What is STP?

STP stands for Straight Through Processing and refers to forex brokers that basically act as the middle man between the traders and the liquidity providers. These brokers send their customers’ orders directly to the liquidity providers (banks or larger brokers) without running them through a dealing desk.

This suggests that there shouldn’t be any conflict of interest between brokers and traders, as STP brokers make money by adding a small commission, or a markup to the spread. Whether a trader wins or loses, the broker gets the same markup, whereas dealing desk brokers make money out of their clients’ losing trades. STP brokers, on the contrary, benefit more from winning traders who trade more and the broker thus gets more commission/markup fees. This is a definite advantage to market makers.

Besides, orders are filled without unnecessary delays, and ideally, with STP execution there are no re-quotes which is another obvious advantage.

Otherwise, some brokers only offer one liquidity provider, others give traders access to a deeper liquidity pool. Obviously, the more liquidity providers there are, the better order executions.

Liquidity Providers