Best Forex STP/ECN/DMA Account 2019

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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.
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

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

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

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

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

Forex STP/ECN/DMA Account Comparison Table

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BrokerRatingOfficial SiteRegulationsMin DepositMax LeverageTrading PlatformsFoundation YearPublicly TradedTrading Desk TypeCurrenciesCommoditiesIndicesStocksCryptoCommission on tradesFixed spreadsoffers promotionsOfficial Site
FBS
Visit Broker>

Your capital is at risk

CySEC, IFSC

$1

1:3000

MT4, MT5

2009

ECN, No dealing desk, STP

Visit Broker>

Your capital is at risk

FXTM
Visit Broker>

90% of retail CFD accounts lose money

CySEC, FCA, FSC

$10

1:30

MT4

2011

ECN, STP

Visit Broker>

90% of retail CFD accounts lose money

ATFX
Visit Broker>

Your Capital is at Risk

FCA

$100

1:200

MT4

2014

No dealing desk, STP

Visit Broker>

Your Capital is at Risk

FP Markets
Visit Broker>

Your capital is at risk

ASIC

$100

1:500

MT5

2005

DMA, ECN

Visit Broker>

Your capital is at risk

Alpari
Visit Broker>

Your capital is at risk

FSC

$null

1:1000

MT4, MT5

1998

ECN, STP

Visit Broker>

Your capital is at risk

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.

Here’s our recommendations of the best ECN/STP/DMA brokers based on service, product and usability.