Every forex broker sits between you and the market, but they don't all sit there the same way. When you click buy, your order might be filled by the broker itself, passed straight to a bank, or matched against other orders in a pool of liquidity. Which one happens shapes your spreads, your slippage and how the broker makes its money.
The labels (ECN, STP, market maker, dealing desk) are used loosely in marketing, and many brokers are a mix. Here's what each actually means.
Market maker (dealing desk)
A market maker takes the other side of your trade. When you buy, the broker sells to you from its own book. It quotes its own bid and ask, usually derived from interbank prices.
- How it makes money: the spread, and in some models, from clients' net losses, since it's the counterparty.
- Typical account: fixed or wider floating spreads, no commission.
- Execution: can be instant, at the quoted price, often with requotes when price moves (instant execution).
- Why it can be fine: a well-run, regulated market maker hedges its aggregate exposure and gives stable, predictable fills, including on small sizes. The conflict of interest is real, but so is regulation of it.
When a broker keeps client risk in-house like this, it's called B-book execution.
STP (straight-through processing)
An STP broker passes your order on to one or more liquidity providers (banks, non-bank market makers) and fills you at the price they offer, usually with a markup added to the spread.
- How it makes money: the markup on the spread, or a commission.
- Execution: market execution: you get the best available price when the order arrives, which can slip either way.
- No dealing desk in the sense that the broker isn't your counterparty; it's routing your order. This is A-book execution.
ECN (electronic communication network)
An ECN broker connects you to a network where prices from multiple liquidity providers, and sometimes other participants, are aggregated, and your order is matched against the best available.
- How it makes money: a commission per lot, with raw or near-raw spreads.
- Typical account: "raw spread" or "ECN" account, spreads from close to zero on majors plus a commission (often quoted per lot round turn).
- Execution: market execution, with depth of market visible on some platforms.
In practice, the line between STP and ECN is blurry: many "ECN" accounts are STP routing to an aggregated feed. What you can actually observe is the pricing model (raw spread plus commission vs marked-up spread) and the execution mode.
A-book, B-book and hybrids
Most large retail brokers are hybrid: they A-book some flow (typically large or consistently profitable clients) and B-book the rest, managing the net risk internally. That's not inherently bad. What matters to you as a trader is whether execution is fair: fills at reasonable prices, symmetrical slippage (positive as well as negative), no unexplained rejections.
What it means for you
| Market maker | STP | ECN | |
|---|---|---|---|
| Counterparty | Broker | Liquidity provider | Liquidity pool |
| Pricing | Spread (often fixed or wider) | Marked-up spread | Raw spread + commission |
| Execution | Often instant (requotes possible) | Market | Market |
| Slippage | Requotes instead of slippage | Both directions | Both directions |
| Suits | Small sizes, predictable costs | Most retail trading | Scalpers, high volume |
- Scalpers and high-frequency traders usually want ECN-style raw spreads: the commission is lower than the spread markup at high volume.
- Swing traders pay the spread once per trade over many pips, so the pricing model matters less than reliability and swap rates.
- Prop firm challengers don't choose: the firm's broker decides. The prop firm rules posts are more relevant than execution model there.
How to tell what your broker does
Brokers don't always say plainly, but you can observe a lot:
- The pricing model. Raw spread plus commission suggests STP/ECN routing; a wider spread with no commission is typical of market-maker accounts (though STP accounts can be priced this way too).
- The execution mode in MT5: right-click a symbol in Market Watch → Specification → Execution. "Instant" means the broker quotes and can requote; "Market" means you get the available price. Execution mode also decides whether your deviation setting is honoured; the slippage post explains.
- Slippage symmetry. Measure your fills. On fair execution, slippage goes both ways; consistently one-sided slippage is a warning sign. The slippage post shows how to measure it.
- Execution reports. Regulated brokers in many jurisdictions publish execution quality statistics. Read them.
- The regulator. Who regulates the broker matters more than its execution label: it's what determines client money protection and how conflicts are policed.
Using several brokers
If you trade across brokers, for diversification, different account types, or copying a strategy from one to another, expect differences: symbol names and suffixes, contract sizes, commission models, server timezones. The symbol suffixes post and server time post cover the practical ones. MetaKit connects MT5 accounts from 300+ brokers to one API, so the multi-account P&L view and copier work the same regardless of each broker's model.
Execution model is one input to choosing a broker. Regulation, costs you can measure, and how the broker behaves on the worst day of the year are the others.