STP Brokers:

STP stands for Straight Through Processing. These brokers pass the orders directly to the liquidity providers. When the client gives then an order to process, they, as their name suggests, process the orders directly to the liquidity providers which may include a Bank, a Hedge Fund, Investment corporations or another broker. The trades won’t have any intermediary body involved. They do not filter the orders through an intermediate Dealing Desk. This absence of the dealing desk makes the broker’s platform an STP one.

With the absence of the dealing desk body, we can jot down the following advantages.

a. No re-quotes are sent to the clients.b. Processing of orders without delay.

What usually happens is that, with a dealing desk intermediate body, the orders first go to them. They then process the orders as required. Hence there is a time delay in processing of the trades. Moreover, one of the biggest advantages that the STP brokers have is that they won’t send any re-quotes to its clients. This is really very useful for the investors and the traders. STP Brokers allows its clients to trade even during the release times of financial news without any sort of restrictions.

Why Choose STP Brokers:

No Dealing Desk; this simply means that the STP brokers will execute your trades directly to the true market rather than the artificial market that might be created by the market makers. Hence STP Traders are more transparent to their client. The trades are processed faster, better and safer through an STP broker.

Since there isn’t any dealing desk monitoring the transaction of various orders, the client transactions with an STP broker are anonymous. The orders are executed automatically via the market anonymously.

Another important point that can be brought to light is that since the trades with the STP traders are better and faster, the market bids and offers provided by the liquidity providers via the STP brokers are low. Hence STP traders provide more liquidity to the market by a executing a number of transactions and in turn get lower execution prices by their liquidity providers.

Hence we can see that STP brokers have several liquidity providers and this increase in the number of liquidity providers means better is the fills for the various traders trading with them. Many STP brokers choose banks, which trade on interbank, as their liquidity providers. Interbanks are nothing but the top level exchange market where bank exchange various currencies.

One of the biggest advantages of an STP execution is that the client’s losses here aren’t the broker’s profits. These brokers make money by adding a small commission. So a trader should feel secure by trading with STP traders. This is definitely a big advantage to the marker maker brokers who benefit from your losses. STP brokers benefit from the winning traders of its clients.