identical. DMA provides direct access to exchange order books, while ECN trading specifically refers to trading through an electronic network that matches orders between participants. Many ECN brokers offer DMA as part of their service.
- What is a hybrid broker model?
A hybrid broker combines aspects of both ECN and market maker models. They might route some orders directly to the market (ECN) while taking the opposite side of other trades (market making), depending on market conditions or order size.
- How does dark pool trading relate to ECN trading?
Dark pools are a type of alternative trading system that allows for anonymous trading of large blocks of securities without displaying quotes publicly. While ECNs are designed for transparency, dark pools prioritize anonymity. Some ECN brokers may offer access to dark pools for institutional clients or large orders.
Best ECN Forex Brokers
Fusion MarketsSince: 2017 | Offices:Australia, Vanuatu |
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| Minimum Deposit: | $1 |
| Account currency: | USD, EUR, GBP, AUD, JPY, SGD, THB, and CAD |
| Leverage: | Up to 1:500 |
| Accounts: | Zero, Classic, Demo, Swap Free [Islamic] |
| Instruments Offered: | Forex, Indices, Commodities, Metals, Energies, Shares, Cryptocurrencies |
| Trading Platform: | MT4, MT5, TradingView, cTrader, DupliTrade | Free VPS Hosting |
| Regulation: | ASIC, VFSC |
| Spreads | Raw Spreads + Tight spreads on other CFDs |
| Key Features | Extremely low trading costs, no dealing desk, great customer support, flexible leverage |
| Visit Broker | Broker Review |
FxviewSince: 2009 | Offices:EU, South Africa |
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| Minimum Deposit: | $50 |
| Account currency: | EUR, USD, GBP, CAD, ZAR & AUD |
| Leverage: | Up to 1:1000 |
| Accounts: | RAW ECN | Premium ECN | Swap free/ Islamic Account |
| Instruments Offered: | Forex, Indices, Metals, Energies, Shares , Cryptocurrencies |
| Trading Platform: | MT 4 (EU), MT 5 (Global), ZuluTrade and ActTrader | Free VPS hosting |
| Regulation: | CySEC, FSCA and FSC |
| Spreads: | From 0.0 pips |
| Key Features: | Ultra-tight Spreads | Fast Withdrawals | Dedicated Account Manager |
| Visit Broker | Broker Review |
IC MarketsSince: 2007 | Offices:Australia, Cyprus, Seychelles |
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| Minimum Deposit: | 200 US dollars |
| Account currency: | Multiple base currencies |
| Leverage: | From 1:1 to 1:500 |
| Accounts: | Demo, Raw Spread, cTrader, Standard, Islamic, PAMM |
| Instruments Offered: | Forex, Indices, Commodities, Metals, Energies, Shares, Bonds Cryptocurrencies |
| Trading Platform: | cTrader, MT4, MT5, TradingView | Free VPS hosting |
| Regulation: | ASIC, CySEC, FSA |
| Spreads | Raw Spread 0.0 pips (cTrader, TradingView MT4/5) Standard 0.8 pips |
| Key Features | Ultra-fast Execution, TradingView , Copy trading, Dedicated Account Manager |
| Visit Broker | Broker Review |
Costs and Requirements
- Are ECN brokers more expensive than standard brokers?
ECN brokers typically charge a commission per trade in addition to the spread, which can make them appear more expensive at first glance. However, the spreads are generally tighter, which can offset the commission costs, especially for larger trade volumes.
- What is the typical minimum deposit required for an ECN account?
Minimum deposits for ECN accounts typically range from $100 to $10,000, with $1,000 being common. This is generally higher than market maker accounts due to the direct market access and the need for sufficient capital to cover commission costs.
- How are commissions structured with ECN brokers?
Commissions are typically charged per lot traded (e.g., $3-7 per standard lot) or as a percentage of trade value. Some brokers use a tiered commission structure where rates decrease as trading volume increases.
- Do ECN brokers offer fixed or variable spreads?
ECN brokers offer variable (floating) spreads as they reflect real-time market conditions and the actual prices available from liquidity providers. Fixed spreads are typically only offered by market maker brokers.
- Are there monthly or inactivity fees with ECN brokers?
Some ECN brokers charge inactivity fees if an account doesn’t meet minimum trading requirements over a specified period. These fees vary by broker and are designed to cover the costs of maintaining inactive accounts.
Technical Aspects of ECN Trading
- What trading platforms do ECN brokers typically offer?
Most ECN brokers offer industry-standard platforms like MetaTrader 4, MetaTrader 5, TradingView and cTrader. Some also provide proprietary platforms with advanced features specifically designed for ECN trading.
- Can I see the depth of market (DOM) with an ECN broker?
Yes, a key advantage of ECN trading is access to depth of market information, showing pending buy and sell orders at different price levels. This provides valuable insights into market liquidity and potential support/resistance levels.
- How does latency affect ECN trading?
Latency (the delay between sending an order and its execution) is crucial in ECN trading, especially for high-frequency trading strategies. Lower latency enables faster execution and potentially better prices. Many ECN brokers offer VPS (Virtual Private Server) services to reduce latency.
- What is a liquidity provider in the context of ECN trading?
Liquidity providers are financial institutions (banks, hedge funds, other brokers) that provide buy and sell prices to the ECN. These entities essentially “make markets” by being willing to buy or sell at quoted prices, ensuring there’s sufficient trading volume.
- How does slippage differ between ECN and market maker brokers?
Slippage (the difference between expected execution price and actual execution price) typically occurs less frequently with ECN brokers during normal market conditions due to direct market access. However, during volatile markets, ECN slippage can be more pronounced as the broker doesn’t intervene to guarantee pricing.
Regulatory Aspects
- Are ECN brokers more regulated than standard brokers?
Not necessarily. The level of regulation depends on the jurisdiction where the broker is registered, not their business model. However, the transparency of the ECN model may attract brokers who are comfortable with stricter regulatory oversight.
- How do I verify if a broker is truly an ECN broker?
Look for transparency in pricing (variable spreads), commission-based fee structures, depth of market access, and evidence of multiple liquidity providers. You can also check regulatory filings and independent reviews. Some brokers provide demo accounts that allow you to observe their order execution model.
- Can ECN brokers operate in all countries?
ECN brokers, like all financial service providers, must comply with local regulations. Some jurisdictions have restrictions on forex trading or specific types of brokerage models, which may limit ECN operations in certain countries.
- What regulatory bodies oversee ECN brokers?
Major regulatory bodies include the Financial Conduct Authority (FCA) in the UK, the Australian Securities and Investments Commission (ASIC), the Cyprus Securities and Exchange Commission (CySEC), and the U.S. Commodity Futures Trading Commission (CFTC), among others.
- Does ESMA regulation impact ECN brokers differently than market makers?
The European Securities and Markets Authority (ESMA) regulations affect all brokers operating in the EU, regardless of their model. However, the leverage restrictions may have a more significant impact on ECN clients who previously relied on high leverage for their trading strategies.
| | 4.8/5 |
IC Markets: ASIC | MT4, MT5, cTrader, TradingView | Raw spreads | True ECN | Low-latency execution | |
| 4.8/5 |
Fxview: CySEC | MT4, MT5 | Raw spreads | Dedicated Account Manager | Low-latency ECN routing | |
| 4.7/5 |
Fusion Markets: ASIC | MT4, MT5, cTrader, TradingView | Raw spreads | Forex VPS | Sub-ms latency via VPS | |
| 4.8/5 |
BlackBull Markets: FMA, FSA | MT4, MT5, cTrader, TradingView | Raw spreads | True ECN | Ultra-low latency | |
| 4.8/5 |
TMGM: ASIC | MT4, MT5 | Raw spreads | Low-latency execution | True ECN Broker | Dedicated Acc. Manager | |
| 4.9/5 |
Fpmarkets : ASIC, CySEC | MT4, MT5, TradingView | Raw spreads | Forex VPS | Sub-ms latency via VPS | |
| | 4.3/5 |
GO Markets : ASIC, CySEC, FSC, | MT4, MT5, TradingView, cTrader, | Raw Spreads | Forex VPS Hosting | Ultra-Low Latency | |
| | 4.7/5 |
Global Prime: ASIC | MT4, MT5 | Raw spreads | True ECN | Low-latency agency execution | |
| 4.7/5 |
Blueberry Markets: ASIC | MT4, MT5, cTrader, TradingView | Raw spreads | Forex VPS | Low-latency | |
Trading Strategies with ECN
- Are certain trading strategies better suited for ECN trading?
Strategies that benefit from tight spreads and fast execution, such as scalping, high-frequency trading, and arbitrage, are particularly well-suited for ECN trading. News trading can also be more effective due to the lower latency and more accurate market pricing.
- Can I use Expert Advisors (EAs) with ECN brokers?
Yes, most ECN brokers allow the use of Expert Advisors or trading robots, especially on platforms like MetaTrader that support automated trading. The direct market access and fast execution make ECN environments suitable for many algorithmic strategies.
- Is scalping allowed with ECN brokers?
Generally, yes. Most ECN brokers allow scalping because they profit from commission rather than spread widening or client losses. The fast execution and tight spreads of ECN platforms make them particularly suitable for scalping strategies.
- How does news trading differ on an ECN platform?
News trading on ECN platforms provides more accurate price movements reflecting real market reactions. Unlike market makers who might widen spreads or pause trading during news events, ECN brokers typically maintain service, though liquidity and spreads may naturally fluctuate based on market conditions.
- Is hedging possible with ECN brokers?
Yes, most ECN brokers allow hedging (opening opposite positions on the same instrument). The direct market access model means both positions are actually executed in the market rather than being netted internally by the broker.
Market Conditions and ECN Trading
- How do ECN brokers handle periods of extreme market volatility?
During extreme volatility, ECN brokers continue to provide the best available prices from their liquidity providers. However, spreads may widen significantly, and slippage may occur due to rapidly changing market conditions. Unlike market makers, they don’t typically intervene to stabilize prices.
- Are there times when ECN trading is disadvantageous?
ECN trading may be disadvantageous during extremely thin market conditions (like during major holidays or late Sunday/early Monday when markets open) when liquidity is scarce and spreads widen significantly. Also, for very small position sizes, the fixed commission may make trades proportionally more expensive.
- How do ECN brokers handle “flash crashes” or extreme price movements?
ECN brokers reflect real market conditions, including flash crashes. They don’t typically intervene to protect clients from extreme price movements, though some may have circuit breakers or other risk management tools in place. This transparency can be both an advantage and a risk.
- Do ECN brokers offer guaranteed stop-loss orders?
Most pure ECN brokers don’t offer guaranteed stop-loss orders as these require the broker to take on market risk. Some hybrid brokers might offer this feature, usually for an additional premium.
- How does market depth visibility help in volatile markets?
Market depth visibility allows traders to see pending buy and sell orders at different price levels, providing insights into potential support and resistance. During volatile markets, this information can help traders assess liquidity at various price points and make more informed decisions.
Practical Considerations
- Are ECN accounts suitable for beginners?
ECN accounts generally have a steeper learning curve and higher capital requirements, making them more suitable for intermediate to advanced traders. Beginners might find the variable spreads, commission structures, and direct market volatility challenging to navigate initially.
- Can I switch from a market maker broker to an ECN broker easily?
Switching is straightforward technically – you close positions with your current broker, withdraw funds, and open a new account with an ECN broker. However, you should be prepared for differences in trading conditions, platform features, and cost structures.
- Do ECN brokers offer Islamic (swap-free) accounts?
Many ECN brokers offer Islamic accounts that comply with Sharia law by not charging or paying swaps (overnight interest). However, they may charge alternative fees to compensate for the interest they would normally collect through swaps.
- Can I use multiple ECN brokers simultaneously?
Yes, using multiple ECN brokers can provide advantages such as redundancy in case of platform issues, access to different liquidity pools, and the ability to take advantage of different commission structures for different trading strategies.
- What happens if an ECN broker goes bankrupt?
If an ECN broker is properly regulated, client funds should be held in segregated accounts separate from the broker’s operational funds. This provides some protection in case of bankruptcy. Additionally, many jurisdictions offer investor compensation schemes up to certain limits.
Advanced ECN Topics
- What is ECN aggregation?
ECN aggregation involves combining liquidity from multiple ECNs or liquidity providers to offer clients a more comprehensive view of the market and better execution prices. This is particularly valuable for traders seeking the best possible execution across different venues.
- How does co-location impact ECN trading performance?
Co-location involves placing trading servers in the same data center as the ECN matching engine to minimize latency. This can provide a significant advantage for high-frequency trading strategies where execution speed is critical, potentially improving execution prices and reducing slippage.
- What is the difference between ECN and STP+ECN hybrid models?
A pure ECN model matches orders between participants in the network, while STP+ECN hybrids route client orders to multiple liquidity providers (STP component) and also allow interaction between client orders within their own network (ECN component). The hybrid approach aims to maximize available liquidity.
- How do prime brokerage services relate to ECN trading?
Prime brokerage services allow institutional traders and hedge funds to access multiple ECNs and liquidity venues through a single relationship. This provides consolidated clearing, settlement, and reporting, along with potentially better leverage and cross-margining opportunities.
- What technological innovations are impacting ECN trading?
Recent innovations include artificial intelligence for smarter order routing, blockchain technology for more transparent and efficient settlement, advanced data analytics for liquidity optimization, and improved network infrastructure reducing latency to microsecond levels. These developments continue to enhance the efficiency and capabilities of ECN trading.
ECN Trading Brokers – CFD Brokers List
Choosing the correct ECN Trading Broker for trading is critical to your trading journey, there are many factors you should take into consideration specifically for ECN trading before settling with the broker you may be trading with or when switching to a new choice broker which is best suited to your needs and factors which are important to you personally.
Get the list of the Best CFD Trading Brokers to trade Forex, Stocks, Indices, and Commodities
– Instant ECN Execution With ECN Brokers
Broker | Regulators | Max. Leverage | Spreads | Trading Acc. | Instruments | Connect |
 | ASIC, CySEC | Up to 1:500* | From 0.0 pips | Broker Type: STP | ECN | DMA 2 Accounts | Forex, Indices, | |
 | ASIC, VFSC | Up to 1:500 | From 0.0 pips | Broker Type: ECN 4 Accounts | Forex, Indices, | |
 | AFSL, ASIC, CySEC, FSA | Up to 1:500 | From 0.0 pips | Broker Type: | Forex, Indices, Commodities, Metals, Energies, Shares, Crypto | |
 | ASIC, VFSC, CMA, FSC | Up to 1:1000 | From 0.0 pips | Broker Type: True ECN 2 Accounts | Forex, Indices, | |
| | ASIC, VFSC | Up to 1:500 | From 0.0 pips | Broker Type: 2 Accounts | Forex, Indices, Commodities, Metals, Crypto, Shares & Bonds CFDs | |
 | CySEC, FSCA and FSC | Up to 1:1000 | From 0.0 pips | Broker Type: ECN | STP 3 Accounts | Forex, Indices, Commodities, Metals, Energies, Shares, Crypto | |
 | ASIC, FSC, FSCA, FSA | Up to 1:1000 | From 0 pips | Broker Type: ECN | STP 2 Accounts | Forex, Indices, Commodities, Metals, Energies, Shares, Crypto, ETFs | |
 | CIMA, ASIC, FCA | Up to 1:500* | From 0.4 pips | Broker Type: ECN | STP 4 Accounts | Forex, Indices, Metals, Energies, Shares, Crypto | |
 | FCA, SCA, ASIC,FSCA, FSC, FSA | Up to 1:1000* | From 0.0 pips | Broker Type: ECN | STP 5 Accounts | Forex, Indices, Metals, Energies, Shares, Crypto | |
 | HCMC / ESMA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 2 Accounts | Forex, Indices, Commodities, Metals, Shares CFDs, Crypto | |
 | CySEC, FSC, FSCA, ASIC | Up to 1:3000 | From 1 pip | Broker Type: ECN | STP 6 Accounts | Forex, Indices, | |
 | FMA, FSA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 6 Accounts | Forex, Indices, | |
 | ASIC, BaFin, CIMA, UAE VARA/SCA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 3 Accounts | Forex, Indices, Commodities, Metals, Energies, Shares, Crypto | |
 | ASIC,VFSC, FSC | Up to 1:500 | From 0.0 pips | Broker Type: ECN | MM 2 Accounts | Forex, Indices, | |
 | ASIC, CySEC, FSC | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 2 Accounts | Forex, Metals, Commodities, Shares, Crypto, Bonds | |
 | CySEC, FSC, FSCA | Up to 1:2000 | From 0.0 pips | Broker Type: ECN | STP 4 Accounts | Forex, Indices, | |
 | CySEC, FCA, FSCA | Up to 1:1000 | From 0.0 pips | Broker Type: ECN | STP 5 Accounts | Forex, Indices, | |
 | AFSA, FSCA, MISA | Up to 1:1000 | From 0.0 pip | Broker Type: ECN | STP 4 Accounts | Forex, Metals, Indices, Commodities, Stocks, Crypto | |
 | FCA, FSA | Up to 1:500* | From 0.0 pips | Broker Type: ECN 2 Accounts | Forex, Indices, | |
 | ASIC, FSC, FSCA | Up to 1:1000 | From 0.0 pips | Broker Type: ECN | STP 3 Accounts | Forex, Metals, Indices, Commodities, Equities, Crypto | |
 | SVGFSA, FSC, FSA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 3 Accounts | Forex, Indices, | |
 | FCA, ASIC, SCA, FMA, FSC, FSA | Up to 1:500 | From 0.0 pip | Broker Type: ECN | STP 2 Accounts | Forex, Indices, Commodities, Metals, Crypto | |
 | ASIC, FSA | Up to 1:500 | From 0.0 pip | Broker Type: ECN | STP 3 Accounts | Forex, Indices, Commodities, Metals, Crypto | |
 | FCA, ASIC, CySEC, FSA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 6 Accounts | Forex, Indices, | |
 | CySEC, MISA | Up to 1:1000 | From 0.0 pip | Broker Type: ECN | STP 1 Accounts | Forex, Metals, Commodities, Indices, Equities, Crypto | |
 | FSC | Up to 1:2000 | From 0.0 pips | Broker Type: ECN | STP | MM 5 Accounts | Forex, Indices, | |
 | BVI FSC | Up to 1:1000 | From 0.0 pips | Broker Type: MM | ECN 6 Accounts | Forex, Indices, Commodities, Metals, Shares CFDs | |
 | CySEC, FSA, FSCA, VFSC | Up to 1:2000 | From 0.0 pips | Broker Type: STP | ECN 6 Accounts | Forex, Indices, | |
 | FSC , FSRA | Up to 1:3000 | From 0.0 pip | Broker Type: ECN | STP 3 Accounts | Forex, Metals, Indices, Crypto, Stocks CFDs | |
 | ASIC, VFSC, CySEC, FCA | Up to 1:500 | From 0.0 pip | Broker Type: ECN | STP 2 Accounts | Forex, Indices, | |
 | FINMA | Up to 1:100 | From 0.1 pip | Broker Type: ECN | STP 7 Accounts | Forex, Indices, | |
Kevin George is an active trader of stocks, forex, commodities and crypto with over 15 years of market experience. He hold a master's degree in finance and mix microeconomic studies of company financials with a big-picture macroeconomic view.
Kevin earned a bachelor's degree from Robert Gordons University in Scotland. He returned later to earn his master's degree in finance.
Kevin has written for investopedia, Seekingalpha with his resume on Muckrack and LinkedIn