An STP (Straight Through Processing) broker is a type of forex broker that routes your orders directly to liquidity providers — such as banks and financial institutions — without any manual intervention or a dealing desk. STP brokers make money primarily through a small markup added to the raw spread rather than trading against their clients, making them a transparent and trader-friendly execution model.
Introduction: Why Your Broker’s Execution Model Matters
Most traders spend a great deal of time analysing charts, developing strategies, and studying price action. Far fewer take the time to understand how their trades are actually executed — and that oversight can cost them significantly.
The type of broker you trade with determines whether your orders are filled at fair market prices, whether the broker profits when you lose, and how quickly and accurately your trades are executed. Understanding the difference between broker types — particularly STP, ECN, and market makers — is essential knowledge for anyone serious about forex trading.
This guide explains exactly what a STP broker is, how straight through processing works technically, how it compares to other broker types, and what to look for when choosing one. You can compare verified STP and ECN brokers directly on the Compare Forex Brokers page at CompareBroker.io.
What Does STP Stand For in Forex?
STP stands for Straight Through Processing. In the context of forex trading, it refers to an order execution model in which client trades are processed and forwarded directly to liquidity providers — without any human intervention and without passing through a dealing desk.
When you click “buy” or “sell” on your trading platform, an STP broker’s system automatically routes that order to one or more liquidity providers (LPs) in real time. The broker does not take the other side of your trade. Instead, it acts as a conduit between you and the broader interbank or institutional forex market.
The defining feature of an STP broker is the absence of manual order handling. Every trade is processed automatically, electronically, and at the best available price from the broker’s pool of liquidity providers.
How Does STP Execution Work? A Technical Walkthrough
Understanding what happens between the moment you click “buy” and the moment your trade is confirmed reveals why STP is considered a fairer model for retail traders.
Step | What Happens |
1. You place an order | You click Buy/Sell on your platform (MT4, MT5, cTrader, etc.) |
2. Order received by broker system | The STP broker’s automated system receives your order instantly |
3. Route to liquidity providers | The system checks quotes from multiple banks and financial institutions |
4. Best available price selected | The broker selects the best bid/ask from its LP pool |
5. Spread markup applied | The broker adds a small markup to the raw spread as its revenue |
6. Order confirmed | Trade is filled and confirmed on your platform — typically in milliseconds |
This entire process happens in milliseconds — often faster than human perception. The key distinction from market maker brokers is in step 3: rather than taking the opposite side of your trade, the STP broker passes it directly to external liquidity providers.
STP Brokers vs Market Makers: The Critical Difference
To fully understand why STP brokers matter, you need to understand what they are NOT — specifically, a market maker.
Feature | STP Broker | Market Maker Broker |
Order execution | Routes orders to liquidity providers | Takes the opposite side of your trade |
Conflict of interest | Minimal — broker profits from spread markup only | High — broker profits when you lose |
Spread type | Variable (reflects real market conditions) | Fixed or artificially set |
Requotes | Rare — prices are real-time market prices | More common — broker controls pricing |
Transparency | High — real interbank prices with markup | Lower — prices set internally |
Best for | Intermediate to experienced traders | Beginners seeking simplicity |
The conflict of interest in a market maker model is the central reason why many experienced traders prefer STP or ECN execution. When a market maker takes the opposite side of your trade, they profit directly when you lose — creating an incentive structure that is misaligned with your interests as a trader.
An STP broker, by contrast, makes the same small markup regardless of whether your trade wins or loses. Their revenue is tied to your trading volume, not your trading losses.
How Do STP Brokers Make Money?
This is one of the most important questions any trader should ask before funding an account.
1. Spread Markup
The primary revenue source for STP brokers is a small markup added on top of the raw interbank spread. For example, if the raw EUR/USD spread from the liquidity provider is 0.1 pips, the STP broker might display it to you as 0.8 pips — keeping 0.7 pips as their fee.
2. Commission Per Trade
Some STP brokers (particularly those operating a hybrid ECN/STP model) charge a flat commission per lot traded rather than a spread markup. This is generally more transparent and often more cost-effective for high-volume traders.
3. Volume-Based Revenue
Because STP brokers earn from trading volume rather than client losses, they are incentivised to help their clients trade more — and to keep them trading for longer. This creates a more aligned relationship between broker and trader.
You can compare verified STP and ECN broker fee structures side by side on the Compare ECN Brokers page at CompareBroker.io, which includes full spread and commission data.
STP vs ECN: What Is the Difference?
STP and ECN (Electronic Communications Network) are both non-dealing-desk execution models, and they are often mentioned in the same breath. However, there are meaningful differences.
Feature | STP Broker | ECN Broker |
Order routing | Routes to selected liquidity providers | Matches orders in a live open network |
Spread source | Markup on LP quotes | Direct interbank/institutional pricing |
Minimum spreads | Slightly wider (0.3–1.0 pips typical) | Can reach 0.0 pips during liquid hours |
Commission | Often built into spread markup | Usually a flat per-lot commission |
Order matching | LP takes the other side | Orders matched within the network |
Depth of market (DOM) | Not always available | Usually available |
Account minimum | Generally lower | Often higher minimums |
In practice, many modern brokers operate a hybrid STP/ECN model — combining the routing efficiency of STP with the network-based pricing transparency of ECN. When you see a broker advertise “ECN/STP execution,” this typically means they use STP routing to connect clients to an ECN-based liquidity pool.
Browse the Compare ECN Brokers tool to find brokers that clearly disclose their execution model, spreads, and liquidity provider relationships.
What Is a Non-Dealing Desk (NDD) Broker?
STP and ECN brokers both fall under the broader category of Non-Dealing Desk (NDD) brokers. The term “NDD” simply means that there is no dealing desk manually processing or intervening in your orders.
All STP brokers are NDD brokers, but not all NDD brokers are STP brokers. The NDD category also includes ECN brokers and hybrid models. The common thread is the absence of manual dealer intervention in order execution.
The Role of Liquidity Providers in STP Execution
STP brokers depend on their relationships with liquidity providers (LPs) to deliver competitive pricing and fast execution. Understanding who these LPs are and how they influence your trading experience is valuable.
Typical STP liquidity providers include:
- Tier-1 global banks (e.g., Deutsche Bank, Citigroup, JP Morgan, Barclays)
- Non-bank market makers and prime brokers
- Electronic liquidity providers (ELPs) such as XTX Markets or Virtu Financial
- Other institutional forex participants
The quality and number of an STP broker’s liquidity providers directly determines the quality of pricing, fill rates, and execution speed you receive. Brokers with more and higher-quality LPs can aggregate better prices and offer tighter effective spreads.
Key Advantages of Trading with an STP Broker
1. No Conflict of Interest
The broker’s income is independent of your trading outcome. Whether you profit or lose, the broker earns the same spread markup per trade. This alignment of interests is one of the most significant advantages of the STP model.
2. Faster and More Reliable Execution
Because orders are processed electronically without dealer intervention, STP execution is typically faster and more consistent than market maker execution. Requotes — where the broker rejects your order and offers a slightly different price — are rare in true STP environments.
3. Real Market Pricing
STP brokers display prices derived from real interbank and institutional sources. While there is a markup, the underlying price reflects genuine market conditions rather than an internally constructed spread.
4. Better for News Trading and Scalping
Because there is no dealing desk that can manually intervene or widen spreads selectively, many day traders and scalpers prefer STP execution. That said, spreads may still widen during high-impact news events, as liquidity providers pull back — this is a natural market response, not broker manipulation.
5. Transparency
STP brokers are generally more transparent about their pricing model, as their spread markup is the clear and disclosed source of revenue. There are no hidden mechanisms profiting from client losses.
Potential Drawbacks of STP Brokers
1. Variable Spreads
STP spreads change with market conditions. During low-liquidity periods — the Asian session, weekends, or major news events — spreads can widen considerably. Traders who prefer cost predictability may prefer fixed spread brokers instead.
2. Markup Opacity
While the STP model is inherently more transparent than market making, the specific markup applied by brokers is not always clearly disclosed. Some brokers are far more transparent about this than others — always check the full cost breakdown before opening an account.
3. Higher Minimum Deposits (Sometimes)
Some STP brokers, particularly those offering raw or near-raw spreads, require higher minimum deposits than basic market maker accounts. However, this is not universal — many STP brokers offer accessible micro and standard accounts.
How to Identify a True STP Broker
The term STP is sometimes used loosely in broker marketing. Here is how to verify whether a broker genuinely operates an STP model:
- They clearly disclose their execution model as STP, NDD, or ECN/STP in their account documentation
- They provide information about their liquidity providers (even if not by name)
- Their spreads are variable and reflect real market conditions rather than being fixed regardless of volatility
- They are regulated by a reputable authority (FCA, ASIC, CySEC, FSCA) that holds them to execution quality standards
- They offer negative balance protection and segregated client funds
- Their execution policy documents describe straight-through order routing
When comparing brokers, use the Compare Forex Brokers tool at CompareBroker.io to filter by execution model, regulation, and account type — ensuring you find a genuinely transparent STP broker that matches your trading needs.
STP Broker Account Types
Many STP brokers offer multiple account tiers. Understanding the difference helps you choose the most cost-effective option for your trading style and volume.
Account Type | Typical Spread | Commission | Best For |
Standard STP Account | 0.8 – 1.5 pips | None | Beginners and low-volume traders |
Raw/Pro STP Account | 0.0 – 0.3 pips | $3 – $7 per lot | High-volume and professional traders |
Islamic STP Account | Variable (adjusted) | None or markup | Muslim traders requiring swap-free conditions |
Micro STP Account | Variable | None | Small accounts and beginners |
For traders observing Islamic finance principles, most reputable STP brokers offer swap-free accounts. Compare your options on the Compare Forex Islamic Accounts page.
Regulatory Standards for STP Brokers
Regulation is the most important factor when evaluating any broker’s claimed execution model. Regulatory bodies such as the FCA (UK), ASIC (Australia), and CySEC (EU) require brokers to disclose their execution model in their Client Agreement and Order Execution Policy.
FCA-regulated STP brokers, for example, must demonstrate best execution — meaning they are legally required to take all reasonable steps to achieve the best possible result for clients on each trade. Compare FCA-regulated brokers at CompareBroker.io to find brokers held to the highest execution standards.
Popular STP Brokers on CompareBroker.io
Broker | Execution Model | Regulation | Min. Deposit |
Pepperstone | STP / ECN | FCA, ASIC, CySEC | $0 (AU) / $200 (Int) |
ThinkMarkets | NDD / STP | FCA, ASIC | $0 |
TIO Markets | ECN / STP | CySEC, FSC | $100 |
Equiti | STP | FCA, JFSA | $500 |
Eightcap | STP / ECN | ASIC, SCB | $100 |
Visit the full reviews for Pepperstone, ThinkMarkets, TIO Markets, and Equiti on CompareBroker.io for detailed analysis of their execution models, spreads, and regulatory status.
Frequently Asked Questions About STP Brokers
Is an STP broker better than a market maker?
For most intermediate and experienced traders, yes. The absence of a conflict of interest and real-market pricing makes STP brokers a more transparent choice. However, market makers can be suitable for beginners due to fixed spreads and simpler account structures.
Do STP brokers offer demo accounts?
Yes — virtually all reputable STP brokers offer demo accounts with real spreads and execution conditions. This allows you to test the broker’s execution model before risking real money. Compare available forex demo accounts at CompareBroker.io.
Can an STP broker manipulate prices?
A true STP broker derives prices from external liquidity providers and applies a transparent markup. Because they do not set prices internally or trade against clients, price manipulation opportunities are significantly reduced compared to a market maker model. Regulated STP brokers are additionally bound by best execution obligations.
Are STP brokers good for scalping?
Generally yes. STP execution is fast and consistent, without the dealing desk intervention that can cause issues for scalpers. Check the Compare Day Trading Brokers page for STP brokers that explicitly allow scalping strategies.
Conclusion: STP Execution Is a Trader-Aligned Model
The STP execution model represents a fundamental alignment of broker and trader interests. By routing orders directly to liquidity providers and earning from volume rather than client losses, STP brokers create a more transparent, fair, and efficient trading environment.
Choosing an STP broker is not just a technical decision — it is a decision about the integrity of the trading environment you operate in. The broker’s execution model affects every single trade you place, every fill you receive, and every price you see on your screen.
Start comparing regulated STP and ECN brokers with verified execution data at CompareBroker.io. Whether you are opening your first account or switching from a market maker, the right STP broker can make a significant difference to your long-term results.
