Why Traders Choose Best STP Broker & The Difference Between Best STP Broker and Best ECN Broker
XAUUSD STP Meaning
Best STP Broker or Straight Through Processing, is the name given to brokers that, when upon receiving a client order they will pass on the orders directly to their Liquidity Provider. Liquidity providers can include Banks ++3& as such ++1there is no inter-mediary involved in order processing in other words the STP ++1##does--notdoes't filter the orders through a Dealing Desk. The absence of a Dealing Desk intervention is what makes this electronic platform a Straight Through Processing.
With absence of an intermediary process (dealing desk) the Best STP Broker, Straight Through Process execution will be able to process its clients orders instantly without having any delay. This makes Best STP Brokers the most recommended broker type. Straight Through Processing Brokers will also not send re-quotes to its clients something which most traders regard as very important. The Straight Through Process execution will also in effect will allow its clients to trade during the release of financial news reports without having any restrictions.
Straight Through Processingtrading brokers benefit from having several liquidity providers and an increase in number of providers in the system means better fills for the client. A large number of Best STP Brokers will use banks trading on the interbank markets as their liquidity providers.
Before Reading Spot the difference between these two movings so that the movings below don't seem like a repetition.
- Reasons why Brokers select STP execution
- Reasons why Traders Select STP execution
Reasons why Gold Brokers select to be Best STP Broker
In addition to the fact that most traders prefer Straight Through Processing due to the fact that a client's losses are not a broker's profit. It's therefore in broker's interest for the trader to make profitable trades, a STP execution model often implies that there is No Dealing Desk (NDD) and subsequently has less expenses through its staff salaries.
An Best STP Broker is compensated through a markup on the spread it obtains from its XAUUSD Liquidity Provider and/or commissions imposed for each trade. As most liquidity providers of Straight Through Process execution are banks on the Interbank market, the majority of which offer fixed spreads this allows the Straight Through Processing Brokers to provide both fixed and/or variable spreads to its clients.
Every time a client trades through a STP platform, the Best STP Broker will always make a profit. As Straight Through Processing add a small markup to the spread which they receive from their provider when getting quoting of bid/ask rate. The Best STP Broker will apply this markup by a certain amount of fractional pips to the bid & ask gold price that it receives from its best bid/ask XAUUSD Liquidity Provider before passing the rates onto the client via the straight through processing electronic platform.
As the client places the order through the STP platform, the orders are then sent directly to the Liquidity Provider and as such the Best STP Broker executes the same orders as the client at a slightly better price this is the markup.
Reasons why Traders Select Straight Through Processing Brokers
Clients often choose to execute trades via a Best STP Broker as it often implies there is no Dealing Desk, which in turn means that the broker is more transparent with clients.
The Traders enter trade transactions into a true market instead of an artificial market that may be created by a market maker. Client trades obtain better and faster fills through a Best STP Broker.
The better and faster fills are obtained directly from the many competitive market bids & offers coming through the Straight Through Processing liquidity providers, which provide for more liquidity within the market and in turn this implies lower execution gold prices for the trader.
Client transactions with a Best STP Broker means there is anonymity for the client as there is no Dealing Desk monitoring the transactions of orders coming in from each client. The trading orders are instead executed automatically through the market network anonymously.
Another Type of Broker is Best ECN Broker
What is a Best ECN Broker?
Electronic Communications Network- Best ECN Broker provide traders with real time data quotes straight from the network of banks that trade XAUUSD- The Interbank market. Since these Best ECN Brokers offer real time data xauusd quote from these network through their own ECN Network which connects directly to the Interbank network of banks, they are known as Best ECN Broker technology brokers, short form is Best ECN Broker.
Best ECN Broker will show the entire bid and ask offers currently available in the market from banks. An Best ECN Broker will allow traders to place their orders straight through to the market. Liquidity isn't provided by broker but by this inter-bank net-work of banks. This way traders through an Electronic Communication Net-work gets high liquidity and execute trades very quickly & instantly without getting re quoted.
Most Traders ask which is the best between the Best STP Broker and the Best ECN Broker? and What is the difference between these two?
Best STP Broker
Has many liquidity providers, but selects the best at any one time automatically for the trader. Therefore when a trader places a trade the orders will be passed direct to this interbank.
Therefore Best STP Broker is like Best ECN Broker the only difference is that the Straight Through Processing Brokers automatically chooses the best one at that particular time & does it automatically for the trader.
Best ECN Broker
Has many liquidity providers from which a trader will see all at the same time & select which to trade, It is like having 10 brokers to select from which to trade.
The Best ECN Broker one will have to look at many live quotes at the same time & choose one, this streaming xauusd quote will have varying spreads and a trader selects the low spread.
There is no much difference between Best ECN Broker and Best STP Broker, that is why some traders or some brokers will use the term interchangeably, because the only difference between Straight Through Process execution from the Electronic Communication Network execution is that the Best STP Broker only chooses to have only one XAUUSD Liquidity Provider while Best ECN Broker implements a wide variety of liquidity providers and it is up to the trader to choose which XAUUSD Liquidity Provider to choose from while trading.
According to reviews, these brokers also have low spreads, therefore if you're looking for the low spreads it's good to select a Best STP Broker.
Most online brokers do not want to clutter the traders work space with multiple streaming xauusd quote from various different places which might confuse the trader, especially the beginner traders who don't know what is what, that is why most brokers may be Best ECN Broker but only select to display only one realtime quotes from only one interbank, therefore becoming more of a Best STP Broker rather than a Best ECN Broker, but model of operation is basically one & the same.
If you were to open a account with a Best ECN Broker you would get like 10 quotes of XAUUSD from different banks and to trade you would have to chose the quote from one of these banks. 10 price quotes for each xauusd instrument would make your trading platform workspace too crowded (An Best ECN Broker Lists Spreads from many liquidity providers). Another thing is that you would need a more complex platform to live stream these many price quotes, this type of platform would not make the best platform to trade with. Furthermore if you open a Best ECN Broker account you'll have to pay additional commissions on top of spreads. This is also another reason why to select Best STP Broker since unlike Best ECN Broker, Best STP Broker don't charge commissions. This means that the Best ECN Broker is not the cheapest execution technique & will charge traders extra commissions adding onto your transaction costs.
Best STP Brokers offer the best liquidity conditions for traders to make trades
Best STP Brokers don't have a dealing desk and therefore this provides for full trade transparency, faster & better order fills. Full transparency means this type of broker does-not create an artificial trading market environment for the traders, but instead displays a trader the real time data xauusd quote from an electronic network of banks and allows the trader to enter the true market conditions created by the various market participants.
Straight Through Processing - is the name given to brokers that: upon receiving of a client order they will pass on orders directly to the network of banks & as such there is no intermediary who will be involved in order execution in other words Straight Through Processing Execution will not be filtering orders through a Dealing Desk. The absence of a Dealing Desk is what makes the Electronic Communication Network the best choice for many traders.
With the absence of such a intermediary process such as a dealing desk the Best STP Broker is able to process its clients orders without any delay. In addition these brokers do not send requotes to their clients something that most traders regard as a huge advantage.
This also enables the Straight Through Processing STP Brokers to allow its clients to trade during the release times of financial news reports without having any restrictions. Other online brokers might not have the liquidity of a Best STP Broker and might in turn lock out trading for a few minutes before and after a news release.
XAUUSD Straight Through Processing Brokers provide the best 24-hour execution and access to order execution due to high internal liquidity rate and reliable inter-bank partners they have.
Difference Between STP & ECN - XAUUSD ECN Meaning - XAUUSD STP Meaning
