The right model for trading is essential for traders who want to maximise their earnings and minimise their risks. Two common trading models are ECN (Electronic Communication Network) and STP (Straight-Through Processing), with distinct advantages and disadvantages depending on the traders’ goals and preferences. This article will give an overview of ECN trading models and STP, examine the main aspects of the two, and review the pros and cons of each. We will also provide guidelines for choosing the right m
ECN and STP trading models enable traders to trade directly with liquidity providers as well as access interbank markets. They both offer advantages over traditional market maker models, for example, lower spreads, speedier execution, and improved transparency. But there are some distinct differences between these two models that traders need to be aware of prior to selecting one.
The main difference between ECN and STP is the way they operate. ECN brokers are hubs to match purchases and sales between different market participants. STP brokers, on the contrary, handle orders directly with liquidity providers. ECN brokers charge a commission for every trade, whereas STP brokers could charge a markup for the spread or commission. ECN brokers have smaller spreads, more efficient execution, and enhanced transparency and transparency, whereas STP brokers offer seamless order processing an