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