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Different Types of Stock Indexes Brokers

Types of Indices Brokers: STP Brokers

Most indices trader ask what is the difference between the STP and ECN?

STP Indices Broker

STP broker has many liquidity providers, but chooses the best one at any one time automatically for the indices trader. Therefore when a indices trader places a indices trade the stock indices orders will be passed direct to this interbank network of liquidity providers - after the liquidity provider with the lowest spread is selected automatically by the STP execution model.

Therefore STP indices broker is like ECN indices 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 indices trader.

ECN Indices Broker

ECN indices broker has many liquidity providers from which a indices trader will see all at the same time and choose which liquidity provider to trade with, It is like having 10 indices brokers indices quotes to choose from which to trade - these ten quotes are for the same indices instrument - each quote from a different liquidity provider.

The ECN broker quotes model means a indices trader will have to look at many streaming indices quotes at the same time and choose one, this streaming quote will have varying spreads markups and a indices trader chooses the lowest spread.

There is no much difference between ECN indices broker and STP indices broker, that is why some indices traders or some indices brokers will use the term interchangeably, because the only difference between Straight Through Processing execution from the Electronic Communication Network execution is that the STP indices 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 indices traders and it is up to the indices trader to choose which liquidity provider to choose from while trading.

According to indices broker reviews, these ECN and STP brokers are also have the lowest indices spreads, therefore if you are looking for the lowest spreads it is good to choose an STP broker or an ECN broker.

Most online indices brokers do not want to clutter the indices traders workspace with multiple streaming quotes from various different liquidity providers for the same stock indexes at the same time because this might confuse stock indexes traders, especially the beginner indices traders who do not know what is what from what, that is why most indices brokers might be ECN brokers but only choose to display only one streaming stock indexes price quotes from only one interbank liquidity provider, therefore becoming more of an STP broker rather than an ECN broker, but the model of indices trade execution operation is basically one and the same.

If you were to open a indices trading account with an ECN indices broker you would get like 10 different quotes of Stock Indexes from different liquidity providers and to trade you would have to chose the indices quote from one of these liquidity provider. 10 indices quotes for every indices pair would make your stock indexes trading platform workspace too crowded (An ECN Indices Broker Lists Spreads from many liquidity providers). Another thing is that you would need to have a more complex indices trading platform to stream these multiple indices quotes, this type of indices platform would not make the best trading platform software to trade with. Furthermore, if you open an ECN stock indexes trading account you will have to pay additional commissions on top of indices spreads. This is also another reason why to choose STP indices broker since unlike ECN indices broker, STP indices broker do not charge commissions on top of spreads. This means that the ECN indices broker execution is not the cheapest execution method and will charge indices traders extra commissions on top of spreads adding onto your indices trading transaction costs.

STP Indices Brokers offer the best liquidity for stock indexes traders to make trades

STP indices brokers do not have a indices dealing desk and therefore this provides for full indices trade order transparency, faster and better order fills. The full order transparency means this type of STP indices broker does not create an artificial market for clients, but instead shows a indices trader the real time stock indexes price data quotes from an electronic network of banks and allows the indices trader to enter the true market conditions created by the various indices market participants.

Straight Through Processing Indices Brokers- is the name given to indices brokers that; upon receiving of a indices order they will pass on the indices 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 indices trade orders through a Indices Dealing Desk. The absence of a Indices Dealing Desk is what makes the STP execution model the best choice for many online stock indexes traders.

With the absence of such an intermediary process such as the indices dealing desk the STP indices broker is able to process its clients stock indices orders without any delay. In addition STP indices brokers do not send re-quotes to their clients something that most indices traders regard as an advantage.

This also enables the Straight Through Processing Indices Brokers to allow stock indexes traders to trade during the release times of financial news without any restrictions. Other online indices brokers might not have the liquidity of an STP indices broker and might in turn lock out indices trading for a few minutes before and after a indices news release.

Straight Through Processing Stock Indexes Brokers provide the best indices order execution and access to trade order execution due to high internal liquidity rate provided by multiple liquidity providers and reliable interbank partners they have.

Different Types of Stock Indexes Brokers - The Difference Between STP Indices Broker and ECN Indices Broker - Difference Between STP Indices Broker and ECN Stock Indexes Broker - Types of Indices Brokers: STP Brokers - Types of Indices Brokers: ECN Brokers.


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