As a result of leverage, Mary’s buying power on her $5,000 deposit becomes $500,000. In this example, Mary deposits $5,000 into her Forex trading account and nominates the leverage on her account to be 1:100. Using leverage means that you are able to deposit a smaller amount of money to achieve the same buying power as you would have if you bought and sold the currencies outright. Making money trading Forex involves buying lower and selling higher or selling higher and buying back lower. We do this in order to provide you with a better overall trading experience. In order to provide you with better price certainty and to ensure fast execution speed, we do not hedge each and every position with our liquidity providers. These prices are passed on to you with no dealing desk intervention. We consider ourselves to be a Forex provider offering the ECN pricing model as we source our pricing from external unrelated liquidity providers. IC Markets is the issuer of the products it provides. This is not dissimilar to the ECN pricing model in that the price is not altered and there is no dealing desk intervention when the trade is processed hence, it is known as STP. This price is simply passed on by the broker. STP: This term stands for 'Straight Through Processing' and is used when a Forex and CFD provider process all trades at market prices obtained from a liquidity provider. This is distinct from order execution, which may result in an offsetting order placed with a liquidity provider. This usually results in faster trade execution. Under this model your broker will stream raw prices and your trades will be offset with another client or liquidity provider, or held internally by the broker. In the Forex industry, it can be used to identify providers who use this type of pricing mechanism in order to offer raw interbank pricing to retail traders. We do this in order to provide you with a better overall trading experience.įorex brokers use three main business models which differ in the way the transactions are handled and orders are executed: ECN, STP and Market Makers.ĮCN: ECN stands for 'Electronic Communication Network', which is simply a technical term that is used to describe how banks and liquidity providers connect to each other to form bid and offer prices. In order to provide you with better price certainty and to ensure fast execution speed we do not offset each and every position with our liquidity providers.
We consider ourselves to be a forex provider offering the ECN pricing model as we source our pricing from external unrelated liquidity providers, these prices are passed onto you with no dealing desk intervention. This is not dissimilar to the ECN pricing model in that the price is not altered and there is no dealing desk intervention when the trade is processed, hence it is known as STP. STP: This term stands for 'Straight Through Processing' and is used when a Forex and CFD provider processes all trades at market prices obtained from a liquidity provider, this price is simply passed on by the broker.
This is distinct from order execution that may result in an offsetting order placed with a liquidity provider. Under this model your broker will stream raw prices and your trades will be offset with another client, a liquidity provider or held internally by the broker. There are three main business models used by Forex brokers which differ by the way the transactions are handled and orders are executed: ECN, STP and Market Makers.ĮCN: ECN stands for 'Electronic Communication Network' which is simply a technical term that is used to describe how banks and liquidity providers connect to each other to form a bid and offer price. The difficult part in understanding ECN and STP meanings is that those have been interpreted differently by many people. This is one of the most frequently asked questions.
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