STP (Straight Through Processing) is an automated order routing system that sends trades directly to liquidity providers without dealer desk intervention. It eliminates manual processing steps and enables faster execution compared to market-maker brokers.
How STP works
When you place an order on an STP platform, it is transmitted electronically and matched directly with liquidity providers' available prices. The order bypasses the broker's internal matching engine—there is no human review or dealing desk markup applied to your trade.
Practical implications for trading
- Faster execution: Order-to-fill times are minimized because there is no dealer review before routing.
- No dealing desk markup: Your order goes straight to the market at the liquidity provider's quoted price, not a broker's adjusted spread.
- Scalping allowed: STP brokers typically permit scalping and fast trading strategies that market-maker brokers restrict.
- Price slippage risk: Because execution is automatic, you may fill at a different price than you saw on screen, especially during volatile news or thin liquidity.
- Liquidity dependent: Execution speed and fill quality depend on available liquidity providers at that moment.
STP vs. other execution models
ECN (Electronic Communication Network) is more transparent—you see the live order book—but STP is faster and simpler. Market-maker brokers guarantee fills at their quoted price but can widen spreads whenever they choose and may refuse large orders. STP offers direct market access without the price transparency of ECN.
