In addition, a further classification is possible according to the way in which the broker acts on the market and influences prices, as well as forwards orders. Against this background, for example, a distinction is made between three types of brokers, namely market makers, ECN brokers and STP brokers. Especially ECN and STP brokers differ only in minor details, so that these broker types are often mentioned and summarized in one breath.
What is an ECN broker?
The abbreviation ECN in stands for the English technical term "Electronic Communication Network". One of the characteristics of an ECN broker is that all traders have the opportunity to enter orders into the broker's individual order book. This order book can be viewed so that the orders placed can be tracked at any desired time. It is also characteristic that not only the respective buy and sell prices are given for the orders, but also the figures of the supply and demand available on the market. Another important feature of an ECN broker is that it does not influence the prices. This leads, among other things, to the fact that the broker does not earn its money in the form of spreads, but instead assesses commissions.
In general, ECN brokers have some advantages, such as the fact that no conflicts of interest can arise between them and the customers. In addition, order execution is very fast and there are no requotes with ECN brokers. In addition, customers benefit from the fact that they have direct access to the markets and with ECN brokers - mostly in contrast to the offer of market makers - certain trading strategies can also be used without restrictions, such as scalping.
What is an STP broker?
As mentioned at the beginning, there are only minor differences between an ECN broker and an STP broker. STP is the abbreviation for straight through processing. This mainly means that with STP brokers, all orders placed by traders are forwarded to banks or a liquidity pool without any detours.
It often happens in practice that even several pools or banks compete for the order, which can have a favorable impact on the price. How good the quality of an STP broker is depends - far from the usual comparison criteria - mainly on the size of its liquidity pools. For STP brokers, the liquidity pool is therefore a very important comparison criterion unlike the https://exness-vietnam.asia/trader-app/.
ECN and STP brokers in comparison: What you should look out for
There are also typical comparison points for ECN and STP brokers that you should pay attention to when comparing the providers. These include, for example, the trading platform, the trading offer, the customer service and, of course, the conditions. As mentioned in the previous section, especially with STP brokers, the most important thing is how extensive the liquidity pool is, so this is an important comparison point. With ECN brokers, on the other hand, you should additionally pay special attention to regulation and deposit insurance, because the minimum deposits to be paid there are generally higher than with market makers and STP brokers. Therefore, it should at least be guaranteed that it is a reputable provider that is regulated and in the best case is affiliated with the deposit insurance.
How do I find the right ECN/STP broker?
Read the experiences and reviews of other traders about ECN/STP brokers on broker-bewertungen.de and compare all listed ECN/STP brokers to find the best ECN/STP broker for you.