STP FOREX BROKER:- Well,STp stands as the straight through processing .Where forex brokerage model involves sending client orders directly to the market without passing them through a dealing desk. A STP forex broker is a forex brokerage firm that provides wholesale forex services orders to institutional traders. It is fully automated dealing system in the forex trading. It is possible to see the transaction speed from the journal section of MT4 and MT5.There is best STP forex broker:-BDS wiss, Blackball markets, pepper stone also.
ECN FOREX BROKER:- An ECN stands as electronic communication network. It is a computer based system which displays the best buying and selling quotes from a number of market participants. ECN brokers offer faster execution of orders and usually at more favorable prices. ECN brokers charge a fixed commission fee for every transaction. This is their profit. There are the best ECN forex brokers:-Forex.com, FXTM, and Robo forex also.
IS STP BETTER THAN ECN?
ECN accounts can offer tighter spreads and a cheaper cost of trading in liquid market conditions, but STP brokerages can offer a similar ease and cost of execution .without the disadvantages of the increased cost from a dealing desk.
WHAT IS A STANDARD STP ACCOUNT?
The vantage standard STP account is the ideal trading account for traders ready to move into the live trading environment. With the vantage standard STP account trader will gain direct access to institutions grade spreads and dark liquidity pools for increases liquidity.
HERE ARE THE SOME IMPORATNT DIFFERENT FEATURES BETWEEN THE STP
FOREX BROKERS AND ECN FOREX BROKER THAT IS FOLLOWS AS:-
- LIQUIDITY
- ORDER ROUTING
- SPEED OF EXECUTION
- TRADING FEE STRUCTURE
- LIQUIDITY: – Well, the STP forex broker has an internal liquidity pool that is represented by different liquidity providers. The two main types of liquidity include market liquidity and accounting liquidity also. It plays an important role in the STP forex brokers to manage the market skills and bid/ask prices. Current, quick and cash ratios are most commonly used to measure liquidity. In this way, the offshore market maker company acts as liquidity provider. STP forex brokers aggregate buy and sell prices from multiple liquidity providers. On the other hand, In the ECN-model, liquidity on the trading platform is generated by all participants in the trading network. The process of matching their orders with each other is called internalization. This is because it happens within the platform and is not exposed to external execution. ECN forex broker is an automated component of trading that connects traders to liquidity providers including banks brokerages and even other traders. Apart from these, there are a lot of similarities between an STP and an ECN forex broker, but the main real difference is routing. As mentioned above, the STP can choose to deal with different liquidity providers out of their liquidity pool, while the ECN acts as a kind of hub.
- ORDER-ROUTING:- In STP[straight through process] forex broker, it is straight-through processing which understand automated process done purely through electronic transfers with no manual intervention involved. Its popular uses are in payment processing as well as the processing of securities trades. It is beneficial than other forex brokers process. STP forex broker only who use a straight through processing model to usually have a fully automated dealing system in the forex trading. This process is same like as the cryptocurrencies. When an STP broker accepts a customer’s order and the broker is considered to be” working” that order.
The STP systems works by processing each trade electronically and entering them directly and anonymously into a group of interbank forex market. Whereas, an ECN is an automated system that publishes orders entered by market participants directly to third parties and individual traders. ECN brokers are non-dealing desk brokers, which mean it provides lower transaction costs in forex market by reducing these intermediaries in the trading. ECN forex brokers are utilized by online brokerages for institutional investor’s day traders also. Due to their low speed and low costs etc. ECN brokers only route by traders orders to the central interbank market. Small investors use the ECN forex brokers to access the currency and trading system. Order-routing system means the back-end system that performs image routing, currency routing also. IN ECN trading, order routing is done by stock market where the currency buys or sell.
- SPEED OF EXECUTION:-The Straight through process [STP] technology used by these brokers means that trade execution is done by digitally and at high speeds. Some market makers brokers also use software to process trades, but many executes traders do them manually through a dealing desk. Order execution speed basically refers to the time between the sending of orders to a broker and receiving the answer from it. There are several ways to execute a trade and they encompass manual as well as automated methods by forex trading. This all process depends on the execution speed routed. However, execution speed is the time that takes for a broker to complete a trade-from the second. Where the order is placed. On the contrast, In ECN [Electronic communication network] forex brokers, it is an automated system that publishes order enterd by market participants directly to third parties and individual traders. Those orders are then automatically executed by matching buy and sell orders at the best price available. ECN trading is an extremely efficient process using by sophisticated technology. ECN forex brokers do trade in lower costs and take more trading time.
- TRADING FEE STRUCTURE:-STP accounts have no commission fees attached. An STP broker makes money from spreads rather than just capitalization. In a broader sense, STP means that the broker where company plays the role of a silent connection provider between the market and the top best forex brokrs. There are several ways that an STP brokerage can make a profit. STP brokers can charge commissions as well as gain from the spreads. Straight through process [STP] forex brokers can offer variable and fixed spreads. The fees can either be a commission or a markup on the currency prices. As an STP forex brokers, generate the profit only from the spreads of realized transactions not for the losses of forex clients. While, trading costs for one forex broker leads to EUR/USD at ECN forex brokers will range from 6 USD to 18 USD.ECN traders can only be compensated through a small commission for trades. ECN [Electronic communication network] forex brokers fees is a term used to lump all of the fees charged by networks and exchanges that much buy and sell orders. ECN is an professional traders who want the best possible trading conditions. To open the ECN account, traders need to make an initial deposit of $1000 and better understanding of the forex market and Traders easily invest their money at low cost of price.
CONCLUSION:- Well, ECN forex brokers always charge a commission on trades, whereas STP brokers can charge commissions and gain from the spreads. ECN forex brokers always offer variable spreads, while STP forex brokers can offer fixed spreads. Forex trading company offers many types of incentives or financial reward that is given to traders for making successful traders in the foreign exchange market. Forex market offers a good selection of ECN and STP forex brokers different features .so that trader can make the mast of their trading ding career.
