Forex Brokers with Straight Through Processing (STP)

Richard Montana | October 31, 2022

If you are looking to trade forex online and on the hunt for a reliable broker, you may have come across the term STP forex broker. Whilst the different types of brokers may seem complicated at first, it really is quite simple when you break them down into the main categories which are: STP, ECN and market makers.

The STP (Straight Through Processing) technology requires no dealing desk and is the model which is used by many forex brokers. In this instance, orders are routed to the broker’s liquidity providers, and prices are executed at the bid/ask rate provided by liquidity providers.

What is an STP forex broker?

STP (Straight Through Processing) is a forex brokerage model that involves sending client orders directly to the market without passing them through a dealing desk. This means that there should be no interference between you and the market, so you can get your trades executed at the best possible prices without any conflict of interest with your broker.

One of the main advantages of STP brokers is the fact that orders are filled more quickly, and trade execution is seamless, which in turn helps traders to take advantage of market conditions without the broker interfering in any manner.

With an STP account, you can gain direct access to institutional grade spreads and dark liquidity pools for increased liquidity. This means that you can get favourable trading conditions at all times, something that you might not get from a dealing desk broker or market maker broker in comparison.

How do you know if a forex broker is STP?

It is possible to see the transaction speed from the journal section of MT4 and MT5. Companies with average transaction speed between 80 and 140 milliseconds are most likely a STP Broker. The faster a transaction is sent to the market, the lower the slippage risk is. This can be the difference between a good and bad trading strategy, especially if you are using a scalping system that relies on small price movements.

What is the difference between a market maker, ECN and STP broker?

Unlike ECN/STP brokers, a market maker broker does not usually pass on client trades to liquidity providers and instead will provide their own liquidity. They are therefore obliged to pay for client’s beneficial trades with their own money, meaning that client’s losses are earnings for the broker. The general term for them is B-book brokers. You can see how this might lead to a conflict of interest and it can be worrying to know that your broker is taking the opposite side of your position.

Hence, this is why many forex traders will look for an STP or ECN broker as these are NDD forex brokers who do not have a dealing desk so should not interfere with your trades. An STP forex broker could be considered a hybrid between market makers and ECN brokers.

ECN accounts can offer tighter spreads and a cheaper overall cost of trading in liquid market conditions, but STP brokerages can offer a similar ease and cost of execution without the disadvantage of the increased cost from a market maker.

Which one is better ECN or STP?

ECN brokers are considered to be more transparent. ECN brokers only route orders to the interbank market, whereas STP brokers can route orders to any of their liquidity providers such as banks or interbank exchanges.

ECN brokers always charge a commission on trades, whereas STP brokers can charge commissions and gain from the spreads by adding a mark-up.

STP accounts may be bridged to larger brokers or exchange houses, which can result in slower trade execution times and a few re-quotes.

From my experience, ECN brokers have lower costs overall and faster execution speeds. They are my top choice when it comes to what type of trading broker to choose. If you are an active day trader, then costs can add up over the long term which is where ECN broker savings can come in handy. If you plan on holding traders for the weeks or months, you probably might not notice that much of a difference.

What are the advantages of an STP forex broker?

  • Quick trade execution speeds
  • No broker interference
  • Access to some of the best bid/ask prices
  • Deeper liquidity pools
  • Can trade forex with both variable and fixed spreads

What are the disadvantages of an STP forex broker?

  • Some forex brokers claim to be an STP but are market makers
  • Not always as reliable as an ECN broker
  • Can be spread mark-ups
  • Possible trade delays (slippage) and requotes

Who are the best STP forex brokers?

There are hundreds of STP brokers that you can trade forex with. The majority of them will offer a great selection of major, minor and exotic currency pairs. Below you can see a selection of our best STP forex brokers.

Broker
Rating
Regulated
Min. Deposit
Founded
Max. Leverage
1.
IG Review

ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA

$250

1974

1:200

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
2.
IC Markets Review

ASIC, CySEC, FSA, SCB

$200

2007

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
3.
Pepperstone Review

ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB

$200

2010

1:400

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
4.
XM Group Review

ASIC, CySEC, DFSA, IFSC

$5

2009

1:888

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
5.
FP Markets Review

ASIC, CySEC, SVGFSA

$100

2005

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
6.
XTB Review

CySEC, DFSA, FCA, FSCA, IFSC

$1

2004

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
7.
Axi Review

ASIC, FCA, SVGFSA

$1

2007

1:500

70% of retail investor accounts lose money when trading CFDs with this provider.
8.
Admirals Review

ASIC, CySEC, EFSA, FCA

$1

2001

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
9.
FXTM Review

CySEC, FCA, FSC, FSCA

$10

2011

1:300

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
10.
Fortrade Review

ASIC, FCA, IIROC, NBRB

$100

2013

1:200

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

Conclusion: should I trade with an STP forex broker?

It really depends on your trading strategy. For instance, if you need access to fixed spreads then you would need to use a market maker or STP broker because true ECN brokers will not be able to provide fixed spreads. On the other hand, if you want exceptional execution at the best possible prices at all times, I think an ECN forex broker is the way to go.

About the Author

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Richard Montana
Richard has many years of experience in broker research, testing, analysis and reviews. He knows what to look for through years of trading himself with different brokers and listening to the feedback of others.

Review Methodology

For all of our broker reviews, we research, validate, analyse and compare what we deem to be the most important factors to consider when choosing a broker. This includes pros, cons and an overall rating based on our findings. We aim to help you find the best broker according to your own needs. You can read more about our review process.


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