STP account with a Forex broker
Who are STP Forex brokers? These are broker companies that deliver client trading orders to liquidity providers. Trading on STP accounts is completely anonymous, and the execution of transactions is faster than with regular brokers.
Liquidity providers include large brokers and banks. Orders with straight Through Processing (STP) dealing go directly to the liquidity providers, and there is no mediation. Orders of clients who have STP accounts are executed without requotes or delays.
STP brokers earn money by making a small margin on the Forex spread or at the expense of a small Commission. Moreover, regardless of whether traders will gain or lose profits, STP brokers will still receive their profits in the form of Forex margins and commissions.
There are Forex brokers that only give access to one liquidity provider. There are also those that open access to several liquidity providers at once, for example, FXCM.
Important: the more liquidity providers there are, the better orders are executed.
brokers with stp accounts
Figure 1. Forex liquidity providers.
The STP platform exists so that traders can trade on the real market and their Forex orders are executed immediately without the intervention of the dealer.
In turn, brokers with STP accounts can provide their clients with floating or fixed spreads. Recall that STP brokers act as intermediaries between clients and international banks. Naturally, they take quotes along with the spread from the interbank market. Many banks themselves act as market makers, providing fixed spreads.
An STP broker can go one of two ways:
floating spreads. Reset the fixed spreads so that the system determines the best bid and ask Forex offers provided by the participating banks. The more of them, the better. This is roughly the principle used by NDD (No Dealing Desk) brokers. They have no delays in executing orders, no conflicts of interest, and no requotes. NDD brokers offer their clients ECN accounts or STP execution;
fixed spread. After receiving spreads from interbank, STP will leave them unchanged, that is, it will not add additional points as its profit. In this case, it will enter a Commission for stp accounts.
What do STP brokers earn?
Once again, STP brokers make a profit due to the Commission or spread for the Forex lot traded by the trader. Orders opened by Forex traders with an STP trading account are sent to banks with the same quotes that were originally announced. However, STP representatives charge commissions for trading lots. Brokers with STP accounts are interested in the profit of traders, as this determines the constant earnings from the Commission.
How does an STP account work?
Any trader who is just thinking of opening an STP account is primarily interested in what principle it works on. STP accounts are designed in such a way that risks are reduced to minimal values and become insignificant as a result.
Figure 2. How does the trade on STP accounts.
As soon as there is a request for placed orders, they are sent through unique "bridges" past the dealer directly to the Bank. The banking organization, in turn, immediately processes it. Moreover, this process takes place automatically. Having an STP or ECN account, the trader will not have any order execution freezes. After all, this allows you to increase the speed of execution of orders by an order of magnitude.
Which brokers have STP accounts?
You can open an STP trading account with the following Forex brokers:
Advantages of STP accounts
It is especially pleasant to work on STP accounts for owners of large deposits who like to use large leverage in trading. It is important that the order is opened at a favorable price, which will be of interest to the trader, since the slightest movement of quotes will be significantly displayed on the account.
The STP account is ideal for traders who use intraday trading strategies, as well as scalping strategies. For scalpers, an important criterion for choosing a broker is the rapid execution of orders. After all, scalping involves taking small profits in terms of volume, and it is important for scalpers to enter and exit the market in time, since the price may go in the other direction while the order is being executed.
Those traders who really want high-quality execution of transactions and value their time and money, open an STP account. But nothing prevents you from opening such an account. The main thing is to have a proven trading strategy and be able to use it correctly under certain conditions.