STP Forex Brokers
If you are a retail trader who launch regular trading, then you must want more controls on your trade. This control covers not only buy-sell but also checking the bids from the other-end traders so that you can get clear details of your trade. But most of the time money makers doesn’t support this process & you’ve to depend on their pricing information. On the other hand, although, ECN brokers give you the access to market directly, you need a higher minimum deposit and also higher minimum trade per lot.
That’s why it is necessary to have a trading processing between MM & ECN which will support you to access the market, but in a controller manner. And there the term STP comes. Today, tons of STP forex brokers are getting more popular day by day. And if you are new to this money making world, then you may want to know more details about STP brokers. And that is the core topic of today’s discussion. Hope you’ll enjoy.
What is an STP Broker?
STP or ‘Straight through Processing’ broker is basically a hybrid model. It inherits from both MM & ECN brokers but the core goal is to ensure an inexpensive, but manipulation free trading experience. STP brokers give you a limited access to the market or forward your query directly to the market. But they always check if your action conflicts broker’s policy or not. It makes STP brokers are slower in trading. But on the contrary, it also makes the trading inexpensive which we’ll talk about in details later.
How does STP Work?
This process is very simple. When you want to buy or sell new instruments, the market marker will directly forward your trade to the market instead of all types of manipulation by themselves. And that’s how without accessing the market directly, STP brokers give you the complete authorization on your trade.
The Differences between the STP and ECN Model
If you want to know the difference between this two models, it is better to know the total trading model by some non-technical & easy words. So, let’s start.
The first question is that how the trading actually works?
- The answer is easy. First you need to know the rate of a buyer or seller from the other end. Now, if you are a seller, you’ve to know the standard rate by which a buyer is agree to buy. In a similar manner, when you want to buy something, then you need to know the asking price from the seller.
- Now, you don’t know the buyer or seller who are in the other side. So, you need a negotiator. Typically, every broker provides this negotiators who are called Market Makers or dealing desk. They collect the quotes from both sides and make the trade successful. But most of the time market makers manipulates the rate by their own which is conflicting for both side traders. That’s why an automation was necessary.
- Now ECN is an electronic networks who collect real time quotes from different sources and if you want to trade you can access, check those quotes directly through this network & launch your trade without any market maker. As a result manipulations becomes almost zero. This is the model of ECN brokers.
- But to run ECN servers continuously, it needs more expenses. As a result, minimum trading volume is kept higher to balance the cost. But not everyone has the same ability to launch bigger trades. As a result a hybrid system between the ECN & MM is very necessary.
- To do so, STP model comes. Market makers directly forward you trades without tempering it by their own. So you may not be able to access the market directly, but you can your exact quotes to the market through MM. Now interested buyers will quote & requote and finally, the qualified trader will gain the win. Here market marker will now make any impact. They’ll act only like a messenger.
STP vs ECN Forex Broker
|STP Forex Broker||ECN Forex Broker|
|Minimum deposit of STP Forex Accounts are lower.||Minimum deposit for ECN brokers are higher than STP & MM.|
|Trading Process execution time is slower.||Trading time is the fastest.|
|You’ve to deal with lots of requotes.||All dealings are done automatically.|
|Market manipulation is notably lower.||Market manipulation is the lowest.|
|More available than ECN||Less available than STP.|
How to Choose the Best STP Forex Broker?
Although it differs trader to trader depend on the budget, trading experiences & knowledge of money making, we can check the following common factors during choosing STP broker for you:
- Broker’s Location & Regulation: Checking the regulation is the primary step because broker is globally known by the quality of its regulation. If you see a broker is regulated by popular authorities like CySEC, FCA etc. then you should be tension be about your found safety and broker’s quality.
- Then try to choose a broker which’s HQ is located in your country or area. May be you are thinking that why should you consider HQ location where the total process is web based. The reason behind this fact is the consistency of support. If your broker is located in your area, then the time zone will be the same. Besides, every broker focuses on their local client and local language is always available for support.
- Trading Spreads & Platform: So, regulation is location is checked. Now it’s time to check the amount of spreads & the available trading platform for money making.
- Trading Style & Trading Instruments: There are lots of trading instruments like Currencies, CFDs, Metals, and Shares etc. Now if you want to trade only currencies then you can start your STP forex account with almost all brokers. But for wide varieties of trading instruments, you’ve to research the availability of instruments and also their safety features. The retailing style is also important.
- Deposit Amount & Payment Method: Try to choose a broker who provides deposit and withdrawal methods those are common to you. Additionally, also check the charges associated for the payment methods. And if they seem reasonable to you, then it’s time to say hello trading.
FAQ: Frequently Asked Questions
Is an STP Forex Broker the Best Choice for You?
If you’ve a handsome minimum deposit, then we’ll recommend you to look for an ECN broker. But if you want to start money making with a reasonable amount, then STP is the best choice for you.
ECNs VS STP?
Processing time of your trading is faster in ECN. But the minimum deposit is lower in STP. In ECN you’ll can access directly to trade market, but on the other hand you can’t launch your trade with a small amount because in ECN trade per lot is higher than STP.
Is There Any Disadvantages of the STP?
There are plenty of requotes in STP. This is a disadvantage. Besides, STP broker’s trading process is the slowest of all brokers. This is also a big disadvantage.
ECN vs. STP: Which is better
In fact, it is hard to tell which one is better. But if you are a beginner, then you can start with STP because it’ll clear your trading basics & also give you a better vision of money making. Then if you become successful in your primary stage and want to move your trading to a new and larger dimension, then ECN will be the better we guess.
You can find tons of STP brokers list online & this long list made you confused in many cases. But after reading the whole discussion, we hope all your confusions & misconceptions become clear. And from today, we can research STP forex broker properly by yourself and choose the right one for your future trading. Cheers.