Straight Through Processing or STP Brokers send trader warrants directly to the market without interfering with operations (or NDD), which means a direct link to the liquidity providers the market works with and those with whom a particular broker collaborates. Typically, a broker has many liquidity providers that are either banks or larger brokers generating their own purchase and sale price. However, it's still an option to execute through a single liquidity provider, as some brokers practice this as a result of obtaining a deeper liquidity pool.
Performing STP also means that there are no re-quote or delays in execution of warrants, as the technology is executed at a marginal rate, sorts quotes among offering and executing orders at the best affordable price, simply adding a small fixed mark-up, usually 1pip to the quote. Most often, the STP type brings variable spreads due to changing bid/ask prices, but at a very competitive value, the spread is generally lower than that of Market Makers. However, one of the advantages of performing STP is that the broker never profits from customer losses because the company profits from a number of executed orders and is more interested in the trading sizes.
The best STP Forex broker is a crucial choice for any trader with his successful trading experience as you can see plenty of unscrupulous brokers or offerings among industry offerings. However, the fact remains the same, only Regulated brokers are constantly overseen in all stages of operation, so maintaining secure trader’s money management, deliver fair dealing conditions and may be considered as safe to trade with.
help Mini Online Forex FAQWhat Is A Currency Pair?
A currency pair is a Forex instrument, also known as a cross, for example USDJPY. When you trade in Forex, you always trade currencies in pairs. Thus in the example of USDJPY, this pairing indicates that you trade U.S. dollars against Japanese yen. If you buy dollars, you pay in yen, and if you sell dollars you receive yen.What Is Spot?
A direct trade on a market price with a standard settlement date (Value date) of 2 business days from the trade date.What Is Spread?
The difference between the Bid price (at which you can sell the trading instrument) and the Ask price (at which you can buy the trading instrument).What Is Swap?
Swap is the amount of money you receive or pay for holding a position overnight. It is formed based on central banks’ interest rates of those countries whose currencies you trade. Swap can be positive or negative.What Is Margin Calls?
If your position moves against you, your provider may ask you to put up additional funds in order to keep your trade open. This is known as margin call, and you’ll either need to add capital or exit positions to reduce your total exposure.What Is Leverage?
A leverage involves borrowing a certain amount of the money needed to invest in something. In the case of Forex, money is usually borrowed from a broker. Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up – and control – a huge amount of money.What Is Hedging?
A hedging is a strategy used by investors to reduce or eliminate the risk of holding one investment position by taking another.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite.