How does fixed spread work for STP broker?

Hello,

I was with an STP broker and also I found a good explanation about ECN/STP/MM brokers.

http://www.100forexbrokers.com/stp-ecn-brokers

Looks like STP brokers benefit from spread mark-up, but what if the real market spread is higher than the fixed spread? how do they handle this? lose money? e.g. during news time, real spread is higher than fixed spread, how can they still provide fixed spread?

Thanks

So far I have read and talked with brokers representatives, STP brokers also earn with an increased spread. They have operating costs that they need to cover. What is good about STP is that they will give you the best quote within their liquidity providers.

One of the best offers I´ve seen so far is from WH Selfinvest, the spreads start at 0,8 pips, but are capped to 3, even in the worst market conditions!

Hope to learn quick enough to open an account there soon.

Cheers,
francsfx

In my experience in periods where real spread is drastically higher than what the fixed spread broker offers you, with market execution you will likely see slippage on that order to reflect the real spread or in the case of instant execution brokers they will likely requote you until spread settles down to cover themselves.

They don't. They're not STP if they fix spreads

The whole idea of an ECN-STP broker is that it provides spreads and quotes which are the closest to the real market. In fact, a real ECN-STP broker is linked directly to the real market so you should get the same spreads. A real STP broker earns just from the spreads, so it must be a little bit wider than the real market spreads. In fixed spreads, during news times, if the spread is too high, the MM does not let you get in or get out in the prices you ask..they will not lose money because of you- do not worry

One of the best offers I´ve seen so far is from WH Selfinvest, the spreads start at 0,8 pips, but are capped to 3, even in the worst market conditions!

Hope to learn quick enough to open an account there soon.

Cheers,
francsfx[/quote]

francsfx!

what is your opinion about cfd trading execution?

You might want to read this which is right off their website:

"Swiss brokers are allowed to keep client monies on their own account. Client monies thus become part of the broker's balance sheet. This increases risk significantly. Creditors can stake a claim to the money and all clients are co-responsible for losses"

PLZ DO NOT DISTORT.........AND READ IT ALL

WH SELFINVEST Ltd has a broker license (nr. 42798), a commissionaire license (nr. 36399) and a portfolio manager license (nr. 1806) granted by the Luxemburg Ministry of Finance. The company is supervised by the Luxemburg Commission for the Surveillance of the Financial Services Sector (www.cssf.lu). WH SelfInvest complies with all laws regarding financial intermediaries and thus benefits from a European Pasport allowing it to offer its services across the EU. Our registered branch office in Belgium has the authorization of the "Banking, Finance and Insurance Commission". Our information office in the Netherlands has the approval of the "Autoriteit Financiële Markten". Our registered branch office in France has the authorization of the 'Autorité des Marchés Financiers' and the Banque de France. And, our registered branch office in Germany has the authorization of the Bundesanstalt für Finanzdienstleistungsaufsicht.

Our firm is audited by not one, but two, independant audit firms. WH SelfInvest serves private retail clients and institutional clients such as white labels, banks, brokers and portfolio managers. Our clients are based in 28 different countries.
Why is it advisable to open your account with a European broker instead of a North American or Swiss broker ?

1. Quality: European brokers, in order to obtain a broker's licence from their local banking regulator, need to meet significantly more requirements than North American or Swiss brokers, and need to maintain higher operational quality standards. For example, WH SelfInvest must maintain 2 auditors. One of these auditors will regularly check that the company delivers the execution speed, service level, commission charges, etc it promises clients. Thus clients can rely on an independent quality control.

2. Risk: Swiss brokers are allowed to keep client monies on their own account. Client monies thus become part of the broker's balance sheet. This increases risk significantly. Creditors can stake a claim to the money and all clients are co-responsible for losses

3. Insurance: The governments of several European countries have insurance schemes in place covering their citizens if they open an account with a financial institution which has a European passport. A North American broker does not have a European passport and is thus not covered by such government insurance schemes.

Absolutely right! I haven't seen any STP broker with FIXED spread. Its impossible.