How Does STP Compare To ECN?

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STP and ECN have several similar characteristics, but some traders prefer STP in its pure form due to the lack of a commission per trade that is usually associated with ECN accounts. Most institutional traders open ECN accounts to enjoy tighter spreads at the cost of a commission per trade that is charged as a percentage of the traded lots. Scalpers are also known to trade with ECN conditions to get in and out of the markets as quickly as possible and enjoy tighter spreads for better market execution. However, some retail traders are more comfortable with the higher STP spreads rather than accounting for the commission for each trade. Therefore, if a commission-free trade is your priority, STP accounts can provide more advantages than ECN accounts.

When it comes to the speed of trade execution, ECN has the upper hand over regular STP accounts as traders are exposed to the actual liquidity available in the market. STP accounts may be bridged to larger brokers or exchange houses, which can result in slower trade execution times and a few re-quotes. ECN accounts have minimal instances of re-quotes, and it is guaranteed that a trader’s position will be filled at the strike price, even if it is a partial fulfillment of the order.

How Do I Make The Choice Between ECN & STP Forex Brokers?

If you are finding it difficult to make the choice between ECN and STP, you should trade on a demo account to get familiar with both platforms and decide on a system that suits your trading style. Some traders might find ECN to be more expensive from a commission point of view, but they may be surprised to find that ECN accounts may prove to be more economical in the long run. ECN accounts also provide the best trading conditions; however, STP accounts are not far behind regarding the speed of trading and the overall trading environment. Regardless of your choice, always choose a Forex broker that is regulated by a reputable regulatory agency, and ensure that the broker of your choice has a good reputation in the market.

Reprinted from Forexbonuses, the copyright all reserved by the original author.