Why Traders Choose Best Commodities STP Broker and The Difference Between Best Commodities STP Broker and Best Commodities ECN Broker
Difference Between STP and ECN
Best Commodities STP Broker or Straight Through Processing, is the name given to brokers that, when upon receiving a client trade order they will pass on the commodity orders directly to their Commodities Liquidity Provider. Liquidity providers can include Banks and as such there is no intermediary involved in order processing in other words the STP doesn't filter the commodity orders through a Dealing Desk. Absence of a Dealing Desk intervention is what makes this electronic trading software a Straight Through Processing.
With the absence of an inter-mediary process (dealing desk) the Best Commodities STP Broker, Straight Through Process execution will be able to process its clients orders instantly without any delay. This makes Best Commodities STP Brokers the most recommended commodity broker type. The Straight Through Processing Brokers will also not send re-quotes to its clients something that most investors regard as very important. Straight Through Process execution will also in effect will allow its clients to trade during the release of financial news without any restrictions.
Straight Through Processing commodity brokers benefit from having several liquidity providers and an increase in the number of providers in the system means better fills for the client. A large number of Best Commodities STP Brokers will use banks trading on the interbank markets as their liquidity providers.
Before Reading Spot the difference between these 2 headings so that the headings below don't seem like a repetition.
- Reasons why Brokers select Straight Through Process execution
- Reasons why Traders Choose Straight Through Process execution
Reasons why Commodities Trading Brokers choose to be Best Commodities STP Broker
In addition to the fact that most traders prefer Straight Through Processing due to fact that a client's losses aren't a broker's profit. It is therefore in the broker 's interest for the Client to make profitable trades, a STP execution model often implies that there is No Dealing Desk (NDD) & subsequently has less expenses through its staff salaries.
An Best Commodities STP Broker is compensated through a markup on the spread it obtains from its Commodities Liquidity Provider and/or commissions imposed for each trade. As most liquidity providers of Straight Through Process execution are banks on the Interbank market, the majority of which offer fixed spreads this allows the Straight Through Processing Brokers to provide both fixed and/or variable spreads to its clients.
Each time a client trades through a Straight Through Processing platform, the Best Commodities STP Broker will always make a profit. As Straight Through Processing add a small markup to the spread they receive from their provider when getting quoting of bid/ask rate. The Best Commodities STP Broker will apply this markup by a certain amount of fractional pips to the bid and ask commodities price that it receives from its best bid/ask Commodities Liquidity Provider before passing the rates onto the client via the straight through processing electronic platform.
As the client places the trading order through the STP platform, the commodity orders are then sent directly to the Commodities Liquidity Provider and as such the Best Commodities STP Broker executes the same orders as the client at a slightly better commodities price this is the markup.
Reasons why Commodity Traders Select Straight Through Processing Brokers
Clients often choose to execute trades via an Best Commodities STP Broker as it often implies there is no Dealing Desk, which in turn means that the broker is more transparent with clients.
The Traders enter trades into a true market instead of an artificial market that might be created by a market maker. Client trades obtain better and faster fills through an Best Commodities STP Broker.
The better & faster fills are obtained directly from many competitive market bids and offers coming through STP liquidity providers, which provides for more liquidity within commodity market and in turn this implies lower execution commodities prices for the client.
Client transactions with an Best Commodities STP Broker means there is anonymity for the client as there is no Dealing Desk monitoring the transactions of orders coming in from each client. The trading Commodities orders are instead executed automatically through the commodity market network anonymously.
Another Type of Online Commodity Trading Broker is Best Commodities ECN Broker
What's an Best Commodities ECN Broker?
Electronic Communications Network- Best Commodities ECN Broker provide traders with real time data quotes straight from the network of banks that trade Commodities- The Interbank market. Since these Best Commodities ECN Brokers offer real time data commodity quote from these network via their own Electronic Communication Network which connects directly to the Interbank network of banks, they are known as Best Commodities ECN Broker technology brokers, short form is Best Commodities ECN Broker.
Best Commodities ECN Broker will show the entire bid and ask offers currently available in the commodity market from banks. An Best Commodities ECN Broker will allow traders to place their commodity orders straight through to the commodities market. Liquidity isn't provided by the broker but by this inter-bank net-work of banks. This way commodity traders trading through an Electronic Communication Network gets high liquidity & execute trades very quickly and instantly without getting re-quoted.
Most Traders ask which is the best between the Best Commodities STP Broker and the Best Commodities ECN Broker? And What is the difference between these two?
Best Commodities STP Broker
Has multiple liquidity providers, but selects the best at any one time automatically for the trader. Therefore when a trader places a trade the commodities orders will be passed direct to this interbank.
Therefore Best Commodities STP Broker is like Best Commodities ECN Broker the only difference is that the Straight Through Processing Brokers automatically chooses the best one at that particular time and does it automatically for the trader.
Best Commodities ECN Broker
Has many liquidity providers from which a trader will see all at the same time and choose which to trade, It is like having 10 commodities trading brokers to select from which to trade.
The Best Commodities ECN Broker a trader will have to look at many streaming quotes at the same time & select one, this streaming commodity quote will have varying spreads & a trader chooses the low spreads.
There is no much difference between Best Commodities ECN Broker and Best Commodities STP Broker, that is why some traders or some brokers will use the term interchangeably, because the only difference between Straight Through Process execution from the Electronic Communication Network execution is that the Best Commodities STP Broker only chooses to have only one Commodities Liquidity Provider while Best Commodities ECN Broker implements a wide variety of liquidity providers and it is up to the trader to select which Commodities Liquidity Provider to choose from while trading.
According to reviews, these brokers are also have the low spread, therefore if you are looking for the low spread it is good to select an Best Commodities STP Broker.
Most online commodity brokers do not want to clutter the traders workspace with multiple commodity streaming commodity quote from various different places which may confuse the trader, especially the novice commodity traders who do not know what is what, that is why most commodities trading brokers might be Best Commodities ECN Broker but only choose to display only one streaming quotes from only one interbank, therefore becoming more of an Best Commodities STP Broker rather than an Best Commodities ECN Broker, but the model of operation is basically one and the same.
If you were to open a commodity account with an Best Commodities ECN Broker you would get like 10 quotes of Commodity Trading from different banks and to trade you would have to chose the commodity quote from one of these banks. 10 commodities price quotes for every commodity instrument would make your commodities trading platform workspace too crowded (An Best Commodities ECN Broker Lists Spreads from many liquidity providers). Another thing is that you would need a more complex commodity platform to stream these multiple commodities price quotes, this type of platform would not make the best trading software to trade with. Furthermore if you open an Best Commodities ECN Broker account you will have to pay additional commissions on top of spreads. This is also another reason why to choose Best Commodities STP Broker since unlike Best Commodities ECN Broker, Best Commodities STP Broker do not charge commissions. This means that the Best Commodities ECN Broker is not the cheapest execution method and will charge traders extra commissions adding onto your transaction costs.
Best Commodities STP Brokers offer the best liquidity conditions for clients to make trades
Best Commodities STP Brokers do not have a dealing desk and therefore this provides for full trade transparency, faster and better order fills. The full transparency means this type of commodity broker does not create an artificial market for clients, but instead shows a trader the real-time data commodity quote from an electronic network of banks & allows the trader to enter the true market conditions created by the various commodity market participants.
Straight Through Processing - is the name given to brokers that: upon receiving of a client order they will pass on the commodity orders directly to the network of banks and as such there is no intermediary who will be involved in order execution in other words Straight Through Processing Execution won't be filtering orders through a Dealing Desk. The absence of a Dealing Desk is what makes the electronic communication network the best choice for many traders.
With absence of such an inter-mediary process such as the commodity dealing desk the Best Commodities STP Broker is able to process its clients commodity orders without any delays. In addition these brokers do not send re-quotes to their clients something which most Commodities traders regard as a huge advantage.
This also enables the Straight Through Processing Brokerages to allow its clients to trade during the release times of financial news without any restrictions. Other online commodities trading brokers might not have the liquidity of an Best Commodities STP Broker and may in turn lock out trading for few minutes before and after a news release.
Commodities Straight Through Processing Brokers provide the best 24-hour execution and access to order execution due to high internal liquidity rate and reliable interbank partners they have.
Difference Between STP & ECN - Commodities ECN Meaning - Commodities STP Meaning
