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Best Forex STP/ECN/DMA Account 2020

Kate Leaman
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There are many reasons to trade with direct market access brokers that offer STP or ECN access. However it’s hard to know which brokers you should personally trade with. FXEmpire have narrowed down your selection by conducting research into the ultimate STP and ECN brokers. Find our list inside.

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
First Prudential Markets Pty Ltd
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Your capital is at risk

ASIC, CySEC

$100

1:500

IRESS, MT4, MT5, webtrader

2005

No dealing desk

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Your capital is at risk

Swissquote Bank
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Your capital is at risk

DFSA, FINMA, SFC

$1000

1:100

Advanced Trader, MT4, MT5

1996

Bank, Dealing Desk, Market Maker, No dealing desk

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Your capital is at risk

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

No dealing desk

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90% of retail CFD accounts lose money

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.

FP Markets

Regulated By:ASIC, CySEC

Foundation Year:2005

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

Min Deposit:$100

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FP Markets was founded in 2005 and is regulated by the Australian Securities and Investments Commission (ASIC), offering segregation of client funds and top tier liquidity. FP Markets is a group of companies that includes First Prudential Markets Ltd which is authorised and regulated by the Cyprus Securities and Exchange Commission.

FP Markets also offers a range of education and market analysis resources through the Traders Hub which includes technical analysis and fundamental analysis articles and videos, as well as, trading ebooks and video tutorials. Users can access live support via telephone, email and live chat 24 hours a day, 5 days a week.

Pros: Cons:
  • ASIC regulated.
  • ECN pricing and DMA trading available.
  • 10,000+ tradable financial instruments.
  • Wide range of trading platforms and trading tools available.
  • Excellent customer support and education tools.
  • The volume of choice of markets and accounts may be overwhelming for beginner traders.

Swissquote

Regulated By:DFSA, FINMA, SFC

Foundation Year:1996

Headquarters:Chemin de la Créteaux 33, 1196 Gland, Switzerland

Min Deposit:$1000

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Swissquote Bank Ltd. is an online forex, CFD and derivatives trading broker that offers what may be called a total trading package that goes beyond forex or CFDs. Swissquote Bank is part of the Swissquote Group Holdings Ltd, and represents the Swiss-based trading division of the company. Swissquote Bank operates from Gland, Switzerland and commenced operations in 1996.

The Swissquote website is a multi-lingual portal which offers 10 languages, giving it a wide linguistic spread that can accommodate traders from various countries. Swissquote is a sponsoring partner of Manchester United Football Club, the most successful domestic club in the UK.

Pros Cons
  • Swissquote Bank is a regulated entity.
  • There is a comprehensive trader education suite.
  • Customer support is very responsive and provides timely service.
  • Investor protection is very strong.
  • Highly diversified asset base, which caters to all kinds of traders.
  • Many countries are excluded from doing business with Swissquote, which prevents traders in those countries from opening trading accounts.
  • Minimum deposit amounts are high.

FBS

Regulated By:CySEC, IFSC

Foundation Year:2009

Headquarters:N/A

Min Deposit:$1

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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

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.

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

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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Trade With A Regulated Broker

  • Your capital is at risk