Trading with a market maker or STP/ECN broker

Choosing a broker to invest your money into isn’t that easy. There are a lot of scam brokers and the best way to check for some feedback is on the website Forex Peace Army or surf some forums. It’s very hard to find a broker that will satisfy all your needs like spread, no slippage, deposit amount etc. but on top on that, you need to know if you want to trade with a Market Maker (MM), STP or ECN broker.

So let’s say a few words about those three types of brokers.

Market Maker – like the name already says, this broker makes the market. This means that every time you buy or sell a pair the broker is the counter party. If you lose your money, this means that the broker earns it. So you can see that their interest is you losing money and that’s bad. The only good thing is the instant execution, all your orders are filled almost in the same second and you won’t get any re-quotes. This type of brokers are OK for smaller amounts but when you’ll start making trades at 5$/pip they will delay your execution or even make your trades re-quote. But on the other hand, market maker have account types with minimal deposit requirements and often offer nice welcome bonuses for newbie trades. So check out FBS, they offer deposits from 5$, leverage up to 1:500 and you even get a welcome bonus of 5USD! Some brokerswill give you 5$, 10$ and up to 200$ bonus without any deposit made, it’s so called welcome bonus and others have some bonuses on a deposit up to 50%, check out here for free forex trading bonuses.

ECN Broker is a broker that offers you direct trading on the real market. This broker makes money from spread displayed to you: let’s say if the current real spread on an GBPUSD pair is 0.3 pips, this broker might display you a 0.6 pips spread, so he’s making 0.3 pips on every trade you make. And ECN brokers have commissions per round turn lot traded, around 10$/round lot. Real ECN brokers have min deposits above 1k$ and min lotsize of 1$/pip. Some ECN brokers can even offer you 0 pip spreads! But like mentioned for a small trader ECN execution is often beyond reach: because its interbanking nature, traders are typically required to trade very large lots and minimum deposit requirements are somewhere from $50,000 to $100,000. This model is also responsible for all the re-quotes and order rejections because when you open a large order the broker routes it to the real market, but the prices there might have already changed so the broker is faced with two options: either rejecting the order asking for you to adjust prices or completing the order by taking the risk that it might end up a successful trade meaning the broker will have to pay you from its pockets and this will not happen. So check out HotForex, they have an ECN account

STP Brokers are a hybrid between Market Makers and ECN brokers. This type of broker displays most of the time its own quotes which are correlated to the actual inter banking quotes.
And now here is the real complexity of STP brokers: This brokers sometimes routes your orders to the real market (acts as an STP broker) but other times it doesn’t and acts like a Market Maker.
STP brokers use complex algorithms that finds if a trader is successful and automatically routes those traders to the real market while small and losing traders aren’t routed to the market. This way the broker profits twice: once by clients losses and another by not losing money to successful traders. STP brokers are currently a hit and are not so long around. I’m trading with a STP broker and I find them superb. Check out HotForex and trade with a true STP/ECN broker. They are regulated, with great account types and leverage up to 1:500. Scalping, hedging, EA’s and all other trading strategies are allowed! US clients are welcomed too!

So you have a better picture now how those three broker types work.. I hope it’s more clear now.


Huge Forex No Deposit bonus $200

No broker can beat that great offer! LiteForex gives you 200$ free zero deposit welcome bonus. All the profits + bonus are withdrawable after closing X lots, you can see the progress in your account on the progress monitor. Register to LiteForex, verify your trading account (phone number, name, address) and open a LF BOOM account ($200 free). Leverage on LF BOOM account is 1:200 and the account has floating spreads.
This promo is extended until 6th of July 2011 !

And here’s a little proof of the 200$ bonus 🙂 I’m already trading with it!
forex no deposit bonus

Best deposit bonus in 2011

HotForex (STP/ECN regulated broker) now offers you to choose the bonus you want.

Here are the two options:

  • 50% Withdraw bonus
    Yes, the bonus is really withdrawable when all requirements are met. So if you deposit 5000$, you get 2500$ bonus that’s 7500$ total! I know that you have to trade a certain trade volume to withdraw this bonus but hey you’re gonna trade for a while right? So this is a great way to make some extra cash.
  • 15% Rescue bonus
    This is a bonus that can’t be withdrawn and is intended just to protect your account from drawdowns. But if you ask me, I’ve chosen the above bonus that gives you 50% and it’s even withdrawable 🙂