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In forex trading, one must have come across the terminology STP trading and STP forex brokers. STP stands for “Straight Though Processing”. This is a procedure which involves no dealing desk either in quoting or market making (controlling the price in the market). Instead the orders are directly passed on to the liquidity providers who shall execute them at their bid/ask rates.
OctaFX broker as a STP forex broker
STP forex broker is a diverse group that carry out the forex transactions in the currency market. OctaFx broker is one such renowned STP forex broker. They act as an intermediary between the client and the liquidity providers. When the clients place their orders, the STP brokers send the orders directly to the liquidity providers like banks or larger traders. These orders are not passed through the dealing desks. The absence of intervention of dealing desk makes their trading platform as STP.
Why do brokers prefer to be STP brokers?
The main reason why brokers such as OctaFx broker choose to be STP brokers is because the losses of the client cannot become the gains of the broker. Hence, the clients have to trade in such a way that they make gains. As the brokers have no dealing desk, their staff overheads are low.
The STP forex brokers earn from the spreads they get from the liquidity providers and the commission that is imposed on each trade. Most of these liquidity providers are banks who are also market makers. While some of them offer fixed spreads several others provide variable spreads too. Hence, STP forex brokers also provide their clients either fixed /variable spread.
Every time a client places an order, the STP broker adds a little mark up to the spread that they are entitled to from the provider. This way every transaction of the client earns them profit for the broker as well.
Why do traders prefer STP forex brokers?
In STP trading, the client’s orders are directly placed to the liquidity provider. This way the dealings with the broker become more transparent. The clients also get the satisfaction that they are directly dealing in the market. As the liquidity provider of the STP broker provide competitive offers and market bids, the client’s trade also acquire faster and better fills.
Advantages of STP brokers
• There does not arise any conflict of interest when the clients trade through STP brokers. The brokers do not gain from the losses of the clients. They earn their profits only from the addition to the spread or commission.
• Scalpers can practice their trading style without the fear of getting penalised with re-quotes, outright ban and slippages.
• The STP brokers enable the clients to engage themselves deeply in the market. They provide the clients with lots of information regarding the market prices quoted by different liquidity providers.
OctaFX broker facilitates a comfortable and convenient STP broker services to its clients. They have also been awarded as the “Best STP Broker” at the European CEO Award. It would really be a good opportunity to deal with the best STP forex brokers.
is a true STP/ECN broker. I have been with them for 2 years and I never had an issue with my trading or withdrawals, unlike with market makers.
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