The Difference Between STP and ECN
Types of XAUUSD Trading Brokers: ECN Brokers
Most gold trader ask what is the difference between the STP and ECN?
STP XAUUSD Broker
STP broker has many liquidity providers, but chooses the best one at any one time automatically for the gold trader. Therefore when a gold trader places a gold trade the gold orders will be passed direct to this interbank network of liquidity providers - after the liquidity provider with the low spread is selected automatically by the STP execution model.
Therefore STP gold broker is like ECN gold broker the only difference is that the Straight Through Processing Brokers automatically chooses the best fill at that particular time of trade execution and does it automatically for the gold trader.
ECN XAUUSD Broker
ECN gold broker has many liquidity providers from which a gold trader will see all at the same time and choose which liquidity provider to trade with, It is like having 10 gold brokers gold quotes to choose from which to trade - these ten quotes are for the same gold instrument - each quote from a different liquidity provider.
The ECN broker quotes model means a gold trader will have to look at many streaming gold quotes at the same time and choose one, this streaming quote will have varying spreads markups and a gold trader chooses the low spread.
There is no much difference between ECN gold broker and STP gold broker, that is why some gold traders or some gold brokers will use the term interchangeably, because the only difference between Straight Through Processing execution from the Electronic Communication Network execution is that the STP gold broker only chooses to have display only one liquidity provider with the best markup at the time of trade while ECN implements a wide variety of liquidity providers and displays all their quotes to the gold traders and it is up to the gold trader to choose which liquidity provider to choose from while trading.
According to gold broker reviews, these ECN and STP brokers are also have the lowest gold spreads, therefore if you are looking for the low spreads it is good to choose an STP broker or an ECN broker.
Most online gold brokers do not want to clutter the gold traders workspace with multiple streaming quotes from various different liquidity providers for the same xauusd at the same time because this might confuse xauusd traders, especially the beginner gold traders who do not know what is what from what, that is why most gold brokers might be ECN brokers but only choose to display only one streaming xauusd price quotes from only one interbank liquidity provider, therefore becoming more of an STP broker rather than an ECN broker, but the model of gold trade execution operation is basically one and the same.
If you were to open a gold trading account with an ECN gold broker you would get like 10 different quotes of XAUUSD from different liquidity providers and to trade you would have to chose the gold quote from one of these liquidity provider. 10 gold quotes for every trading symbol would make your xauusd trading platform workspace too crowded (An ECN Gold Broker Lists Spreads from many liquidity providers). Another thing is that you would need to have a more complex gold trading platform to stream these multiple gold quotes, this type of gold platform would not make the best trading platform software to trade with. Furthermore, if you open an ECN xauusd trading account you will have to pay additional commissions on top of gold spreads. This is also another reason why to choose STP gold broker since unlike ECN gold broker, STP gold broker do not charge commissions on top of spreads. This means that the ECN gold broker execution is not the cheapest execution method and will charge gold traders extra commissions on top of spreads adding onto your gold trading transaction costs.
STP XAUUSD Brokers offer the best liquidity for xauusd traders to make trades
STP gold brokers do not have a gold dealing desk and therefore this provides for full gold trade order transparency, faster and better order fills. The full order transparency means this type of STP gold broker does not create an artificial market for clients, but instead shows a trader the real time xauusd price data quotes from an electronic network of banks and allows the gold trader to enter the true market conditions created by the various gold market participants.
Straight Through Processing XAUUSD Brokers- is the name given to xauusd brokers that: upon receiving of a gold order they will pass on the gold orders directly to the network of banks through liquidity providers and as such there is no intermediary who will be involved in the order execution in other words the Straight Through Processing Execution Model will not be filtering gold trade orders through a Gold Dealing Desk. The absence of a Gold Dealing Desk is what makes the STP execution model the best choice for many online xauusd traders.
With the absence of such an intermediary process such as the gold dealing desk the STP gold broker is able to process its clients gold orders without any delay. In addition STP gold brokers do not send re-quotes to their clients something that most gold traders regard as an advantage.
This also enables the Straight Through Processing XAUUSD Brokers to allow xauusd traders to trade during the release times of financial news without any restrictions. Other online brokers might not have the liquidity of an STP gold broker and might in turn lock out gold trading for a few minutes before and after a gold news release.
Straight Through Processing XAUUSD Brokers provide the best gold order execution and access to trade order execution due to high internal liquidity rate provided by multiple liquidity providers and reliable interbank partners they have.
Different Types of XAUUSD Brokers - The Difference Between STP Gold Broker and ECN Gold Broker - Difference Between STP Gold Broker and ECN XAUUSD Broker - Types of Gold Brokers: STP Brokers - Types of Gold Brokers: ECN Brokers.
