Market Makers Forex Brokers

What is an STP Forex Broker

 

Definition of STP Order Execution

STP means 'Straight Through Processing' and it is a technique that optimizes the speed at which trading orders are processed and executed. This technique allows the automatic settlement of orders (same-day settlement) without manual intervention.

What is an STP Forex Broker?

STP Brokers are Forex Brokers using the 'Straight Through Processing' as their main execution model to transfer directly the trading orders of their clients to liquidity providers. Liquidity providers include Banks, Investment Corporations, Hedge Funds or even another Forex broker. Actually, STP brokers consist the middle selection between Dealing-Desk brokers (Market Makers) and pure ECN Forex brokers.

STP Broker Quotes

STP brokers are displaying their own quotes which are tight correlated to the actual ECN interbank quotes. The linkage between an STP broker and its liquidity is based on complex algorithms that are able to distinguish the nature of any order and then execute it instantly.

Trading Cost when trading with STP Brokers

As in the case of ECN brokers, STP brokers have access to many different liquidity providers, allowing them to offer tight spreads.

STP brokers make profits from:

(1) From the spread between ask and bid (usually EURUSD spread 1.1 to 1.9 pips without commissions)

(2) Some STP brokers may charge trading commissions, but most STP brokers make money only by the spread.

What are the Advantages of Trading with an STP Forex Broker?

STP brokers are currently very successful in the Foreign Exchange market as they can combine some of the advantages of ECN brokers with the advantages of Dealing-Desk brokers:

(1) Fast Order Execution without delays (as ECN brokers)

(2) Tight spreads especially as concerns EURUSD, GBPUSD, and USDJPY (as ECN brokers)

(3) Normal SWAP charges for overnight positions which make them convenient for long-term traders (as ECN brokers)

(4) Great selection of trading platforms allowing Automated Trading, Scalping, and Hedging (as ECN brokers)

(5) No Dealing Desk, meaning no conflict of interest and that is why an STP broker is considered transparent with its clients (as ECN brokers)

(5) Low minimum account requirements, which is usually 100USD (as Market Makers)

(6) Welcome Bonus promotions, usually in the form of credit bonus (as Market Makers)

(7) The anonymity of Trading, as an STP broker has no Dealing Desk monitoring their client orders. All trading orders are executed anonymously and automatically via the liquidity network (as ECN brokers)

Final Thoughts

STP brokers are ideal for semi advanced and advanced traders. Forex beginners should better choose a Market Maker while Forex Pros will prefer a pure ECN Forex broker. STP brokers combine some of the advantages of all other execution types offering narrow spreads, fast execution, state-of-the-art technology and at the same time low minimum account requirements and even welcome bonus for new customers. In addition, you don’t trade against your broker as in the case of Market Makers therefore, you can avoid the conflict of interest between trader and broker. In overall STP brokers have the ability to cover the needs of a lot of different traders and that is why this execution model has become so popular and so successful nowadays.

Compare the Accounts of STP Forex Brokers

In the following table, you may compare the trading terms of some popular ECN Forex Brokers. Note that only ForexBroker Inc. welcomes US traders.

ECN BROKER

REGULATION

TRADING PLATFORMS

ACCOUNT INFO

OPEN ACCOUNT

 

» HOTFOREX

FCA UK, CySEC, MiFID

METATRADER-4, WEBTRADER, PAMM

 

MOBILE TRADER

Minimum Size: $50

-Leverage up to 1:1,000

-Welcome Bonus up to 100%

 

 

► HotForex Account

 

» XEMARKETS

FCA UK, CySEC, MiFID

METATRADER-4, WEBTRADER

 

MOBILE TRADER

Minimum Size: $50

-Leverage up to 1:200

-Welcome Bonus up to 40%

 

► XEMarkets Account

 

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◙ What is an STP Forex Broker?

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