Best Forex Brokers:What they are Market making, STP and ECN? pros and cons?

Best Forex Brokers:What they are Market making, STP and ECN? pros and cons?

One of the most intriguing issues in online Forex trading is what is a market maker, STP and ECN and what are the differences and similarities between them and what the benefits for traders are.

Choose the Best Forex Brokers Right Now!

http://www.topforexbrokerscomparison.com


Below is the short summary:
Market Maker (MM), also called a Dealing Desk (DD): MM is an artificial type of broker because it doesn’t reflect the market directly, but simply quotes prices which are similar to what the market displays. Any order you enter is processed internally and never goes out to the market.
Pros: Quick execution (typically no re-quotes)
Cons: Every dollar you gain goes out of the broker’s pocket and every dollar you lose ends up in its pocket = major conflict of interest.
Straight Through Processing (STP): This type of broker typically routes some or all of your orders directly to the market. This is a hybrid model between MM and ECN. Some brokers though say they are STP while they are actually MM, you can never tell and sometimes they do a bit of both – MM for losers and STP for winners.
Pros: Smaller conflict of interest, more accurate prices
Cons: Slow execution with plenty of re-quotes, if you are a loser your broker might end up moving you to market making servers
Electronic Communications Network(ECN): Is the only type of a broker per-se. Like in equities – brokers are supposed to let you gain access to the market not be the market (like in MM or STP sometimes). So a true ECN broker lets you see the actual prices and display the order in the market. You trade with other traders and financial institutions but not against your broker.
Pros: Direct market, no conflict of interest, typically no spread mark-up
Cons: No guaranteed fills, smallest lot possible is 100k (although I heard FXOpen are working on introducing a solution to smaller players) and there is a commission involved (albeit much lower than the spread you pay to MM and STP).
Start Your Forex Trading Journey!

. Top Forex Brokers

Top Forex Brokers. Find the Best Forex Brokers.Choose the Top Forex Brokers. Share the latest forex information about top forex brokers. More detail about forex bonus,and maximize your bonus profit. https://www.topforexbrokerscomparison.com

Related Posts

20 Guiding Principles for Success In Forex Trading

20 Guiding Principles for Success In Forex Trading In the dynamic and challenging environment of forex trading, achieving mastery is a journey that involves continuous learning, strategic planning, and disciplined…

How to Avoid Losing Money in Forex Trading

How to Avoid Losing Money in Forex Trading Forex (foreign exchange) trading can be a lucrative opportunity for those who understand the market and manage their risks effectively. However, it’s…

You Missed

Top Forex Brokers – Forex Weekly news and analysis For January 20 – 26, 2025

Top Forex Brokers – Forex Weekly news and analysis For January 20 – 26, 2025

Top Forex Brokers – Forex Weekly news and analysis For January 13 – 19, 2025

Top Forex Brokers – Forex Weekly news and analysis For January 13 – 19, 2025

20 Guiding Principles for Success In Forex Trading

20 Guiding Principles for Success In Forex Trading

Top Forex Brokers – Forex Weekly news and analysis For January 6 – 12, 2025

Top Forex Brokers – Forex Weekly news and analysis For January 6 – 12, 2025

Top Forex Brokers – Forex Weekly news and analysis For December 30 – January 5, 2025

Top Forex Brokers – Forex Weekly news and analysis For December 30 – January 5, 2025

Top Forex Brokers – Forex Weekly news and analysis For December 23 – 29, 2024

Top Forex Brokers – Forex Weekly news and analysis For December 23 – 29, 2024