Find out what are the types of Forex brokers

by Priscilla

Forex is a worldwide network that connects buyers and sellers in the foreign exchange market. To operate in this market you need to know what types of brokers exist. Some brokers are STP, some are ECN and some are hybrid, such as prosperity fx.

Brokers play a fundamental role in Forex trading, since in order to open an account, it is necessary to choose among the large number of brokers available. Platforms such as WikiFX, for example, have information about more than 8 thousand of them.

Taking into account the types of brokers to choose is a crucial decision when trading in this market, since the quality of service, trading commissions and the probability of success of the transactions to be carried out will depend on it.

The brokers will be in charge not only of advising the user regarding the operations, but also of showing all the alternatives and investment variables that best suit the trader.

Because of its function as an intermediary, it is crucial in operations and it is necessary to know how many types of brokers exist and their operation methods. For that reason it is important to consult broker review and validation platforms such as the one offered by WikiFX.

ECN Broker

This type of broker, which stands for Electronic Communication Network, basically works as an interbank broker. Its function is to communicate the operations of its traders to different banks, creating a network with other users or traders to trade with each other.

ECN brokers show prices exactly as they receive them from clients, being one of the best valued on WikiFX, for offering the most attractive quotes for users in terms of selling and buying in trading.

Among the types of brokers, the ECN basically acts as an intermediary between the buyer and seller in the market, without trading desks, which means that when a user enters a trade it goes directly to the market as the offer has been submitted.

STP Broker

STP brokers, also known as Straight Through Process, have the same method as ECN brokers, so they also make the connection between their clients and suppliers within the market, however, unlike ECN brokers, it does interfere in the offer of the operation.

An STP broker shows its clients or traders the best bid and ask prices separately and will automatically choose the highest bid to its liquidity providers.

The different types of brokers, while having the same function, differ in their routing. While STP brokers provide access to various providers in their liquidity pool, ECN brokers operate as a hub.

Platforms such as WikiFX show information related to thousands of brokers available in the world, regarding their origin, operations, market statistics and also highlight the different types of brokers.

It is necessary to know them and understand their differences, so that the user can choose the broker that best suits his trading strategy and eventually achieve successful operations.

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