The Difference Between STP and ECN
Types of XAUUSD Brokers: ECN Brokers
Most xauusd trader ask what is the difference between the STP & ECN?
STP XAUUSD Broker
STP has many liquidity providers, but selects the best one at any one time automatically for the trader. Therefore when a trader places a xauusd trade the xauusd orders will be passed direct to this interbank network of liquidity providers - after the liquidity provider with the low spread is selected automatically by the STP execution model.
Therefore STP xauusd broker is like ECN xauusd broker the only difference is that the Straight Through Processing Brokers automatically chooses the best fill at that particular time of trade execution & does it automatically for the trader.
ECN XAUUSD Broker
ECN xauusd broker has many liquidity providers from which a trader will see all at the same time and choose which liquidity provider to trade with, It is like having 10 brokers gold quotes to choose from which to trade - these ten quotes are for the same xauusd trading instrument - each quote from a different liquidity provider.
ECN broker quotes model means a trader will have to look at many streaming gold quotes at the same time and select one, this streaming quote will have varying spreads markups & a trader selects the low spread.
There is no much difference between ECN gold trading broker and STP gold trading broker, that is why some xauusd traders or some xauusd brokers will use the term interchangeably, because the only difference between Straight Through Processing execution from Electronic Communication Network execution is that STP xauusd broker only chooses to have display only one liquidity provider with the best markup at the time of trade while ECN implements a wide variety of liquidity providers & displays all their quotes to the traders & it is up to the trader to select which liquidity provider to choose from while trading.
According to xauusd broker reviews, these ECN & STP brokers are also have the lowest xauusd trading spreads, therefore if you are looking for the low spreads it is good to choose an STP broker or an ECN broker.
Most online xauusd brokers do not want to clutter the traders workspace with multiple streaming quotes from various different liquidity providers for the same xauusd trading instrument at the same time because this might confuse gold traders, especially the beginner traders who do not know what is what from what, that is why most xauusd brokers might be ECN brokers but only choose to display only one streaming gold price quotes from only one interbank liquidity provider, therefore becoming more of an STP broker rather than an ECN broker, but the model of xauusd trade execution operation is basically one and the same.
If you were to open a xauusd account with an ECN xauusd broker you would get like 10 different quotes of XAUUSD Trading from different liquidity providers and to trade you would have to chose the xauusd trading quote from one of these liquidity provider. 10 gold quotes for every xauusd would make your xauusd platform workspace too crowded (An ECN XAUUSD Broker Lists Spread from many liquidity providers). Another thing is that you would need to have a more complex xauusd platform to stream these multiple gold quotes, this type of xauusd trading platform would not make the best platform software to trade with. Furthermore, if you open an ECN xauusd account you will have to pay additional commissions on top of xauusd trading spreads. This is also another reason why to choose STP xauusd broker since unlike ECN gold trading broker, STP xauusd broker do not charge commissions on top of spreads. This means that the ECN xauusd broker execution isn't the cheapest execution technique and will charge xauusd traders extra commissions on top of spreads adding onto your xauusd transaction costs.
STP XAUUSD Brokers offer the best liquidity for gold traders to make trades
STP xauusd brokers do not have a xauusd trading dealing desk and therefore this provides for full xauusd trade order transparency, faster and better order fills. The full order transparency means this type of STP xauusd broker doesn't create an artificial market for clients, but instead shows a trader the real time gold price data quotes from an electronic network of banks and allows the trader to enter the true market conditions created by the various xauusd market participants.
Straight Through Processing XAUUSD Brokers- is the name given to xauusd brokers that: upon receiving of a xauusd order they will pass on the xauusd orders directly to the network of banks through liquidity providers and as such there is no intermediary who will be involved in the order execution in other words the Straight Through Processing Execution Model will not be filtering xauusd trade orders through a XAUUSD Trading Dealing Desk. The absence of a XAUUSD Trading Dealing Desk is what makes the STP execution model the best choice for many online gold traders.
With the absence of such an intermediary process such as a xauusd trading dealing desk the STP xauusd broker is able to process its clients xauusd orders without any delays. In addition STP xauusd brokers don't send requotes to their clients something that most traders regard as an advantage.
This also enables the Straight Through Processing XAUUSD Brokers to allow gold traders to trade during the release times of financial news without any restrictions. Other online brokers might not have the liquidity of an STP gold trading broker and might in turn lock out xauusd for a few minutes before and after a xauusd trading news release.
Straight Through Processing XAUUSD Brokers provide the best xauusd order execution and access to trade order execution due to high internal liquidity rate provided by multiple liquidity providers and reliable inter-bank partners they have.
Different Types of XAUUSD Brokers - The Difference Between STP XAUUSD Broker & ECN XAUUSD Broker - Difference Between STP XAUUSD Broker & ECN Gold Broker - Types of XAUUSD Brokers: STP Brokers - Types of XAUUSD Brokers: ECN Brokers.
