Best Forex STP/ECN/DMA Account 2019

Kate Leaman
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This broker type offers a model that allows for quicker, sometimes cheaper and usually more effective trading. There is no dealing desk inside the company. Rather the investments are passed on directly to third party liquidity providers (STP) or as in the case of the ECN (electronic communication network) to an electronic system.

When it comes to finding a good broker in this area, it’s important to bear in mind a few things. Firstly, you want to be trading with a broker who is a true ECN broker. That means a broker that gives direct access to interbank price feeds from over 50 different bank and dark pool liquidity providers. This means better prices for the traders. Other areas in which a good Direct Market Access broker (DMA) will excel in is excellent customer service for advanced traders (service that is accessible throughout the trading day and where the reps are highly trained to talk the same language as the traders. A good DMA broker should also offer further services like in depth market research and trading tools like a VPS server.

The brokers below represent the best STP/ECN/DMA Accounts

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BrokerRatingOfficial SiteRegulationsMin DepositMax LeverageTrading PlatformsFoundation YearPublicly TradedTrading Desk TypeCurrenciesCommoditiesIndicesStocksCryptoCommission on tradesFixed spreadsoffers promotionsOfficial Site
FBS
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Your capital is at risk

CySEC, IFSC

$1

1:3000

MT4, MT5

2009

ECN, No dealing desk, STP

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Your capital is at risk

FXTM
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90% of retail CFD accounts lose money

CySEC, FCA, FSC

$10

1:30

MT4, MT5

2011

ECN, STP

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90% of retail CFD accounts lose money

ATFX
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Your Capital is at Risk

FCA

$100

1:200

MT4

2014

No dealing desk, STP

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Your Capital is at Risk

FP Markets
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Your capital is at risk

ASIC

$100

1:500

IRESS, MT4, MT5

2005

DMA, ECN

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Your capital is at risk

Alpari
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Your capital is at risk

FSC

$null

1:1000

MT4, MT5

1998

ECN, STP

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Your capital is at risk

Pro Tip: Most of these brokers offer free demo accounts so you can test the brokers and their platforms with virtual money. Give it a try with some play money before using your own cash.

Here’s a list of Best STP/ECN/DMA Brokers


Note: Not all Forex brokers accept US clients. For your convenience we specified those that accept US Forex traders as clients.

FBS

Regulated By:CySEC, IFSC

Foundation Year:2009

Headquarters:N/A

Min Deposit:$1

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Your capital is at risk

Your capital is at risk

FBS is a Forex ECN and CFD broker which was established in 2009 and is regulated by the IFSC in Belize and the CySEC in Cyprus. Since then, the brand has grown in size, capacity and technology and now supports 12 million traders from over 190 countries trading across Forex, Commodities, Metals, Cryptocurrencies and more.

FBS uses the hybrid broker model of Straight Through Processing (STP) and an Electronic Communications Network (ECN). There is no dealing desk as orders are passed directly into the systems of the liquidity providers at the actual market prices.

Pros Cons
  • Broker is regulated by CySEC and the IFSC
  • Access to investor compensation in case of broker fraud
  • Comprehensive trader education
  • Good variety of research tools
  • Low capital requirements for account opening
  • Spreads are higher than many retail brokers
  • Regulation of global brand is not as robust as the EU brand
  • Leverage offered on global brand is too high (careful risk management is a must)

FXTM

Regulated By:CySEC, FCA, FSC

Foundation Year:2011

Headquarters:FXTM Tower, 35 Lamprou Konstantara, Kato Polemidia, 4156, Limassol, Cyprus

Min Deposit:$10

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90% of retail CFD accounts lose money

90% of retail CFD accounts lose money

FXTM, also known as ForexTime, is an ECN/STP broker that was established in 2011 and which is regulated by the UK’s Financial Conduct Authority, among others. CFDs are available on 50+ currency pairs including major, minor, and exotic pairs with the broker specialising in Forex focused trading platforms and tools.

Spreads are competitive across all platforms with 24-hour trading open 5 days per week. FXTM is based in Cyprus and as well as being licensed by the FCA, they are also licenced with the International Financial Services Commission (IFSC), Cyprus Securities and Exchange Commission, and other regulators in and out of the EU. Check out our full FXTM review here.

Pros Cons
  • Support for 250+ products to trade across global markets, including Forex, commodities, shares, indices and cryptocurrency CFDs
  • Competitive spreads
  • MetaTrader 4 and MetaTrader 5 platform support
  • Low maximum order size
  • No native Mac desktop app

ATFX

Regulated By:FCA

Foundation Year:2014

Headquarters:1st Floor, 32 Cornhill, London

Min Deposit:$100

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Your Capital is at Risk

Your Capital is at Risk

ATFX offers its clients access to hundreds of financial instruments such as commodities, cryptocurrencies, precious metals, indices, forex, stocks and even Spread betting. Offering a no dealing desk (NDD) trading mode, clients of ATFX should be able to obtain a more competitive bid and ask price through their Straight Through Processing (STP) model.

The ATFX brand is managed by AT Global Markets Limited, which is part of the AT Group, which has sister companies regulated by the UK’s Financial Conduct Authority (FCA) and the Cyprus Securities Exchange Commission (CySEC) while AT Global Markets Ltd falls under the jurisdiction of the St. Vincent and the Grenadines Financial Services Authority (FSA) as an authorized International Business Company. Check out our full ATFX review here.

Pros Cons
  • Can trade on multiple asset classes across Forex, Stocks, Commodities and Indices
  • Competitive spreads
  • Bonus offers depending on jurisdictions
  • Only supports the MetaTrader 4 trading platform
  • The wide range of jurisdictions to open an account can be overwhelming

FP Markets

Regulated By:ASIC

Foundation Year:2005

Headquarters:Level 5, Exchange House 10 Bridge St Sydney NSW 2000, Australia

Min Deposit:$100

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Your capital is at risk

Your capital is at risk

FP Markets offers a wide range of tradable assets through Forex, CFD, and share trading accounts. FP Markets supports the MT4, MT5, and IRESS platforms and users can trade 45 currency pairs with competitive spread or commission pricing through their standard or ECN Raw account.

FP Markets was founded in 2005 and is headquartered in Sydney, Australia. It is regulated by the ASIC in Australia. Demo accounts are available. While it is suitable for beginners, education resources are limited. Check out our full FP Markets review here.

Pros Cons
  • 10,000+ tradable assets
  • Choose between 3 trading platforms
  • Competitive spread pricing on raw account
  • High spreads on the standard account
  • A range of possible additional fees
  • AU $200 minimum opening balance

Alpari

Regulated By:FSC

Foundation Year:1998

Headquarters:Mauritius

Min Deposit:N/A

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Your capital is at risk

Your capital is at risk

Alpari International is the business name of Exinity Limited, a company that is regulated by the Financial Services Commission (FSC) of the Republic of Mauritius. Users can trade on more than 250 markets via Spot, CFDs and Futures across Forex, Stocks, Indices, Metals and Cryptocurrencies, on the MetaTrader 4 and MetaTrader 5 Desktop, Web and Mobile platforms.

The services and features offered by Alpari International are designed for both beginner and professional traders, with access to ECN and Pro accounts, as well as access to the Alpari Copy Trading program.

Pros Cons
  • Wide range of trading accounts, some offering commission-free trading
  • Access Forex ECN with 1:1000 leverage
  • Trade on MetaTrader 4 and MetaTrader 5 across Desktop, Web and Mobile
  • Access the Alpari Copy Trading programme
  • Limited trader education
  • Non-existent research tools

ECN vs STP vs DMA vs Market Maker

The STP model of brokerage, operated by ECN brokers, is accepted globally as the most transparent way to do forex trading. However, it is important to understand why this is the case and the benefits that this brokerage model has for the end user.

All brokers in the forex market are not created equal. It is therefore important to have some knowledge of the various categories of brokers that operate in the forex market. In the forex market, we have the following categories of brokers:

  1. Market makers
  2. ECN Brokers (also known as the STP/DMA brokers)

Market makers make the market for their clients. Their clients are usually retail clients who have small trading capital which is not enough to gain access to the interbank forex market where the liquidity providers operate. The liquidity providers (LP) are major banks that buy and sell currencies. They trade in billions of units of various currencies. Small traders do not have the capacity to provide the liquidity that is required to sustain these operations, and this is where the market makers come in. Market makers work by taking these large positions off the LPs, aggregate the orders of their retail clients, and then split the positions between the retail clients by fulfilling their orders at the dealing desk level, thus “making the market” for these retail clients.

What is an STP Broker?

An STP broker is a forex broker that offers Straight Through Processing of trade orders. These are brokers that send the trader’s orders straight to the liquidity providers (major banks) for trade order processing and fulfillment. Straight Through Processing (STP) is possible thanks to the development of the Financial Information Exchange (FIX) protocol. The core essence of the STP model is to shorten trade execution time, reduce slippage/re-quotes and ensure that traders get the best pricing. So STP describes the process by which non-dealing desk brokers route their orders.

What is an ECN broker?

ECN stands for Electronic Communication Network. ECN brokers provide pricing from several liquidity providers and display these various bid and ask prices to their traders. They also display the market depth and the order book, allowing traders to know who is buying and who is selling what currencies in the market. ECN brokers therefore provide their clients with direct access to the interbank market, pass their traders’ orders straight for processing to the LPs, and ensure that traders have more information about the activity of other traders in the market. So ECN describes the technology that makes all this happen.

What is a DMA broker?

A DMA broker is a broker that gives its end users direct market access to the interbank market in buying or selling currencies. Only non-dealing desk brokers provide such access; dealing desk brokers fulfill orders in-house and therefore are not DMA brokers. DMA therefore describes the accessibility of traders to transparent pricing from the interbank forex market.

Dealing Desk vs. No Dealing Desk brokers

Dealing desk (DD) brokers are essentially market makers. Dealing desk brokers usually provide trade order fulfillment in-house within a department known as the Dealing Desk. The name “dealing desk” is actually a misnomer, as it confuses a lot of people and misleads them into thinking that it is a single desk within the brokerage, manned by just one or two members of staff of the brokerage. In fact, the dealing desk is an entire department which runs the back end of the trade order and execution process of a market maker brokerage. Dealing desk brokers usually buy off large long and short orders from liquidity providers, then split this up and sell them as counterparties to the end users (retail traders). Dealing desk brokers therefore assume a position of conflict of interest, as they are essentially holding positions against the trader. They profit from trades where the trader loses, and lose money when the trader wins.

Non-dealing desk (NDD) brokers do not handle trade order fulfillments in-house. Rather, they route traders’ orders from the trader’s computers straight to the interbank market where liquidity providers will fulfill these orders at the bid/ask prices stipulated by the trader. There is no conflict of interest since the no dealing desk broker is a bystander in the trade process.

Pros and Cons of Electronic Communication Network Broker

Pros

  • Transparent pricing
  • Access to cutting edge technology for trading
  • Level II quotes provided

Cons

  • Large account capital needed
  • Not suited for beginner traders

Pros and Cons of Straight Through Processing Brokers

Pros

  • No re-quotes/slippage
  • Not trading against a broker with conflict of interest

Cons

  • Not all orders go to Tier 1 liquidity providers

Pros and Cons of Direct Market Access Broker

Pros

  • Risk of price manipulation is non-existent
  • Trader competes with others at the interbank market and not with a broker

Cons

  • It is expensive to trade with a DMA broker as trades attract commissions

How to Distinguish between MM, STP or ECN Brokers

You can distinguish between market makers and ECN brokers by using the following barometers.

  1. What kind of trading platform does the broker offer?
  2. What are the capital requirements for operating the trading account?
  3. Is the trader able to visualize several bid/ask prices from the liquidity providers, or is one fixed price provided?
  4. Are spreads fixed or variable?
  5. Can the order depth be visualized?
  6. Do re-quotes or slippage occur during the trade process?

This table below sums up the differences between market makers and ECN/STP brokers.

Parameter

ECN

Market Maker

Trading Platforms Professional platforms that are able to display multiple bid/ask prices are provided (e.g. Currenex Classic)

Typically, retail platforms such as the MetaTrader4/5, JForex, NinjaTrader, ActForex, are offered.

 

Capital Requirements Liquidity requirements of trading on the interbank market mean that account capital requirements for trading with an ECN broker is at between $20,000 and $50,000.

The broker makes the market, therefore capital requirements are small. A trader can open a retail account with a market maker for as low as $200.

 

Spreads Spreads are variable Spreads are usually fixed
Order Depth

Level II quotes are provided and these can be visualized.

 

Not possible to view order depth.
Slippage/Re-quotes

Slippage and re-quotes do not occur with ECN brokers.

 

Slippage and re-quotes are common.
Trading Cost

Traders pay a commission on trade entry and exit, as well as incurring the spread on the currency pair.

 

Traders do not pay commissions on trades.

It is important to understand these differences as there are many market maker brokers now parading themselves as “ECN” brokers, and yet offering accounts for as low as $500. By the very nature of the forex market and its liquidity structure, it is not possible to offer ECN-style trading conditions for such low amounts.

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