STP forex brokers operate using a Straight Through Processing model, where client orders are routed directly to external liquidity providers without intervention from a dealing desk. In this model, the broker acts as an intermediary rather than a market maker, with trades passed through to banks, financial institutions, or other liquidity sources for execution. STP brokers aim to offer more transparent pricing and avoid conflicts of interest by not taking the opposite side of the client’s trades.
The STP model has gained popularity among retail traders looking for fairer execution, dynamic pricing, and reduced interference. While not as direct as ECN execution, STP bridges the gap between market access and platform usability, often providing a cleaner trading environment than traditional dealing desk brokers.
Below we are going talk more about how the STP model works. If you want to find a STP broker then you should visit ForexBrokersOnline.
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How the STP Model Works
In an STP setup, client orders are matched with available bid and ask quotes from external liquidity providers. The broker’s role is limited to aggregating these quotes and offering the best available price to the trader. Because the broker does not internally process the order, it has no incentive to profit from client losses. Instead, revenue is usually generated from spreads, which may be marked up slightly over raw interbank prices.
This pass-through system ensures that orders are executed based on real market conditions. Prices fluctuate according to supply and demand in the broader market, and execution is subject to slippage or partial fills depending on liquidity depth. However, the absence of a dealing desk reduces the likelihood of re-quotes or price manipulation.
While the model is similar to ECN in its avoidance of internal order matching, STP brokers typically do not offer access to the full depth of market or a visible order book. Instead, they serve as a streamlined route to external liquidity, with less complexity in pricing and platform requirements.
Execution and Pricing
STP brokers offer variable spreads that reflect market conditions. During periods of high liquidity, spreads can be tight. During volatility or illiquid hours, spreads may widen as liquidity providers adjust their quotes. This dynamic pricing is more reflective of actual market behaviour than the fixed spreads offered by market makers.
Because STP brokers may source pricing from multiple providers, they can offer competitive execution, particularly on major currency pairs. Some brokers offer “raw” STP accounts with near-interbank spreads plus a commission, while others incorporate the markup directly into the spread and charge no separate commission. The choice depends on the broker’s business model and the trader’s preference for cost structure.
Order execution is automated, and orders are filled at the best available price among the broker’s liquidity providers. The use of aggregated feeds helps minimise pricing gaps and improves order routing. Execution speed is generally sufficient for most retail strategies, though it may not match the ultra-low latency required by high-frequency systems.
Broker Selection and Transparency
While STP brokers are positioned as neutral intermediaries, not all firms advertising the STP model implement it in a consistent way. Some use hybrid models that mix STP with internal matching or selectively route orders based on volume or profitability. Others label their accounts as STP but maintain partial dealing desk operations.
Verifying a broker’s execution model is difficult without access to internal order routing data. However, regulated brokers in established jurisdictions are often required to disclose their execution practices and financial relationships with liquidity providers. Traders should review broker terms, pricing disclosures, and regulatory filings when available.
Reputable STP brokers typically operate under financial regulation and maintain segregated client funds, transparent pricing structures, and no dealing desk intervention. Traders should assess whether the broker earns revenue primarily from spreads or commissions and whether it has a financial interest in the outcome of trades.
Suitability for Different Trading Styles
The STP model is well suited to most retail trading styles, including intraday, swing, and position trading. It offers cleaner execution than market-making environments, especially during news events or periods of price volatility. For scalpers or those requiring consistent execution at tight spreads, STP brokers can be a viable option, though not always as fast or direct as ECN setups.
Because STP brokers may not support visible depth of market or advanced order types such as iceberg orders or VWAP algorithms, they are less suited to high-frequency or institutional-style strategies. However, for discretionary traders using chart-based or macro-driven approaches, STP provides a good balance between transparency and usability.
The absence of dealing desk activity also makes STP accounts attractive to traders concerned about price manipulation or slippage caused by internal broker controls. While slippage can still occur, it is usually driven by market conditions rather than intentional delay or re-pricing.
This article was last updated on: May 26, 2025