What Is an STP Forex Broker?
What STP actually means for a forex account -- straight-through processing, how orders are routed to liquidity providers, and how pricing and costs work.
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STP stands for Straight-Through Processing. An STP forex broker routes client orders directly to one or more external liquidity providers — typically banks or larger brokers — for execution, without a dealing desk stepping in to take the other side of the trade internally.
How STP execution actually works
When you place an order with an STP broker, it is passed electronically, usually within a fraction of a second, to the liquidity provider or providers the broker connects to. The broker receives a price from those providers, applies its own markup, and passes the resulting price on to you. Because the broker itself is not the counterparty to your trade, it has no direct financial interest in whether your position wins or loses — its revenue comes from the markup or commission on the flow of orders it processes, not from taking positions against its own clients.
Where STP sits between a market maker and a full ECN
STP shares the “no dealing desk” characteristic with ECN brokers, since neither takes the other side of a client’s trade. The practical difference is in how broad the liquidity pool is: a full ECN typically aggregates pricing from many participants into a shared order book, while an STP broker usually routes to a smaller, fixed set of liquidity providers it has direct relationships with. This generally means STP spreads are not quite as tight as the very best ECN pricing during calm markets, but the model is often simpler to offer at lower minimum deposits and smaller trade sizes than a genuine ECN account requires.
How STP brokers typically charge
Most STP accounts build the broker’s revenue into the spread itself, as a markup added to the raw price received from the liquidity provider, rather than charging a separate commission. Some brokers offer an STP account with a smaller spread markup plus a modest commission instead, similar in structure to an ECN account but usually with a lower minimum deposit. Either way, the broker is earning from the spread or commission on your trading activity, not from being on the other side of your position.
What this means for execution in practice
Because pricing passes through from an external provider, STP spreads will vary with market conditions rather than staying perfectly fixed, and can widen during news events or thin trading hours, similar to an ECN account though usually somewhat less dramatically given the broker’s direct relationships with its liquidity providers. Order execution speed depends on both the broker’s own systems and the responsiveness of its liquidity providers, so execution quality can genuinely differ between STP brokers even though they use the same general model.
Why the number of liquidity providers matters
An STP broker connected to only one liquidity provider is, in effect, dependent on that single source for every price it offers — if that provider’s pricing worsens or its connection becomes unreliable, the broker has nothing else to fall back on. A broker connected to several liquidity providers can typically route an order to whichever is currently offering the best price, which tends to produce steadier execution and pricing, particularly during busier market conditions. This is one of the more meaningful but least-advertised differences between STP brokers that otherwise look similar on paper.
Checking whether an account is genuinely STP
As with ECN, the label “STP” is sometimes used loosely in marketing. A genuine STP account should be able to tell you, or at least confirm, that client orders are passed through to external liquidity providers rather than filled internally, and its spreads should move with market conditions rather than staying perfectly fixed at all times. If in doubt, independent reviews and a broker’s own order execution policy document are usually more reliable than a label on a marketing page.