STP Execution: Straight Through Processing in Forex
Macro Glossary, Forex Mechanics
By Ken Chigbo, macro trader and founder of KenMacro, 18+ years in markets.
Updated 2026-05-20
The desk’s answer
STP (Straight Through Processing) routes a client’s order directly to a liquidity provider for execution, without a broker dealing desk in between. It is faster and cleaner than market-maker execution, but it routes to a single LP or a small group rather than an aggregated competitive pool as a true ECN does. STP brokers usually earn from a small markup on the LP spread rather than from an explicit commission, which makes their pricing model sit between true ECN (commission plus raw spread) and market maker (wider spread, no commission).
Defined term, STP execution
STP (Straight Through Processing) execution routes client orders directly to a liquidity provider for fulfilment, without a broker dealing desk taking the other side. It typically routes to a single LP or a small group of LPs rather than an aggregated competitive pool (as ECN does), and the broker earns from a small markup on the LP-provided spread rather than from an explicit commission.
How STP execution works
When the trader hits the broker’s price, the order is forwarded automatically to a liquidity provider for fulfilment. The LP is usually a Tier-1 bank or a prime broker that has a relationship with the retail broker. The fill returned to the client is the LP’s price, with the broker’s markup added (typically 0.3 to 0.8 pips on EUR/USD). There is no dealing desk deciding whether to internalise the order or pass it on. The broker’s revenue is the spread markup, not the bid-ask. The execution is fast (under 100 milliseconds on a competitive broker) and price improvement is rare.
STP versus ECN versus market maker
STP and ECN are both NDD (No Dealing Desk) models. The distinction is the depth of the LP pool. STP routes to a single LP or a small group; ECN routes into an aggregated pool of multiple LPs that compete on each fill. ECN gives tighter spreads at the cost of a per-lot commission, STP gives wider spreads at no commission. Market maker (dealing desk) is the opposite of both: the broker takes the other side and decides whether to hedge, internalise or B-book the position. STP execution at a properly regulated broker is sufficient for most retail traders; ECN matters most for high-frequency strategies.
Practical reads on STP brokers
Three things to verify. First, the LP relationship: a competent STP broker discloses which prime broker or Tier-1 bank it routes through. Second, latency: a real STP execution is under 200 milliseconds on a London-hosted account; longer suggests the broker is internalising or queuing. Third, execution behaviour around news: a real STP broker prints whatever the LP returns, including wide gaps and slippage. Brokers that smoothly fill every news trade at displayed prices are running internalisation, not pure STP, regardless of the marketing.
Frequently asked
What is STP execution in forex?
Straight Through Processing execution, where client orders are routed directly to a liquidity provider for fulfilment without a broker dealing desk taking the other side. The broker earns from a small markup on the LP spread rather than from an explicit commission.
How is STP different from ECN?
STP routes to a single LP or a small group of LPs and earns from a spread markup. ECN routes into an aggregated pool of multiple LPs that compete on each fill, and the broker earns from an explicit per-lot commission. ECN delivers tighter spreads at the cost of commission; STP delivers wider spreads at no commission.
Is STP execution enough for retail trading?
For most retail traders, yes. STP at a properly regulated broker with a competitive LP relationship delivers fast fills, transparent pricing and no dealing-desk interference. ECN only meaningfully outperforms STP for high-frequency or large-size strategies where every 0.3 pip per trade is decisive.
What this means at the desk
STP is competent NDD execution. The model is fine, the LP relationship is what to verify.
Read next from the desk
Educational glossary entry only,
From the desk
Knowing the term is step one. The next question is always which broker actually serves you well. The desk audits eight brokers on regulation by entity, true cost, and honest fit, with the regulatory caveats the comparison sites bury.
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