Trading is an activity that attracts the attention of a growing number of investors. Now, professionals and individuals are embarking on this successful activity. To be able to “trade”, it is necessary to register with an online broker, knowing that many of them offer their services in this sector. In addition to ensuring that the broker you are about to reach is trustworthy, you also need to know the category in which the broker is placed. One can turn to an STP broker, also known as a “pure broker”
Update on the characteristics of this type of broker…
Presentation of the broker STP
The broker STP uses the “Straight Through Processing system”. Like the broker ECN, which provides direct access to the interbank market, it is also classified as a “No Dealing Desk”. Its main feature is that client orders are directly directed to liquidity providers, who can also access the interbank market. As a STP broker with a large number of liquidity providers, they can focus on the most attractive prices. All transactions are then automated and orders are executed without the broker having to intervene.
As far as his remuneration is concerned, this operator increases spreads a little. Depending on his policy, he may also take a commission on transactions (for example, in the range of $10 to $20 for each million traded).
How does it work?
As a reminder, an STP broker is in the same category as the ECN broker, as a No Dealing Desk operator. Nevertheless, these two types of brokers differ in their operation. With an ECN broker, client orders are matched against each other. This implies a rather long turnaround time. This is not the case with an STP broker: all liquidity is provided by a liquidity provider. This specificity also allows it to practice more interesting spreads. This is the case of the broker FXCM, well known in the world of trading.
The term “pure broker” then takes on its full meaning. The broker STP then acts as an intermediary between its clients and the banking institutions. Moreover, the prices disclosed by the banks are in effect.
What are the advantages?
First of all, it should be noted that an STP broker never goes against his client and the latter can always have access to the order book (prices are also disclosed in a transparent manner). If a comparison is made with the ECN broker, the trader does not remain anonymous when placing an order. On the other hand, it is quite possible for him to practice scalping as long as the operator is automatically covered.
In the benefits register (always compared to an ECN broker), liquidity is higher. Overall, the services available are more interesting, particularly in terms of the tools available, the advice provided and the advice and analyses that clients can benefit from.