What is STP in Forex?
Straight Through Processing (STP) brokers, are brokers that pass orders directly to a liquidity provider without the intervention of a dealing desk. Liquidity providers can be big banks, other forex brokers and traders, and companies who provide liquidity to the markets. By doing the STP process, a broker can offer clients better quotes, faster order execution, lower and variable spreads, a liquid market, and reliable trading.
An STP broker routes some or all of the trader’s orders into the market through liquidity providers. The STP broker, in that sense, functions as a hybrid model between the ECN broker and market maker broker. Take note that most STP brokers add a small markup into the spread which reflects their profit and eliminate the conflict of interest between the trader and a forex broker.
The Advantages of STP Network
- Lower spreads
- No dealing-desk intervention
- Better buy/sell quotes
- Variable spreads
- Offers traders to trade at all times
- Improves the broker’s reliability compared to Market Maker broker
What is STP Broker?
STP (Straight Through Processing) broker offers clients a better market execution, bid and ask price and improved terms compared to other types of forex brokers. The STP broker requires no dealing desk, removing the broker’s intervention as a market maker. However, the STP broker passes on all or some of the trades based on the broker’s risk management.
7 Best STP Forex Brokers
Forex trading, and especially in the US has always been surrounded by market maker structures where all transactions were filled in house. In the case of Forex.com, the firm decided to offer a more transparent approach under an STP structure, allowing traders to gain access to giant liquidity providers and top-notch execution.
If you are interested in trading currencies in the US, you should be aware that it is a pretty reduced maker and that offering of brokerage is corned by just a group of companies, being Forex.com one of the very best!
Pepperstone is an Australian broker regulated by top-tier regulators in Australia and in the United Kingdom, considered as one of the leading forex brokers in the industry. The broker offers a huge selection of products on various trading platforms and the ability to trade with social/copy trading platform.
Pepperstone offers the Standard STP account and the EDGE/Razor which is an STP/ECN account. The broker connects traders with some of the best 22 liquidity providers offering tight spreads with no additional commission and advanced market execution.
Forex Time was established in 2011 and is one of the most popular trading brokers in the industry. The broker is highly regulated by CySEC, FCA, FSC, IFSC.
FXTM offers one of the best ECN/STP trading account with full transparency, tight spreads, no dealing desk, and outside market hours. FXTM STP account offers a leverage of up to 1:1000 with a minimum deposit of $/€/£ 500 and variable spreads down to 0.1 for EUR/USD with a commission of $2 per lot. The ECN/STP account can be processed through the ECN network or the STP process which does involve a dealing desk, removing the conflict of interest.
Trio Markets is offering online forex and CFD trading platform with various account types including a straight through processing (STP) solution. Trio Markets STP account removes any dealing desk involvement which improves significantly the speed of execution, offering better trading conditions, and eliminates any conflict between the trader and the broker.
Trio Markets requires a low minimum deposit of $5000 for the STP account and offers a leverage ratio of up to 1:300.[
Established in 2005, FP Markets is an Australian broker offering online forex and CFD. The broker is regulated by ASIC, offering and ECN and STP accounts.
FP Markets offers two accounts: the ECN Raw account which is based on the ECN network and requires a minimum deposit of $1000 AUD providing traders a zero spread on some of the products. The Standard account is a Straight Through Processing (STP) execution offering traders similar terms to the ECN account, however, while traders pay a commission for the ECN Raw, the STP account has a wider spread but no commissions. The minimum deposit for the Standard STP account is 100 AUD with a leverage of up to 1:500.
Founded in 2013, 24Option is an award-winning broker offering a wide range of trading products including over 160 stocks through MT4. The broker is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC). 24option is STP/Market Maker broker offering clients integration of liquidity providers. The STP account has a minimum deposit of $100 with 1:30 leverage for retail traders and 1:400 for professional traders.
eToro is one of the leading forex and CFD brokers in the world with 3 million users and 200,000 active users. The broker offers 47 currency pairs and a total of 471 financial products with a leverage of 1:30 on some of the instruments. eToro is using the market maker model with a combination of STP (Straight Through Processing) and NDD (No-Dealing Desk).
eToro platform offers high execution and low spreads due to the combination of STP and NDD which provide tier liquidity providers to connect with eToro’s traders. Moreover, this combination eliminates the interest of conflict, creating a reliable relationship with the broker.
66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
STP (Straight Through Processing) account offers you better trading terms that can improve your chances to become a profitable trader. First of all, An STP broker does not trade against a client’s orders, removing any conflict of interest between the trader and the broker. In addition, an STP account allows you a better market execution as well as tighter buy/sell quotes.
The fact that trading through STP broker offers you high liquidity through top liquidity providers should make you confident with your broker and eventually, improve your trading performance. Choosing an STP broker can be a huge consideration before you open your trading account. The online brokers on the list above are some of the top STP brokers in the forex and CFD industry.
STP Forex FAQ
What is the difference between STP and ECN account? STP functions as a hybrid model between ECN broker and market maker broker which means not all trades must go through a liquidity provider. If you wish all your trades to go through a liquidity provider, an ECN account is the solution, however, brokers are aware of this flaw in the STP account and compensate you with lower commissions and a low minimum deposit. Hence, an STP account can be a better solution for your needs.
How do brokers earn on STP account? Forex brokers charge a spread on STP accounts, however, remember that an STP broker can filter some of the trades, meaning the broker can route trades through the STP network or remain a market maker. That is how the STP model works.
Why should I choose a forex STP account?
First of all, STP forex broker removes the interest of conflict between the trader and the broker so you do not need to worry that the broker trades against you. Then, you have other factors such as the speed of connection, the liquidity of prices, bid/ask spread, ability to trade outside market hours, etc. For a trader, every element that can improve your confidence and trading conditions must be a consideration when choosing a forex account.