An ECN/STP Forex Broker is a type of Broker that uses an Electronic Communications Network to connect its clients directly to many other participants in the Forex market.

Because of this, the clients’ orders are passed directly to the other market participants without any interference from the ECN/STP Forex Broker. Some may consider that a Forex Broker that acts as an ECN/STP is only the middle man or the agent between its clients and the market and as such, there is no any conflict of interest between the Broker and its clients. – The direct market access allows clients who trade in an ECN/STP account to receive tighter spreads than they used to but in return they are forced to pay a commission fee to the Forex Broker. The fee is calculated according to the traded volume of the clients that pass through the ECN environment.

The commissions’ fee is the only source of income from the Forex Brokers that act as an ECN/STP as they tend to offer best bid and best ask towards their clients. This allows clients to believe that the more they trade the more profits the Forex ECN Brokers are making without worrying that they expect from the Brokers to make more on their losses. In addition, the agency role of the Forex Broker allows clients to use many of the trading strategies that may not be accepted by some other Brokers such as scalping, news trading and other.

However, the market execution in an ECN environment does not guarantee that the stop losses will be triggered at the specified rate and there is no negative balance protection. The reason behind this is that all the rates come from the ECN environment and not the Forex Broker directly.