Choosing between an STP (Straight Through Processing) broker and a market maker can have a significant impact on your trading experience.
While both have their advantages and drawbacks, STP brokers that use a MetaTrader bridge to route trades directly to banks or exchanges are generally preferred by traders seeking transparency, fair execution, and a conflict-free environment. But why?
An STP broker is often considered a better choice than a market maker because it provides a more transparent and fair trading environment. Since an STP broker passes orders directly to liquidity providers, it eliminates any conflict of interest between the broker and the trader.
This means that the broker does not profit from a trader’s losses but instead earns through spreads or commissions, ensuring that the execution process remains impartial. In contrast, a market maker takes the opposite side of a trader’s position, which can create an inherent bias where the broker benefits when the trader loses. This setup can sometimes lead to price manipulation, re-quotes, and execution delays, all of which can negatively impact a trader’s experience.
Another significant advantage of STP brokers is the quality and speed of trade execution. Because orders are routed directly to liquidity providers without interference, execution speeds tend to be much faster, reducing the risk of slippage and ensuring that traders get the best available market prices. Market makers, on the other hand, control order execution internally, which can result in artificial delays, re-quotes, or unfavorable price adjustments.
Additionally, STP brokers allow for both positive and negative slippage, meaning traders can sometimes benefit from price movements in their favor, whereas market makers often restrict positive slippage and only pass on negative movements.
STP brokers also provide a more flexible and unrestricted trading environment. Traders can use various strategies, including scalping, hedging, and high-frequency trading, without restrictions. Market makers, however, may impose limitations on certain trading styles, particularly those that could exploit price inefficiencies.
Furthermore, STP brokers usually process withdrawals smoothly since they do not rely on client losses to maintain profitability, whereas some market makers have been known to delay or complicate withdrawals for consistently profitable traders. This overall transparency and fairness make STP brokers a more appealing choice for traders who seek a reliable and conflict-free trading experience.
How To Verify Whether Your Broker Uses MetaTrader Bridge?
Determining whether your forex broker is a true STP (Straight Through Processing) broker and whether they use a MetaTrader bridge requires some investigation. Here’s how you can find out:
1. Check the broker’s execution model. A true STP broker:
- Passes orders directly to liquidity providers: banks, hedge funds, other market participants
- Does not operate a dealing desk
- Makes money from spreads or commissions rather than trading against clients
- Offers variable spreads: fixed spreads can indicate a market maker model
To check:
- Visit the broker’s website and look for terms like STP, NDD, ECN
- Read their execution policy in their terms and conditions or trading agreement
- Contact customer support and ask directly how orders are executed
2. Analyze the spreads and trading conditions
- True STP brokers typically offer floating spreads, which fluctuate with market conditions
- Market makers usually offer fixed spreads because they control order execution internally
To check:
- Compare the broker’s spreads with raw interbank rates from an independent source
3. Use a trade execution speed test. A true STP broker should have:
- Fast execution speeds, usually milliseconds
- No re-quotes or artificial delays
To check:
- Open a demo or real account and place trades during volatile periods
- Use a latency tester or a ping test on their server
- Compare execution speeds with an ECN broker
4. Look for MetaTrader bridge usage. A true STP broker using MetaTrader (MT4 or MT5) needs a bridge to connect to liquidity providers.
To check:
- Ask the broker if they use a MetaTrader bridge. Common providers include oneZero, PrimeXM, Takeprofit Tech
- Run a network trace using MT4 / MT5 logs to see if the platform is communicating with a liquidity provider rather than an internal dealing desk
- True STP brokers using MetaTrader should provide market depth, level 2 pricing, showing bid/ask from different providers
5. Check the order flow and slippage behavior. A true STP broker:
- Allows positive and negative slippage. Market makers often block positive slippage
- Does not reject trades or re-quote prices.
- Has no conflict of interest in execution.
To check:
- Trade in high-volatility conditions, like news events and analyze slippage behavior
- Compare slippage across different brokers
6. Review the broker’s regulation and licensing
- True STP brokers are often regulated by Tier-1 authorities: FCA, ASIC, CySEC, NFA, etc.
- Many regulators require STP brokers to disclose liquidity providers
To check:
- Search for the broker’s regulatory license and read their execution policies
7. Third-party reviews and user feedback
- Visit forex forums, e.g., Forex Factory, FPA and look for user experiences with order execution
- Use a trade journal tool, like Myfxbook to analyze execution data
What About Hybrid Forex Brokers?
A hybrid model broker combines elements of both STP and market maker models, offering a balance between direct market access and internal execution.
Unlike pure market makers, hybrid brokers often route a portion of trades to liquidity providers while handling smaller or less liquid trades in-house, reducing execution delays and widening spreads. This approach allows them to offer competitive pricing and fast execution while managing risk more efficiently. Since they don’t rely entirely on client losses for profit, the conflict of interest is lower compared to traditional market makers.
While not as transparent as a true STP broker, a well-regulated hybrid broker can still provide fair trading conditions, making them a reasonable option for many traders.
Conclusion
If your broker claims to be STP but:
- Offers fixed spreads
- Has frequent re-quotes
- Blocks positive slippage
- Executes trades slowly
- Doesn’t disclose liquidity providers
…then they might be a market maker or hybrid model rather than a true STP broker.
