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Best ECN/STP Brokers in 2019

By Jeffrey Cammack Published: June 3rd, 2019 Updated: June 8th, 2019
ECN STP Brokers South Africa

You may have come across the term ECN/STP when researching different brokers. ECN/STP brokers are known as Direct Market Acess (DMA) brokers which are distinctly different from the Market Makers, in that ECN/STP trades are sent directly to the interbank market without intervention.

These are the most trusted FSCA regulated ECN/STP Forex brokers operating in South Africa, compared by trust, reputation, platform support and trading conditions.


FXTM

FXTM is an award-winning broker popular with beginner traders. FXTM offers both dealing desk accounts and ECN/STP accounts with low minimum deposits. All the ECN accounts use market execution to execute orders and offer the option to use the MT5 trading platform. All the ECN Accounts require a higher minimum deposit than FXTM’s dealing desk Standard Accounts, but spreads are much narrower.

We like FXTM for their focus on educating new traders, the availability of MT5 for ECN accounts and the weekend customer support.

Visit FXTM or Read Full FXTM Review

FXCM

While not a true ECN, FXCM does practice STP and uses an enhanced execution model to fulfil trades – although they use a network of liquidity providers, FXCM is the final counterparty to all trades that a client undertakes. If you achieve Active Trader status with FXCM (with a minimum account balance of 25,000 USD) you will get access to the tightest spreads available, though commission may be charged on trades.

We like FXCM’s multi-platform support (including its proprietary trading platform, Trading Station, MT4 and Ninja Trader), a huge selection of analytical tools but are aware that many traders will look elsewhere for a true ECN.

Visit FXCM or Read Full FXCM Review

Khwezi Trade

Khwezi Trade is a locally based and locally regulated with trading denominated in Rands. Khwezi offers South African customer support while trading with conditions and software that you would expect of any good international brokerage, though leverage is lower than its competitors. Though all trades are STP market execution, no commission is charged and spreads remain relatively tight – even compared to market maker competitors.

We like that Khwezi Trade is committed to local traders and offers excellent customer support. The tight spreads and zero commission are winners for us too.

Visit Khwezi Trade or Read Full Khwezi Trade Review

HotForex

As an STP broker regulated by multiple major international organizations including the FCA, CySEC and the FSCA, HotForex has built a reputation among traders for achieving a stable, fair, secure and transparent trading environment for both the beginning and expert level trader. HotForex provides clients with a choice of six account types and spreads as low as zero pips.

We like HotForex for their world-class customer support and large account choice, though a little disappointed that they only support MT5.

Visit HotForex or Read Full HotForex Review

FXPro

FxPro is a powerhouse in the industry and very well respected among traditional players. With MT4, MT5, cTrader and a browser-based platform, a reasonable 100 USD opening deposit and outstanding customer service FXPro ticks all the boxes for a reputable brokerage.

While FXPro’s MT4 account is a commission-free dealing desk account, the MT5 account offers market execution, variable spreads, no requotes and will allow for partial fills for orders that lack liquidity. The cTrader account is a true ECN account and charges commission on trades and has significantly tighter variable spreads than the MT4 and MT5 accounts.

Expect consistent trading conditions and excellent support from FxPro, but they leave the extra frills and innovation to other industry players.

Visit FxPro or Read Full FxPro Review

What is an ECN/STP Broker?

Brokers come in two distinct types – dealing desks (also known as market makers) and on the other, and non-dealing desks (the most common of which are ECN/STP).

To understand what an ECN/STP is we first need to understand what a dealing desk is and how the two differ.

Dealing desks are often called market makers because they are the market – when a dealing desk prices a trade that you see on your platform, you are seeing what they has decided is a fair price, given the current market conditions.

If you agree to this price and decide to make the trade offered, you are dealing with the broker, not with the wider market, and they will be the counterparty to your trade. In essence, they are betting against you – if you lose money on that trade, the broker is going to profit.

There is an obvious conflict of interest inherent in this business model and, for this reason, some traders prefer to have a neutral party as a conduit for their trading.

Dealing desks tend to not take a commission on trades, instead making money through the spread and their trading platforms tend to be relatively easy to learn. Markets on a dealing desk platform will also be less volatile – a disadvantage to scalpers – and slippage (a change in price between confirming a trade and the trade being posted) can be an issue.

But how are ECN/STP brokers different?

The clue is the name: ECN (Electronic Communication Network) STP (Straight Through Processing) brokers. ECNs are so called because they rely on a network of market participants (usually large lenders such as banks) to serve as counterparties to Forex trades. When you post a trade with a true ECN they will find a third-party to take the other side of your trade, removing the conflict of interest present with a market maker.

ECN brokers will charge a commission for this service (as they cannot profit from your trade) but spreads tend to be much tighter than with market makers. At times of market volatility on major currency pairs, you will often see spreads disappear entirely, down to zero pips. Another thing to remember with true ECN/STP brokers is that you will not be able to set your stop loss and take profit orders when you post your trade, increasing your risk during times of high market volatility.

STP is the method of the transaction – with STP your order is sent directly to the counterparty through the Financial Information Exchange (FIX) protocol. The FIX protocol decreases trade execution time, reduces slippage and ensures that traders get the best available pricing.

Conclusion

So, while ECN/STP brokers do not have the inherent conflict of interest present with market makers, there are larger trading risks involved and the commission will always be charged on your trades. You will also often find that true ECN/STP accounts will require a much higher minimum deposit – putting them out of reach of a lot of new traders.

Are ECN/STP brokers objectively better than market maker? I don’t believe this to be the case. All those we work with are trustworthy and well-regulated and broker choice is always down to personal preference. Whether you go with an ECN/STP broker or a market maker, as long as you choose one from our list of best in South Africa you will be in good hands.

Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.