GMI Edge
Freshie
- Messages
- 33
- Joined
- Mar 4, 2019
- Messages
- 33
- Reaction score
- 0
- Points
- 6
STP (or Straight Through Processing) technology requires no dealing desk. All orders are routed to the broker's liquidity providers, and prices are executed at the bid/ask rate provided by liquidity providers. Liquidity providers in this case are hedge funds, big banks, and investors that effectively act as counterparties to each trade. Usually, the STP broker has an internal liquidity pool that is represented by different liquidity providers that compete for the best bid/ask spreads for STP broker orders.
The other benefit of an STP broker includes the so-called DMA. DMA stands for Direct Market Access. Client orders are passed directly to their liquidity pool, so orders are filled out at the best possible price, with only a small mark-up spread by the broker. You should always aim for the broker with the most variable spreads.
The reason for this is that brokers with variable spreads are able to pick the best bids from the liquidity providers within their own pool, and the best ask spread from another liquidity provider. This effectively means that the best possible spreads are offered to clients. The STP execution simply goes without any re-quotes, and due to its lightning speed, it is very suitable for traders who like to scalp and trade the news.
The other benefit of an STP broker includes the so-called DMA. DMA stands for Direct Market Access. Client orders are passed directly to their liquidity pool, so orders are filled out at the best possible price, with only a small mark-up spread by the broker. You should always aim for the broker with the most variable spreads.
The reason for this is that brokers with variable spreads are able to pick the best bids from the liquidity providers within their own pool, and the best ask spread from another liquidity provider. This effectively means that the best possible spreads are offered to clients. The STP execution simply goes without any re-quotes, and due to its lightning speed, it is very suitable for traders who like to scalp and trade the news.
