Last update: 29 September 2020
5 min read

How to Trade with STP Forex Brokers

Some of you reading this will be wondering what an STP broker is. STP stands for Straight Through Processing, and this means STP Forex brokers customer orders are sent direct to liquidity providers, such as banks or larger brokers, without the need for running them through a dealing desk. There are a number of activities that come with this type of platform, including no unnecessary order delays, and no requotes.

Another big advantage of using STP Forex brokers is that an STP broker only makes money by adding a small commission, or marking up the spread. Unlike standard brokers who stand to make a profit from their client’s losses, an STP broker gets the same mark, regardless of whether the client wins or loses. This also means there is no conflict of interest, which is only going to be a positive thing. STP Forex brokers benefit more when their clients win their trades as they can charge a higher fee.

The advantages of using STP Forex brokers are as follows:

  • Orders are processed quickly
  • The currency prices offered are correct
  • Automatic execution of orders
  • Quotes can be avoided on STP platforms
  • STP broker clients are never allowed to lose their trades
  • Compared to other types of broker the risks involved are less
  • Live market trends are provided to clients

What can an STP Forex broker offer?

There are a number of things that make an STP Forex broker different from other types of broker.

  • STP Forex brokers don’t trade against their clients.
  • There is no dealing desk and therefore no dealer intervention. Orders are sent to a certain number of liquidity providers, such as banks and other brokers.
  • An STP broker can provide real-time market quotes.
  • A bigger number of liquidity providers, which is good for the client as there are likely to be better fills.

If you are new to the world of Forex trading it will be pertinent to have an understanding of how the platform works. So let’s look at what happens to an order when placed with an STP broker.

Best STP forex brokers – Our expert choices

XTB is a reputable and accomplished broker, with licenses from several respected regulatory bodies, including the UK’s FCA. It boasts an excellent proprietary trading platform, xStation 5, which is available on mobile and desktop and supports MT 4 too. Open a Standard or Pro account with XTB today and you’ll have access to over 4,000 assets, including 48 currency pairs, 16 crypto pairs, and 1,500+ equity CFDs.Read review ›

Searching for a reputable forex broker that services over 13,000,000 clients worldwide, boasts an array of industry awards and has licenses from 2 top-tier authorities? Look no further than FBS. This experienced broker offers a great arrange of account types, with accessible minimum deposit limits, quality research tools and extensive educational materials. If you’re trading from outside the EU, you’ll also benefit from valuable bonuses and a reward bonus program. Read review ›

FXTM is a great choice for both new and experienced traders. This broker offers over 250 instruments, including currency pairs, commodities, shares, and cryptocurrencies. Beginner’s will benefit from FXTM’s range of demo accounts and easy registration process, whilst veteran traders will be impressed by the broker’s fair-trading fees, research tools and analysis. Clients can also rest assured they’re trading with a responsible and reputable broker, as FXTM boasts licenses from top-tier authorities such as CySEC and the UK’s FCA. Join FXTM today to trade with a high-quality broker.Read review ›



Visit site
Traders from South Africa shouldn’t look further than Oinvest, an award-winning broker with an FSCA license. Oinvest offers 350+ instruments including currency pairs and cryptocurrency pairs for forex traders, and stocks and CFDs for more experienced clients. At Oinvest you’ll also benefit from competitive spreads, account types suited to your needs and a comprehensive education center. Oinvest is the perfect choice if you want to trade safely from South Africa today.Read review ›



Visit site
HotForex, or HF Markets for EU traders, is an industry-leading forex broker that offers over 100 tradable assets. This includes currency pairs, cryptocurrencies, shares and indices. HotForex also comes complete with a license from the FCASVG, whilst HF Markets is supported by the UK’s FCA and CySEC. All of this adds up to a broker you can trust, and that’s suitable for all different types of traders. If you’re in the EU, trade safely with HF Markets now, or visit HotForex if you’re elsewhere.Read review ›

How STP Forex brokers work

stp forex brokersThe Forex market is one of the biggest markets for today’s modern investor. Daily turnover is in excess of $5.3 trillion, and the market is open 24/7. Understanding STP and how it works is vital for new traders, and a great way to explain it is by looking at the mechanism behind placing orders and seeing how they are executed on the charts. We’ll also look at all the parties involved in the whole arrangement.

Every broker has a front and back-end. At the front end is the platform, order buttons, charts, a trader’s account, open orders, and a few more besides. Behind the scenes is the back-end operation. Nowadays, platforms are very technologically advanced and data transferred from the back-end to the front-end is almost instantaneous. The processes occur in milli, micro and even nanoseconds.

There are a number of parties involved in processing, placing, and executing transactions. There is obviously a buyer and seller. But there is also a broker who brings the buyer and seller together. And there is also a liquidity provider, often a big name bank, who provides pricing. There is no physical market location like the stock market, and no physical record of trade transactions and executions. It’s electronic all the way when you trade in the Forex market. An STP broker locates and matches orders to a counterparty that is prepared to pay an agreed price. The counterparty could be another trader, a liquidity provider, or a market maker broker.

An STP broker is a really a type of Market Making broker

Most of the time an STP broker displays its own quotes, which are linked comparatively to real inter-banking quotes. There are two different routes an STP broker can take. They can route orders to the market, and act as a true STP broker. Alternatively, they can decide not to take this route, which is something they often choose to do with small or losing clients. In this way the broker has the opportunity to profit twice from the transaction. By not losing money to successful traders, and by clients’ losses. Most of the time this works very successfully for STP Forex brokers, but not 100% of the time.

As well as making two lots of profits the STP model is also responsible for large numbers of requotes and rejection of orders. When you open a large order the broker may decide to route the order through the market. However, it’s possible the prices have already changed. In which case the broker then has two options. To reject the order and ask for the client to adjust prices, or take a risk and complete the order.

How to tell the difference between a Market Maker, ECN, and STP broker

An ECN broker is easily recognizable. There will be minimal capital requirements, both the bid and ask prices will be clearly visible, along with the amounts on either side of the price. Which is known as the depth levels.

Telling the difference between a Market Maker and an STP broker is not quite as easy, and most of the time brokers tend to use a combination of both models. What some traders may find a concern is that MM and STP brokers stand to make a profit from their losses, which is always going to be a little unsettling and worrying. However, we feel it only fair to point out that using a US or UK regulated broker will remove this worry. A broker who is regulated in the UK or US will not trade against you. At least not in a way that will make you lose money. And this isn’t because they prefer to take the moral high ground. But because they would have problems with their license if they operated in such a way.

Best and most trusted forex brokers in April 2024