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What Is The Difference Between ECN And STP?

Blog | 11 Mar 2021 12:26/PM GMT

What type of broker to use? This is among the basic question coming out from those who want to start trading in forex. 

However, it is all about the situation while the forex market is growing fast. When the options are many, let’s look at the among popular broker that is Electronic Communication Network (ECN) and Straight Through Processing (STP). 

If you are interested in the currency trade, this article will guide you to know the main difference between an ECN and a STP account.  

What Is ECN? 

ECN is the future of the forex market and helps with the advancement in technology. It has made the possibility for retail traders to trade in forex securely and efficiently.  

ECN was described as a bridge that links smaller market participants with its liquidity providers. Other than that, ECN is a network of Tier-1 Banks, Prime Brokers, Hedge Funds, and FCMs. It is connected to form a deep pool of liquidity to make trading available.  

When the account provider charges a premium per trade as commission, that mean it is a true ECN account with a pure order-matching execution system. This is rather than artificially inflating the raw spread that occurs naturally during the order-matching process. 

By matching client orders, ECN accounts can offer tighter spreads and a cheaper overall cost of trading especially in the liquid market conditions.  

Additionally, ECN offers a marketplace to enable all the participants including banks, individual traders, and market markets to trade against each other. 

What Is STP?  

As a general rule, STP is an execution model where a broker executes its client’s trade orders directly to a liquidity provider.  

STP also passes its clients’ orders directly to a counterparty that might be STP broker, market broker, or even an ECN broker.  

STP brokerages can have equal ease and cost of execution without the downside of a dealing desk’s higher costs. The quality of the service and the liquidity of the markets traded will determine a lot. 

Also, STP offers faster and better filling of their clients’ orders. They charge commission and also make money from the spreads. 

What We Can Do?  

From the above discussion, you might have an idea about these types of brokers. It seems both guarantee the best trading experience. Figure out which broker you need based on the expenses and objectives.  

Generally, you might be worried about whether or not the broker can give you a decent and reliable fill, and of course whether or not it is fair.  

Doo Clearing makes the process smooth and hassle-free for brokerages, fund managers, and other institutional traders.  

At Doo Clearing, we have created 100% real-time trading (Direct Market Access and Straight Through Processing mode) and up to 99.99% system availability. This also includes as low as 1ms trade execution time, to create the ultimate trading experience.   

Additionally, our liquidity solution is designed for institutional and high-volume traders looking for easy and quick access to institutional forex and CFDs.  

About Doo Clearing   

Doo Clearing is part of The Doo Group, aiming to offer an institutional and bespoke level of liquidity access and clearing services for Forex and CFDs in equities, future and commodities, and other financial products.   

With the robust clearing system powered by Doo Tech, Doo Clearing is now serving brokers, broker-dealers, hedge funds, family offices, fund managers, and professional traders globally.   

Currently, Doo Clearing provides liquidity access and clearing services via our regulated entity in the United Kingdom. The Doo Group has other regulated entities in the United States, Mauritius, and Vanuatu, with operating centres in Hong Kong, Dallas, Singapore, Kuala Lumpur, and among others.   

To get started, contact Doo Clearing’s Specialist team today for an insightful preview of how we can bring your brokerage to the next level.  

London Office   

Email: [email protected]   

Website: www.dooclearing.co.uk   

Hong Kong Office   

Email: [email protected]   

Website: www.dooclearing.com