Different Types of Commodity Trading Brokers
Types of Commodity Trading Brokers: STP Brokers
Most commodity trader ask what is the difference between the STP and ECN?
STP Commodity Trading Broker
STP broker has many liquidity providers, but selects the best one at any one time automatically for the trader. Therefore when a trader places a commodity trade the commodity orders will be passed direct to this interbank network of liquidity providers - after the liquidity provider with the low spread is selected automatically by the STP execution model.
Therefore STP commodity broker is like ECN commodity broker the only difference is that the Straight Through Processing Brokers automatically chooses the best fill at that particular time of trade execution and does it automatically for the trader.
ECN Commodity Trading Broker
ECN commodity broker has many liquidity providers from which a trader will see all at the same time and choose which liquidity provider to trade with, It is like having 10 commodity brokers quotes to select from which to trade - these ten quotes are for the same commodity instrument - each quote from a different liquidity provider.
ECN broker quotes model means a trader will have to look at many streaming commodities quotes at the same time & choose one, this streaming quote will have varying spreads markups & a trader chooses the low spreads.
There's no much difference between ECN commodities trading broker and STP commodities trading broker, that is why some commodity traders or some commodity brokers will use the term interchangeably, because only difference between Straight Through Processing execution from the Electronic Communication Net-work execution is that STP commodity broker only chooses to have display only one liquidity provider with the best markup at the time of trade while ECN implements a wide variety of liquidity providers and displays all their quotes to the traders and it's upto the trader to choose which liquidity provider to select from while trading.
According to commodity broker reviews, these ECN and STP brokers are also have the lowest commodity trading spreads, therefore if you're looking for the low spread it is good to select an STP broker or an ECN broker.
Most online commodity brokers do not want to clutter the traders workspace with multiple streaming quotes from various different liquidity providers for the same commodity trading instrument at the same time because this might confuse commodities traders, especially the beginner traders who do not know what is what from what, that is why most commodity brokers might be ECN brokers but only choose to display only one streaming commodities price quotes from only one interbank liquidity provider, therefore becoming more of an STP broker rather than an ECN broker, but the model of commodity trade execution operation is basically one and the same.
If you were to open a commodity account with an ECN commodity broker you would get like 10 different quotes of Commodity Trading from different liquidity providers and to trade you would have to chose the commodity trading quote from one of these liquidity provider. 10 commodities quotes for every commodity would make your commodity platform workspace too crowded (An ECN Commodity Trading Broker Lists Spread from many liquidity providers). Another thing is which you would need to have a more complex commodity platform to stream these multiple commodities quotes, this type of commodity trading platform would not make the best trading platform software to trade with. Furthermore, if you open an ECN commodity account you will have to pay additional commissions on top of commodity trading spreads. This is also another reason why to choose STP commodity broker since unlike ECN commodities trading broker, STP commodity broker don't charge commissions on top of spreads. This means that the ECN commodity broker execution is not the cheapest execution method & will charge commodity traders extra commissions on tops of spread adding on to your commodity transaction costs.
STP Commodity Trading Brokers offer the best liquidity for commodities traders to make trades
STP commodity brokers do not have a commodity trading dealing desk and therefore this provides for full commodity trade order transparency, faster and better order fills. The full order transparency means this type of STP commodity broker does not create an artificial market for clients, but instead shows a trader the real time commodities price data quotes from an electronic network of banks and allows the trader to enter the true market conditions created by the various commodity market participants.
Straight Through Processing Commodity Trading Brokers- is the name given to commodity brokers that: upon receiving of a commodity trading order they will pass on the commodity orders directly to the network of banks through liquidity providers and as such there is no intermediary who will be involved in the order execution in other words the Straight Through Processing Execution Model will not be filtering commodity trade orders through a Commodity Trading Dealing Desk. The absence of a Commodity Trading Dealing Desk is what makes the STP execution model the best choice for many online commodities traders.
With absence of such an inter-mediary process such as the commodity trading dealing desk the STP commodity broker is able to process its clients commodity orders without any delay. In addition STP commodity brokers do not send re-quotes to their clients something which most traders regard as an advantage.
This also enables the Straight Through Processing Commodity Trading Brokers to allow commodities traders to trade during the release times of financial news without any restrictions. Other online commodity brokers might not have the liquidity of an STP commodities trading broker and might in turn lock out commodity for a few minutes before and after a commodity trading news release.
Straight Through Processing Commodity Trading Brokers provide the best commodity trading order execution and access to trade order execution due to high internal liquidity rate provided by multiple liquidity providers & reliable interbank partners they have.
Different Types of Commodity Trading Brokers - The Difference Between STP Commodities Broker and ECN Commodities Trading Broker - Difference Between STP Commodities Broker and ECN Commodities Broker - Types of Commodity Trading Brokers: STP Brokers - Types of Commodity Trading Brokers: ECN Brokers.
