Whenever you are browsing a website of one of the Forex brokers, you will often notice some information about STP. Brokers often refer to their Execution type as STP, while others may call their accounts STP. There are even brokers that claim to offer so-called “STP services”.
So what exactly is STP, and who are these STP Forex Brokers? STP itself stands for Straight-Through Processing, which means that your orders are received and executed without broker’s intervention. In other terms, the STP Broker would be the opposite of a Dealing Desk Broker. Simply put, STP FX Broker is the one that executes your orders without sending you requotes.
Yes, it is never possible to get a requote from an STP Forex Broker, and no, STP is not the same as ECN. If you are trading with an STP FX Broker, it doesn’t mean that your order is sent to the market, FX STP Brokers can be Market Makers themselves.
The number of STP FX Brokers or just brokers that have STP accounts in their range of products is quite large. We at TopForexBrokers take a look at the trading conditions, and reputation of the FX STP Brokers every quarter, to selects the ones performing the best.
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As many FX STP brokers will be taking a position against you when trading, it is crucial to find a broker that can be trusted. Note that a broker that is expecting you to fail is not necessarily a bad option, as bad as it may sound. In many cases, you will get better pricing and faster execution. What you should really be careful about is the broker’s reputation. As there are many regulated and unregulated FX STP brokers, it is vital to find a safe place for your deposits, which is why when we evaluate brokers, we make sure to analyze them in minute detail, to ensure that you can find the one that matches your exact needs.
There are many brokers out there that claim to be ECN, even more claim to be STP forex brokers, and of course some claim to be Dealing Desk brokers. While distinguishing these is quite easy, it may be a challenge for inexperienced traders to see exactly where the lines should be drawn, which is why we shall define each type in detail to illustrate what the differences between them are.
Dealing Desk Execution – is a process of manual intervention in the trading process. A dealer has to confirm or deny your trade, which in turn may result in requotes. Such execution often provides best pricing, but the execution speed suffers as a result.
Straight-Through Processing (STP) Execution – is a process of trading without any manual intervention from the broker’s side. You get pricing on your platform and once you place a trade, it will be executed at the best available price. Brokers may choose whether or not to put your account into clearing. If not cleared, you will be enjoying great trading conditions. If cleared, an FX STP Broker will probably execute your orders comparably slower.
Electronic Communication Network (ECN) Execution – is a process when orders sent directly to the market. This is the only type of execution where you can be 100% sure you are actually acquiring assets. The pricing will depend on how well the broker managed to negotiate with Liquidity Providers. Execution speeds are usually quite good, although they may depend on the broker’s infrastructure. Note that there are many ECN Brokers that are, in fact, STP Forex Brokers.
When choosing the execution on your forex trading account, you have to a general understanding of how important the speed of execution is for you and how tight spreads are for you. In most cases, we advise our readers to go for STP Forex Brokers, and if you start experiencing worse trading conditions than you did before, we advise you to switch your forex broker.