STP Forex Brokers or Straight through processing Forex brokers are a kind of brokers that work in the Forex market. These are brokers who send the orders that have been placed by their customers on their platforms openly to the liquidity providers (larger brokers or banks) without passing these orders by means of a dealing desk. This provides a means of confirming that orders are treated in a “straight-through” fashion, without delays and re-quotes. Hence the term “straight-through” is used more appropriately to define the process by which orders are handled.
One of the great advantages of STP implementation is that with it, the customers’ losses are not brokers’ profits – actually, STP forex brokers make money by means of addition a small commission, or mark-up to the spread. Whether a trader loses or wins, the broker obtains the same mark-up, hence there is no fight of interest between the two parties. This is a certain advantage to market makers – while trading with a market making broker, your losses are the broker’s gains; STP brokers on the conflicting, benefit more from appealing traders who trade more and the broker therefore gets more mark-up/commission fees.
Certain brokers only give one liquidity provider, and others give traders admission to a deeper liquidity pool (Fxstay for example, provides liquidity from more than 10 banks). Clearly, the more liquidity providers there are, the improved order implementations.
Likewise, No Dealing Desk (NDD) brokers provides traders admittance to the interbank Forex market. Over again, here there are no delays in satisfying orders, no conflict of interest, and no re-quotes. NDD Forex brokers could provide either ECN or STP execution.
Top STP Forex Brokers List
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Fxpro Forex Broker Founded in 2006, London-based FXPro is an online STP broker offering Forex trading along with CFD’s. The MT4, MetaTrader5 and cTrader online trading platforms are available.
Plus500 was established in 2008 as an online international trading platform that is popularly used in Asia, Europe and Australia and elsewhere in the world.
IG Group is a UK-based company providing trading in financial derivatives such as contracts for difference and financial spread betting and, as of 2014, stockbroking to retail traders.
CMC Markets is licensed and regulated by the Financial Conduct Authority of the United Kingdom (FCA), one of the strictest regulatory agencies in the world.
Alpari Ltd was created in Russia in 1998 but moved its headquarters to the UK where it is registered and strictly regulated by the Financial Securities Authority (FSA), Alpari UK has merged with Alpari Global and Alpari US is registered with and overseen by a number of regulatory agencies.
eToro is a social trading and multi asset brokerage company that has registered offices in Cyprus, Israel and the United Kingdom.
HYCM previously known as HY Markets broker is headquartered in London and is authorized and regulated by the Financial Conduct Authority of the United Kingdom.
City Index was founded in the UK in 1983 and now enjoys a global footprint that includes the US, Singapore, China, Poland and Australia.
Markets.com maintains its headquarters in Cyprus, UK and is an investment services firm that is operated by Safecap Investments Limited (Safecap), which was founded in 2006 and is a subsidiary of Playtec PLC.
AvaTrade was founded in 2006 in Dublin, Ireland and is licensed and fully regulated in the EU and BVI, as well as Australia, Japan and South Africa.
ETX Capital is a broker that was established in 2002 and is headquartered in London, England.
The XM.com forex broker was established in 2009 in the Republic of Cyprus using the name Trading Point of Financial Instruments Ltd.
London Capital Group
London Capital Group Ltd was founded in 1996 in the United Kingdom and regulated by the Financial Conduct Authority (FCA) of the UK.
Pepperstone broker is founded in Australia, Melbourne and has offices in USA, Dallas and China, Shanghai.
U.S. Forex STP Brokers
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Forex Capital Markets, better known as FXCM, is an online Foreign exchange STP broker based in the United States.
OANDA broker is a Canadian-based Forex STP company providing currency conversion, online retail foreign exchange trading (fx), online foreign currency transfers, and Forex information, Oanda is one of the top 10 STP broker Forex in U.S.
How dose straight through processing Forex brokers works
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At a daily income of $5.3trillion per day, the Forex market has the status of being the largest and the biggest market of all, open 24/7 round clock.
To recognize how Straight through Processing works, it is relevant for traders (particularly those who are just starting out) to answer the question: what occurs to my orders? What is overdue the mechanism of placing and order and sighted it performed on the charts? Who are the other parties in the total preparation?
All Forex brokerage operation has a back end and a front-end. The front end is what the trader understands on the platform: the platform itself, order buttons, charts, open orders, his account size, etc. Then behind all this, there is a back end. This platforms have come to be quite advanced from the initial days. Hence data transfer from the back to the front end and front end part to the back end, is a procedure which happens in milliseconds or even micro and nano seconds. There are numerous parties in the procedure of placing an order and gaining executions for those orders.
- There is a seller. In a buy trade, the seller is the counterparty.
- There is a buyer. In a sell trade, the buyer is the counterparty.
- There is a liquidity provider (usually a major bank) who delivers pricing for the contributors.
- There is the broker who brings these two parties together.
Unlike the stock market, the Forex market does not have a physical site, and there is no physical record of all trade transactions and executions. The whole thing is virtual and electronic. What STP brokers do while an order is placed by means of the trader, is to localize and match the order a counterparty who is prepared to pick up the order at the decided price.
The counterparty in each forex trade can be
– A liquidity provider
– A market maker broker
– Another trader
In the second two cases, it is difficult to eliminate war of interest because of the method the market making model of forex is organised. The market is occupied by traders by means of low capital. The market essentials liquidity. A liquidity supplier will not trade to such traders with low capital. It would charge excessively and is not effective. Thus a market maker comes in, purchases up large volumes of trades on the sell/buy side of the market, splinter these positions up and then provide the currency to those traders who need to purchase and offer for positions from those who want to sell. While the trader approves (basically by clicking the order button on his platform), the deal is ready and managed in micro seconds.
What does an STP broker do
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Relatively than accepting the market making model, the broker permits the trader admittance to the interbank market where numerous liquidity providers are proving the currency at various prices. Generally, volumes have to be huge enough to support the procedure, and traders would have to wage for the cost of this service which is run on extremely particular platforms. STP brokers thus charge commissions and also permit spreads to differ according to the offer/bid strength in the market. Thus the order does not pass over a dealing desk: it goes “straight through” to the interbank market.
Advantages Of STP Forex Brokers
Deeper Market Access – STP brokers provides traders deeper market access by giving a path to a deeper liquidity pool i.e. receiving pricing from numerous liquidity providers in the interbank market. This provides traders well choice and better market implementations, UK forex brokers are an example of these brokers.
Anonymity – Scalpers can put on their trading style to all their orders devoid of being punished with re-quotes, slippages, and outright ban.
No conflict to interest – One great advantage with STP brokers is the removal of conflict of interest in the implementation pattern. By means of not acting as counterparties to the brokers’ positions, STP Forex brokers do not profit from the losses of their customers. They profit simply from addition a small commission, or mark-up to the spread.
What You See is What You Get – With STP brokers, what you see is what you get. There are no stays in order execution and no re-quotes.
STP Forex Brokers UK
STP Forex Brokers List
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