Trade Stock Indices

Index Brokers Types

ECN, STP, NDD, DD, Market Makers

The list presented here displays the different groups of brokers sorted by how they carry out trades.

ECN

An ECN Stock Index Trade Account stands for Electronic Communication Network. Brokers offering these ECN Indices Trade Accounts are directly connected to the interbank network via an electronic communication system, and orders placed through an ECN Stock Indices Trade Account are routed straight to this electronic network. An ECN Indices Trade Account provides visibility into the diverse orders emanating from various financial institutions. The price quotations for indices presented by this network of banks are delivered directly into the interbank network, and trades are executed immediately in the interbank market once a trader utilizing this ECN account submits an order to their broker.

ECN trading accounts charge both commissions and spreads on every trade. For these ECN indices accounts, every order gets matched with another in real time over the interbank ECN network.

STP

STP Indices Trade Account means Straight Through Processing. STP Indices Account brokers send their clients' orders straight to their Liquidity Provider. The Liquidity Provider is a large bank that has a lot of trading money to use to trade on the interbank network.

STP indices accounts from brokers vary. Some use one provider: others use many.

The great part about STP Indices Accounts is that stock traders can quickly make their stock trades happen right away with fast execution because they can use interbank markets through their STP stock broker.

STP Indices Accounts won't charge fees, but they will charge a spread on trades involving stock indices. Traders can directly access the inter bank market, so orders are not re-quoted and there is no waiting for orders to be executed: order execution happens right away.

Distinctions Between STP and ECN Trade Execution Types

NDD

NDD means no dealing desk for index orders. These brokers skip the desk. It cuts limits compared to dealing desk types.

NDD Order Execution means that the trade orders from the online traders account will be sent straight to the online interbank exchange stock market. Orders will be matched with other orders in the online market using the broker's Non Dealing Desk trade order execution model.

DD

DD refers to dealing desk: these brokers operate under a dealing desk execution model, enabling them to match and execute orders in the online marketplace.

The trader trading with a DD account will get a lot of requotes.

Dealing Desks (DD) often hit traders with a lot of requotes. That means the prices you see aren't always in real time, and the broker can change your order if the market moves fast before they fill it online.

Dealing Desk trading accounts mean that orders are not executed right away. Because of this execution style, orders done with a DD Stock Index Trade Account might not be done as fast as with an ECN account or an STP account.

Market Makers

Market Maker (MM) accounts are broker accounts where Market Maker brokers employ a dealing desk execution model, allowing them to match orders internally without accessing the broader market.

Stock Index orders also can be executed against their clients - meaning the online broker can take the in the opposite trend side of a traders open trades. This trading broker can make the decision to either execute a order that is the in the opposite trend of a trader's order thus if the trader makes a loss the broker makes a profit, and if trader makes a profit the online broker makes a loss.

Regulated Stock Index Brokers

Regulated stock index brokers work under a financial authority. They follow a strict ethics code or risk losing their license. Traders trust these real companies. They avoid shady acts against clients since regulators audit them each year.

The best option for trading is Regulated + STP Execution.

Index broker types include ECN, STP, NDD, DD, and market makers. They act as liquidity providers for stock indices.

Get More Tutorials:

Stock Index Broker