| Updated: January 15, 2025Forex brokers are pivotal in facilitating transactions between buyers and sellers in the foreign exchange market. They are grouped into several major categories, depending on the pricing model they implement, with Straight-Through Processing (STP) brokers enjoying increasing popularity among traders due to their unique approach toward order execution.
STP brokers act as intermediaries between traders and liquidity providers, offering a distinct set of benefits to the former. If you are new to this type of order execution, we suggest you keep reading as we delve deeper into STP brokers and how they work. Also included in this article is information about other popular pricing models like ECN, alongside a rundown of the main advantages and disadvantages of trading with STP brokers.
Below you can find a list with the best STP Forex Brokers:
Top 8 STP Forex Brokers
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Pepperstone
- Australia & CySEC regulated broker
- MT4/MT5, TradingView, Ctrader, Iress
- EUR/USD spread from 0.0 pips
Trading Instruments- Forex
- Indices
- Commodities
- Cryptocurrencies
- Share CFDs
- ETFs
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Fusion Markets
- Australia regulated broker
- MT4, MT5, TradingView, Ctrader
- Leverage up to 500
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FP Markets
- Australia & CySEC regulated broker
- MT4/MT5, TradingView, Ctrader, Iress
- EUR/USD spread from 0.0 pips
Trading Instruments- Forex CFDs
- Shares CFDs
- Metals CFDs
- Commodities CFDs
- Indices CFDs
- Crypto CFDs
- ETF CFDs
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Global Prime
- Australia regulated broker
- Advanced MT4
- $0 Minimum Account Size
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Saxo Bank
- Holds a banking license
- Offers forex options and spot trading
- Minimum EUR/USD spreads from 0.9 pips
Trading Instruments- Stocks
- ETFs
- Bonds
- Mutual funds
- Crypto ETPs
- Options
- Futures
- Forex
- Forex options
- Crypto FX
- CFDs
- Commodities
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IC Markets
- Offers 2,200+ tradable markets, including 61 currency pairs
- Leverage of up to 1:1000 in select jurisdictions
- EUR/USD spreads from 0.8 pips for standard accounts
Trading Instruments- CFDs on Forex
- Commodities
- Index
- Bond
- Cryptocurrencies
- Stock
- Futures
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Interactive Brokers
- Providing access to more than 135 global markets: Forex, Cryptocurrencies, Bonds, Commodities and Stocks
- Seamless integration with third-party research platforms and API access for automated trading and portfolio management.
- Advanced trading tools, such as algorithmic trading options, which allow professional-level trading executions.
Trading Instruments- Stocks
- options
- futures
- ETFs
- bonds
- mutual funds
- metals
- indices
- cryptocurrencies
- spot currencies
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CMC Markets
- Provides a choice of 10,000+ trading instruments
- Supports MT4 and Next Generation (proprietary platform)
- Spreads for EUR/USD from 0.5 pips
Trading Instruments- CFDs on Forex
- Indices
- Shares
- Commodities
- Treasuries
- Cryptocurrencies
- Share Baskets
- Investments on ETFs
- Managed funds
- Options
- and more
Brokers Compared by Spread
| Brand | Commission per lot | |
|---|---|---|
| Pepperstone | 1.00 (min) | $0 (Standard Account), $7 round-turn (Razor Account) |
| Fusion Markets | 0.93 avg (Classic) | $0 Classic Account, $4.50 round turn on Zero Account |
| FP Markets | 1.1 | $0 Standard Account; $6 round turn on Pro Account |
| Global Prime | 0.96 avg (Standard) | $0 Standard Accounts; $7 round turn on Raw Accounts |
| Saxo Bank | 0.9 | $3 per lot |
| IC Markets | 0.8 | $0 Standard MT; $6 round turn on Raw cTrader; $7 round turn on Raw MT |
| Interactive Brokers | 0.1 | From 0.08 to 0.20 bps x trade size |
| CMC Markets | 0.5 | $0.02 per share with a $10 minimum for US shares; 0.10% for other shares with a €/£9 minimum |
FX Brokers Deposit Method Comparison
| Brand | Minimum deposit | |
|---|---|---|
| Pepperstone |  |
$0 |
| Fusion Markets | |
$0 |
| FP Markets | |
$50 (AU$100) |
| Global Prime | |
$0 |
| Saxo Bank |  |
$0 Classic$200,000 + Platinum $1,000,000 + VIP |
| IC Markets | |
$200 |
| Interactive Brokers | |
$0 |
| CMC Markets | |
$0 |
Brokers by Regulator
| Brand | Maximum leverage | |
|---|---|---|
| Pepperstone | |
1:30 |
| Fusion Markets | |
1:30 (1:500 for forex and metals via VFSC) |
| FP Markets | |
1:30 |
| Global Prime | |
1:500 (1:30 for ASIC entity) |
| Saxo Bank | |
1:30 |
| IC Markets | |
1:30 |
| Interactive Brokers | |
1:20 |
| CMC Markets | |
1:30 |
Forex Brokers Platform Availability
| Brand | FX pairs to trade | |
|---|---|---|
| Pepperstone | |
90+ |
| Fusion Markets | |
80+ |
| FP Markets | |
70+ |
| Global Prime | |
56 |
| Saxo Bank | |
185+ |
| IC Markets | |
61 |
| Interactive Brokers | |
100+ |
| CMC Markets | |
330+ |
Comprehensive Comparison of the Best STP Forex Brokers
| Brand | Min. Deposit | Trading Platforms | Spread | Regulation | Trustpilot |
|---|---|---|---|---|---|
 |
$0 |
|
1.00 (min) |
|
|
 |
$0 |
|
0.93 avg (Classic) |
|
|
 |
$50 (AU$100) |
|
1.1 |
|
|
 |
$0 |
|
0.96 avg (Standard) |
|
|
 |
$0 Classic$200,000 + Platinum $1,000,000 + VIP |
|
0.9 |
|
|
 |
$200 |
|
0.8 |
|
|
 |
$0 |
|
0.1 |
|
|
 |
$0 |
|
0.5 |
|
How and When Did STP Order Execution Emerge?
The concept of STP order execution emerged as a response to the evolving needs of the foreign exchange market. Traditionally, brokers acted as market makers, often taking the opposite side of their clients’ positions. The year 1973 marked a significant turning point in the history of foreign exchange trading. It was during this time that the first electronic trade was recorded, paving the way for a new era in forex.
The introduction of currency futures trading on an electronic platform by the International Money Market (IMM) laid the groundwork for the development of modern trading systems like STP. As technology continued to advance in the 1990s, a new breed of brokers emerged, leveraging the power of automation to streamline trade execution and minimize potential conflicts of interest.
This new generation of brokers, known as Straight-Through Processing (STP) brokers, utilized advanced networks to provide clients with direct access to the market, enabling faster and more efficient trade execution. They started routing traders’ orders directly to third-party liquidity providers, such as banks, hedge funds, and other financial institutions. The advent of STP brokers revolutionized the forex landscape, offering a more transparent and efficient trading experience for clients.
How Does the STP Pricing Model Work?
The STP pricing model is based on the concept of routing orders directly to the broker’s liquidity providers. When a trader places an order, the STP broker forwards it to their network of liquidity providers, who then compete to provide the best possible price. The broker collects a commission on each trade, rather than profiting from the bid-ask spread only.
This approach allows STP brokers to offer more competitive pricing, as they are not motivated to widen their spreads, let alone manipulate prices. The STP pricing model is designed to provide traders with the best possible prices, while also ensuring that the broker generates revenue through commissions. Here is a brief rundown of how this pricing model works in practice.
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The client sends an order to the broker, specifying the details of the transaction, including the currency pair, the amount to be traded, and the target price.
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Their request is then transmitted by the broker to a network of liquidity providers like banks and other market participants.
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The liquidity providers provide their most competitive quotes for the specified currency pair.
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The broker then selects the most favorable price quote.
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The trade is then automatically executed without any human interference, ensuring a seamless, fast, and efficient execution.
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The broker collects a small fee, which is fixed or calculated as a percentage of the trade’s volume.
Main Features of STP Brokers
STP brokers are characterized by their ability to provide direct market access, transparent pricing, and fast order execution. All these aspects combined render them a compelling choice for traders looking to minimize their expenses and maximize their profits from successfully closed orders. Here are some of the main features of STP brokers at a glance.
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No dealing desk order execution: STP brokers route orders directly to their liquidity providers, allowing traders to access more competitive prices.
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Price transparency: This type of forex broker provides traders with real-time market prices, eliminating the risk of price manipulation and conflicts of interest.
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Low-latency order execution: STP brokers utilize advanced technology to execute trades quickly and efficiently. The risks of experiencing slippage and receiving requotes are reduced.
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Fixed spreads: Trading sites implementing this pricing model offer floating rather than fixed spreads. Their prices are more competitive often starting from 0.0 pips as brokers are not motivated to widen spreads to generate revenue.
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Commissions on trades: STP brokers earn revenue mainly by charging commissions on each trade, rather than profiting from the bid-ask spread. Commissions are based on trade volume (1 standard lot in most cases) and apply both when you open and close your positions.
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Higher deposit requirements: This type of broker may prove unsuitable for small-scale retail traders as it often comes with higher requirements for the minimum starting capital.
Other Common Types of Order Execution at Forex Brokers
In addition to the STP order processing, there are several other pricing models used by Forex brokers, including Dealing Desk (market makers) and Electronic Communication Network (ECN). Some brokers rely on hybrid models as you shall see shortly. Continue reading to learn more about each type of broker.
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Dealing Desk (DD)
Dealing Desk brokers act as intermediaries between traders and the market, often taking on the role of counterparties to their clients’ trades. This means that the broker’s interests may be opposed to those of their clients, as they aim to profit from the difference between the buy and sell prices. Their spreads are usually fixed rather than floating, as is the case with STP brokers.
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Electronic Communication Network (ECN)
Brokers serve as mediators between traders and a network of liquidity providers, such as banks, hedge funds, and other financial institutions. By aggregating prices from multiple sources, ECN brokers create a marketplace where traders can interact with each other and with liquidity providers, allowing for more competitive pricing and tighter spreads. ECN brokers provide access to the interbank market.
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Hybrid Brokers
These brokers use a combination of the ECN and STP models. They can route trades to either a network of liquidity providers or directly to a single counterparty, depending on the specific requirements of the trade. This hybrid approach enables brokers to optimize trade execution, minimize costs, and provide customers with a more robust and reliable trading experience.
Advantages of Trading with STP Brokers
Trading with STP brokers has become an increasingly popular choice among forex traders, and for a good reason. By utilizing a Straight-Through Processing (STP) model, these brokers are able to offer a unique set of benefits that can enhance a customer’s overall experience and potentially increase their profits from successful trades.
Traders gain access to a more streamlined and cost-effective order execution, which can be particularly beneficial for those who trade frequently or in large volumes. Here is a brief rundown of the main benefits of STP.
- Faster execution speeds
- Tighter spreads
- Lower trading costs
- Increased transparency
- Reduced conflict of interest
- Direct market access
- Improved trading conditions
Disadvantages of Trading with STP Brokers
While STP brokers offer a range of benefits, they are not without their drawbacks. Trading with an STP broker can result in additional costs, among other downsides. You should consider them all carefully as they can significantly impact your overall experience and profitability. Below, we list the main disadvantages of trading with STP brokers.
- Commissions upon entering and exiting trades
- Potential for experiencing significant price fluctuations
- Higher deposit requirements in some cases
- Potential for technical issues and errors
- Limited control over trade execution
- Possibility of slippage still exists
FAQs
Are STP brokers suitable for beginners?
STP brokers may not be ideal for novice traders, as they sometimes require higher initial deposits. Beginners may also find it challenging to navigate the complexities of STP trading, especially if they struggle to understand how their fee structures work. Additionally, the fast-paced and automated nature of STP trading can be overwhelming for those who are new to the markets.
Are STP brokers a good fit for scalpers?
STP brokers can be a good fit for scalpers due to their ability to provide rapid trade execution and lower spreads. The automated processing offered by STP brokers allows for quick entry and exit from trades, which is essential for scalping strategies that rely on making multiple small trades in a short period.
Is ECN order execution better than STP?
ECN order execution is often considered superior to STP execution because it provides access to a deeper pool of liquidity, resulting in tighter spreads and more competitive pricing. Additionally, ECN execution eliminates the risk of market manipulation and improves overall trading efficiency.
How much capital do I need to start trading with an STP broker?
The amount of initial capital required to start trading with an STP broker can vary significantly, depending on the specific broker and the type of trading account you open. Generally, STP brokers sometimes have slightly higher minimum deposit requirements. It’s essential to research and compare the minimums at different trading sites to find one that aligns with your individual budget, experience level, and goals.
How to find a reliable STP broker?
It is crucial to conduct thorough research and exercise due diligence when selecting an STP trading site. This process typically involves verifying the broker’s regulatory status, assessing their reputation by reading feedback at consumer review platforms like Trustpilot, and evaluating their trading conditions, such as spreads, commissions, and maximum leverage.
Conclusion
In conclusion, STP Forex brokers offer a unique approach to order execution, providing traders with more transparent pricing and faster order execution. While there are some disadvantages to trading with them, the advantages of this model make it an attractive choice for traders seeking better conditions and more competitive pricing.
By understanding the features, advantages, and disadvantages of STP brokers, traders can make informed decisions about their trading needs and choose the best broker to suit their needs. Whether you are a seasoned trader or just starting out, STP brokers are definitely worth considering as a viable option.
Why You Should Trust RationalFX
When it comes to making informed decisions about forex brokers, it’s essential to rely on trustworthy sources. RationalFX, a company with over 17 years of experience since its founding in 2005, has established itself as a credible authority in the industry. With an impressive collection of over 2500 reviews on Trustpilot, boasting a score of 4.2, it’s clear that Rational FX has built a reputation for providing reliable and unbiased information.
What sets Rational FX apart is its rigorous evaluation process, which considers over 30 different criteria when selecting forex brokers. This comprehensive approach ensures that every aspect of a broker’s service is taken in consideration, including regulation, forex spreads, trading platforms, deposit methods, and reputation. With its wealth of experience, transparent review process, and outstanding customer feedback, Rational FX is a trusted source for anyone seeking reliable information on forex brokers. You can reach us via e-mail at [email protected] or contact us through our social media accounts here: Facebook, YouTube, or leave a feedback here.