Different Types of Stock Indices Brokers
Types of Indices Brokers: STP Brokers
Most indices trader ask what is the difference between the STP and ECN?
STP Indices 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 indices trade the stock indices 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 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 & does it automatically for the trader.
ECN Indices Broker
ECN indices 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 indices brokers indices quotes to select from which to trade - these ten quotes are for the same indices instrument - each quote from a different liquidity provider.
ECN broker quotes model means a trader will have to look at many streaming indices quotes at the same time & choose one, this streaming quote will have varying spreads markups & a trader selects the low spreads.
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 Electronic Communication Network execution is that 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 & displays all their quotes to the traders & it is up to the trader to select which liquidity provider to select 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 low spread it is good to choose an STP broker or an ECN broker.
Most online indices brokers do not want to clutter the traders workspace with multiple streaming quotes from various different liquidity providers for the same stock indices at the same time because this might confuse stock indices traders, especially the beginner 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 indices 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 Indices from different liquidity providers and to trade you would have to chose the indices quote from one of these liquidity provider. 10 quotes for every trading instrument would make your stock indices trading platform workspace too crowded (An ECN Indices Broker Lists Spread from many liquidity providers). Another thing is that you would need to have a more complex indices 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 indices 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 technique and will charge indices traders extra commissions on top of spread adding on to your indices trading transaction costs.
STP Indices Brokers offer the best liquidity for stock indices 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 trader the real time stock indices price data quotes from an electronic network of banks and allows the trader to enter the true market conditions created by 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 indices traders.
With the absence of such an inter-mediary process such as the indices dealing desk the STP indices broker is able to process its clients stock indices orders without any delays. In addition STP indices brokers do not send requotes to their clients something which most traders regard as an advantage.
This also enables the Straight Through Processing Indices Brokers to allow stock indices traders to trade during the release times of financial news without any restrictions. Other online brokers might not have the liquidity of an STP indices broker and might in turn lock out indices trading for few minutes before and after a indices news release.
Straight Through Processing Stock Indices 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 inter-bank partners they have.
Different Types of Stock Indices Brokers - The Difference Between STP Indices Broker and ECN Indices Broker - Difference Between STP Indices Broker and ECN Stock Indices Broker - Types of Indices Brokers: STP Brokers - Types of Indices Brokers: ECN Brokers.
