What Is STP in Forex? Definition, Execution Model, and How It Compares to ECN

Definition:

STP stands for Straight Through Processing—a trade execution model in which orders are sent directly from the trader to the broker’s liquidity providers without any dealing desk intervention.

Explanation:

In the STP model, when a trader places a buy or sell order, it is automatically routed to one of the broker’s external liquidity providers (such as banks or institutional market makers) at the best available price. The broker acts as a bridge, not a counterparty, and does not manipulate pricing.

STP brokers may mark up the spread slightly for profit or charge a small commission. The model offers fast execution, transparency, and minimal conflict of interest—making it attractive to traders who value reliability over ultra-tight spreads.

Some STP brokers operate on a hybrid model, combining elements of ECN and market-making depending on account type, order size, or trading volume.

⚙️ Key Features of STP:

• ✅ No Dealing Desk (NDD)
• ✅ Fast, automated order routing
• ✅ Access to real interbank liquidity
• ✅ Variable spreads
• ✅ Fewer requotes and slippage compared to market makers
• ✅ Broker profits from spread markup or commission

🆚 STP vs. ECN vs. Market Maker

Example:

You place a Sell order on GBP/USD at market price. The STP broker forwards your order directly to one of its liquidity providers offering the best bid. The order is filled with minimal delay and no dealer intervention.

Related Terms:

ECN, STP Broker, Market Maker, Liquidity Provider, Execution Speed, Raw Spread

Category:

Broker Models / Trade Infrastructure

✅ FastPip Tip:

STP offers a strong balance between speed, transparency, and simplicity—making it ideal for swing traders, day traders, and anyone who values execution quality without ECN complexity.