STP vs ECN vs Dealing Desk: Broker Execution Models Explained
STP vs ECN vs dealing desk explained: how each model routes your order, how it is paid, what depth of market shows, and what to check before you trade.
Broker websites love three-letter labels. One promises STP execution, another a true ECN, a third says “no dealing desk” in large type. The STP vs ECN question sounds technical, but it comes down to two things you care about: where your order goes, and how the broker is paid for sending it there.
Quick answer: A dealing desk broker fills your order from its own book. An STP broker passes it to one or more liquidity providers and usually earns a mark-up on the spread. An ECN broker connects you to a network where many participants’ orders meet, and charges a commission on raw prices. Cost, regulation and execution quality matter more than the label.
STP vs ECN vs dealing desk: three ways to handle your order
Every order you place goes to your broker first. What happens in the next fraction of a second depends on the broker’s execution model, the way it turns your click into a position. There are three broad models, and almost every account you will see is one of them or a blend.
A dealing desk broker, also called a market maker, fills your order itself. If you buy euros, it sells them to you from its own book and decides later whether to hedge that risk with a bank. Our guide to ECN vs market maker brokers covers this model, and the conflict of interest it creates, in depth.
An STP broker uses straight-through processing. Your order is passed automatically to one or more liquidity providers, the banks and specialist trading firms that quote prices to brokers, and one of them fills it. Nobody at the broker decides whether to keep it.
An ECN broker goes one step further. An electronic communication network is a venue where orders from many participants meet in a shared order book: banks, funds, other brokers and, through your broker, you. Your order is matched against the best opposite order available, and you can often see how much is waiting at each price.
STP and ECN are both called no dealing desk (NDD) models, because the broker is not choosing whether to take the other side. That shared label is why the two are so often confused. In practice they differ in where the price comes from, how the broker earns, and what you can see.
The simplest way to picture the split is the two-way toggle below, which the Academy uses in its lesson on how brokers work. STP and ECN sit on the same side of it; the dealing desk sits on the other.
The basic split behind every execution model. STP and ECN brokers pass your order towards liquidity providers; a dealing desk broker fills it from its own book.
How an STP broker routes your order
An STP broker works like a router with a price filter. It holds connections to a group of liquidity providers, often called a liquidity pool. Each provider streams a bid and an ask for every pair, many times a second. The broker’s software, usually called an aggregator or bridge, collects those streams and picks the best bid and the best ask from across the pool.
That best price is not normally what you see. On most STP accounts the broker adds a small mark-up to each side of the quote and shows you the wider result. The mark-up is the broker’s fee. There is no separate commission, so the account looks like a simple spread-only account.
When you click buy, the broker sends your order to the provider whose price was best, or splits it between providers if it is large. The provider fills it, and the broker fills you at the provider’s price plus its mark-up. In calm markets the whole round trip takes a fraction of a second.
Last look and rejected orders
One detail rarely appears in marketing. Some liquidity providers keep a brief window, known as last look, in which they can accept or reject a trade request at the price they quoted. If the market has moved in that instant, the provider may decline, and the broker’s bridge resends the order to another provider at the next available price. To you, that shows up as a slightly slower fill or as slippage. Last look is a recognised wholesale market practice, and the FX Global Code, a set of market principles backed by central banks, expects providers that use it to disclose how.
What STP does and does not mean legally
“Straight through” describes the routing, not the legal relationship. Many STP brokers that offer retail CFDs are still, on paper, your counterparty: they open a matching trade with a provider the moment you open yours, a set-up often described as back-to-back or matched principal. That is not a problem in itself; the risk is passed on immediately. It does mean the account name tells you less than the client agreement, which states whether the firm acts as principal or as agent.
How an ECN works, and what depth of market shows
A genuine ECN is a marketplace rather than a router. Instead of choosing between a handful of quotes, your order joins an order book where many participants’ buy and sell orders sit at different prices. A buy order is matched against the cheapest sell orders available; a sell order against the highest buy orders.
Two consequences follow. First, you see prices very close to the wholesale market, because there is no broker quote in the way. On EUR/USD in busy hours that can be a fraction of a pip. Second, the broker cannot easily earn from the spread, so it charges a commission per lot instead. That combination is what most brokers sell as a raw spread account.
Reading the depth of market
Because orders sit in a shared book, an ECN-style account usually lets you see depth of market (DOM), sometimes called Level 2 pricing. It lists the volume waiting at each price above and below the current one. The best bid and best ask on your chart are only the top line of that book.
If your order is bigger than the volume at the best price, it “walks the book”, taking the next price up until it is filled. The extra cost is a form of slippage that has nothing to do with speed. For most retail sizes in a major pair during busy hours, the top of the book is deep enough that you will never notice. Around big news releases, though, liquidity providers pull their orders, the book thins out, and even small orders can fill several levels away.
Depth of market also has limits as information. On a retail account you usually see the liquidity your broker can access, not the whole forex market, which has no single central book. Orders can be cancelled in milliseconds, so treat DOM as a snapshot of how thin the market is right now.
“True ECN” in retail forex
Few retail brokers connect you directly to an institutional ECN venue. More often, an “ECN account” means the broker aggregates prices from several providers, shows them with little or no mark-up, and charges a commission. In practice that behaves much like a commission-based STP account. The label matters less than three facts: the spread you actually see, the commission you pay, and how your orders are filled.
STP vs ECN: the real differences for a retail trader
Strip away the marketing and the STP vs ECN comparison comes down to a handful of practical points. The table sets them beside the dealing desk model so you can see all three at once.
| Dealing desk | STP | ECN | |
|---|---|---|---|
| Who fills your order | The broker, from its own book | A liquidity provider chosen by the broker | The best matching order in a shared book |
| Where your price comes from | The broker’s own quote | Best provider quote plus a mark-up | Raw prices from many participants |
| Typical charge | Spread only | Mark-up in the spread | Commission per lot on a raw spread |
| Depth of market visible | Rarely | Sometimes | Usually |
| In fast markets | Requotes possible | Slippage or rejected orders | Slippage and partial fills |
| Minimum trade size | Often very small | Often small | Sometimes larger |
Commission vs mark-up: the same fee in a different place
The biggest difference you will feel is how you pay. An STP broker hides its fee in the spread; an ECN broker shows it as a separate line. Neither is cheaper by nature. The only way to compare them is to put both in the same unit.
On one standard lot of EUR/USD, a pip is worth about $10. So a commission per lot divided by $10 gives you its value in pips. A $7 round-turn commission is the same as 0.7 pip of spread. Compare that with the STP mark-up and you have your answer.
Change the numbers and the answer flips. A 0.5-pip mark-up beats a $7 commission; a $10 commission loses to a 0.8-pip mark-up. The calculator below runs the same comparison at your own monthly volume. It labels the two sides “standard” and “raw”, which is how most brokers name the STP-style and ECN-style accounts.
Standard
per month, spread only
Raw / ECN
per month, spread + commission
Spread-only (STP-style) versus raw spread plus commission (ECN-style) monthly cost at your own volume. Typical pricing for illustration, not a quote from any broker.
Our guide to raw spread vs standard accounts works through the crossover in more detail, and the Academy lesson on account types has practice questions on it.
Transparency, size and who sees your order
Two smaller differences are worth knowing. On an ECN account, the commission makes the broker’s income visible on every statement, which some traders value for its own sake. And because you are matched against an order book, a limit order you place may rest in the book and be filled by someone else’s market order, the way it would on an exchange. On an STP account your orders are always taken by a provider at its quote.
Minimum sizes and commissions also differ. ECN-style accounts sometimes require larger deposits or charge a minimum commission per ticket, which can make very small trades relatively expensive. STP and dealing desk accounts are usually comfortable with micro lots.
Execution speed, slippage and requotes across the three models
Execution is what happens between your click and your fill. In every model there is a short gap, and the price can move during it. What differs is how each model handles that movement.
A dealing desk account on instant execution fills you at the price you clicked or not at all. If the price has moved, the broker can decline and offer a new one, a requote. STP and ECN accounts usually use market execution: the order is always filled, at the next available price. That removes requotes but brings slippage, which can be positive or negative.
Speed matters, but less than marketing suggests. In calm conditions all three models fill most orders in a fraction of a second, and the difference of a few milliseconds is irrelevant to anyone holding a trade for hours. Where speed shows up is in the size and direction of your slippage around news, when prices jump. Try it in the simulator: switch between a calm market and a news release, and between order types.
Requested versus filled price for market, stop and limit orders in calm and fast markets. Illustrative: on STP and ECN accounts, market and stop orders fill at the next available price, which can be better or worse than requested.
A limit order never fills worse than your price. That is true in every execution model, and it is the main tool you have to control slippage. Our guide to forex order types explains the trade-off, and the full picture of why fills move is in our guide to slippage in forex. The Academy lesson on execution and slippage shows a simple way to test it yourself.
Hybrids and “no dealing desk” marketing
Very few brokers run one pure model. Most are hybrids: they send some client flow to liquidity providers and keep some in-house, often deciding by account size and trading history. The ECN vs market maker guide explains this A-book and B-book split. For the STP vs ECN question, three marketing habits are worth decoding.
- “NDD” as a blanket term. “No dealing desk” tells you nobody manually handles your order. It does not tell you whether the firm is your legal counterparty, whether a mark-up is added, or whether some flow is internalised.
- “ECN pricing” on an STP account. Often this means raw spreads plus commission from aggregated providers, not access to a shared venue. That can be perfectly good value; it just is not an ECN in the strict sense.
- “STP” on a standard account. A spread-only account at a hybrid broker may be routed straight through, or it may be kept in-house for small clients. The order execution policy, not the account name, says which.
None of this makes hybrids dishonest. A regulated hybrid still owes every client the same duty to execute fairly, whichever route an order takes. It does mean the account label is the weakest evidence you have.
Which account is really which?
A broker offers an 'ECN Pro' account: spreads from 0.0 pips, $8 commission per lot round turn. Its execution policy says the firm 'acts as principal on all client transactions and hedges with third-party liquidity providers'. You trade about 4 lots a month. What do you conclude?
How to read an order execution policy
The order execution policy is the document that answers the STP vs ECN question for any particular broker. In the UK and EU, investment firms must take all sufficient steps to get the best possible result for clients, a duty known as best execution, and must publish a policy explaining how they do it. The UK’s Financial Conduct Authority and the EU’s European Securities and Markets Authority both set out these rules. The policy is usually linked in a website footer under legal documents, next to the client agreement and the conflicts of interest policy.
It is rarely exciting reading, but the parts that matter fit on one page. Work through the list below with the policy open. Your ticks are saved in your browser.
What to check in an execution policy
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Look for plain, specific statements. “We may apply a mark-up to prices received from our liquidity providers” is useful. “We strive to deliver the best possible trading experience” is not. If a broker is regulated where these rules apply and you cannot find a policy at all, treat that as a warning on its own. The Academy lesson on regulation shows how to confirm a licence on the regulator’s own register, and our guide to forex broker regulation compares what different authorities require.
The policy tells you what the broker promises. Your own records tell you what it does. Some firms publish execution statistics, such as average fill time and the share of orders filled at the requested price or better; where they do not, a small live account and twenty logged trades will tell you more than any brochure.
Common mistakes when comparing STP and ECN brokers
Treating “ECN” as a quality stamp
The word describes how prices are sourced, and in retail forex it is often used loosely. An unregulated firm can call any account ECN. Check the regulator first, then the execution policy, then your own fills.
Comparing a spread with a commission
“0.0 pips plus $8” and “1.0 pip, no commission” are not comparable until you convert. Divide the commission by $10 to get pips per standard lot, add the average raw spread at your trading hours, and only then compare. Our guide to forex trading costs shows how to add swap as well.
Paying for speed you do not use
Millisecond execution matters to scalpers trading around news. If you hold trades for hours or days, a fraction of a pip of slippage is small next to your stop distance. Choose the account for its total cost and reliability, not its latency claims.
Ignoring depth when trading larger size
On a raw account, a market order bigger than the volume at the best price fills at several prices. If you trade several lots at a time, check the depth before you click, or use limit orders where the setup allows.
Judging execution on a demo account
Demo orders do not touch real liquidity, so they fill perfectly and teach you nothing about STP or ECN execution. Only a small live account shows how your broker really fills you.
Frequently asked questions
What is the difference between STP and ECN?
An STP broker passes your order to one of its liquidity providers and usually earns a mark-up added to the spread. An ECN broker connects you to a shared order book where many participants trade, shows raw prices and charges a commission. Both are no dealing desk models, and many retail accounts mix features of each.
Is ECN better than STP?
Not automatically. An ECN account is often cheaper for active traders and shows depth of market, but adds a commission and can fill large orders at several prices. An STP account is simpler to cost. Compare total cost per lot at your trading hours, the regulator and your own fills, not the label.
Is an STP broker a market maker?
Not in the dealing desk sense, because it passes your orders to liquidity providers instead of choosing to keep them. Legally, though, many STP brokers are still your counterparty on a back-to-back basis, and hybrid brokers may keep some client flow in-house. The order execution policy states which applies.
What does no dealing desk mean in forex?
No dealing desk, or NDD, means nobody at the broker manually decides how to handle your order; it is routed automatically to liquidity providers or a network. Both STP and ECN accounts use the term. It says nothing about regulation, mark-ups or whether the firm is legally your counterparty.
Do ECN brokers have slippage?
Yes. ECN accounts use market execution, so orders fill at the next available price, which can be better or worse than the one you clicked. Large orders can also fill at several prices if the volume at the best price is small. Fair slippage goes both ways; limit orders avoid negative slippage.
How do I know if my broker is STP or ECN?
Read the order execution policy and the client agreement. Look for whether the firm acts as principal or agent, which providers or venues it uses, how it charges, and whether you can see depth of market. Then test a small live account and record requested and filled prices.
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