ECN

ECN or "electronic communications networks" are computerized order matching systems. When a day trading order to buy or sell a particular stock or security is sent to an ECN, the order is matched to an equal and opposite order in less than a second. Until recently, only institutions could day trade via ECNs.This allowed them to buy and sell stocks outside regular stock market hours (when most earnings announcements took place). This was obviously bad news for the small investor, who had to wait for the market to open. This state of affairs ended in 97, when Island (who you will have heard of) opened to the public. The growth in day trading via ECNs has been extreme, taking business away from more traditional methods. Due to execution speed and transparency, ECNs have become the weapon of choice for day trading, until the arrival of spread betting opened up yet another alternative.