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