Trading with the best brokers in forex is important. This is because trading with a poor broker can lead to losses as a result of slippage, requotes, or even flat-out fraud. Among the several types of forex brokers, operating different models there are brokers that are classified as STP forex brokers. An STP forex broker is one that processes clients’ orders using STP technology. But, what is STP?, how do STP brokers operate?, and who are the best STP brokers?
What is STP?
STP stands for straight-through-processing. It is a method of execution that works by matching the orders of traders directly to the orders of other traders. The core essence of the STP model is to shorten trade execution time, reduce slippage/re-quotes, and ensure that traders get the best pricing.
Using STP completely boycotts dealing desks. therefore it is used by no dealing desk (NDD) brokers.
How Do STP Brokers Operate?
STP brokers are forex brokers that operate using STP as the model of trade execution. This is possible through the development of the Financial Information Exchange (FIX) protocol. The orders of clients are sent directly to the liquidity providers by the broker.
These brokers make profit by adding a markup to the spread offered by the liquidity provider, as they do not charge commissions. In practice, it has been observed that STP brokers usually have lower spreads than most market makers.
List of The Best STP Forex Brokers
- FP Markets
In conclusion, before choosing a broker to trade with, always research the broker and read reviews. This will give insight into the operation of the forex broker before depositing your funds with them. This will help in knowing if you are “compatible” with such a broker or not.
You can read the reviews of these forex brokers and others over at our forex broker reviews page. You can also read about other types of brokers here. If you are unsure which broker to go with then you can go through our recommendations.
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