Choosing Between STP/ECN Brokers And Market Makers
When a trader enters the forex market, they have so much to learn. Every trader needs time to get educated. The market is very deep and you can’t learn to do successful trades immediately as you enter the market. And to help you with forex trades there are various forex brokers that provide quick execution and good trading conditions that can be very helpful to the traders.
Forex broker is basically a financial service company that provides you services that can help you get better results from trading. Today, there are so many brokers with different models that can help you start your forex journey and all these brokers have their own advantages and disadvantages. Traders can choose as per their convenience which one they find most appropriate. The main types of brokers include – STP/ECN and Market Makers. And people are often confused which one to choose among these two. And it is important to understand both, in order to choose one that suits you.
No Dealing Desk Brokers
These are of two types – ECN brokers STP brokers. In STP/ECN, ECN stands for Electronic Communication Network. Here bids and offers are sent and the broker is connected to an ECN trading system. STP stands for Straight-Through-Processing model, and it illustrates that the broker doesn’t interfere in the order while it is in execution, and everything is done electronically. The order execution speed with both ECN and STP brokers is very high. Using ECN brokers also means low costs. They are known to offer low spreads. So, they can be a right choice for those who want to start with a small amount of capital and want to keep the trading cost low.
Dealing Desk Broker
Also called Market Maker, dealing desk brokers pay off client’s money even with their own money. They are sometimes known to even trade against their clients.
What To Choose?
If a person has to choose one of these a detailed study about both types of brokers is needed, as both of them have their own advantages and disadvantages, and you have to choose as per your requirement. It is best if a trader assesses their trading requirements, finalizes their trading plan/strategy, and then accordingly chooses the kind of broker that will align with their strategy.