2

Categories

November 15, 2018

Tickmill, Differences of STP, DMA, OTC and Market Maker Forex brokers

Is Tickmill a STP and DMA FX MT4 broker or adopts other broker models?

Tickmill strives to offer a fair trading environment through MT4 for online investors.

Tickmill is a NDD and STP broker

Tickmill is a STP and DMA broker.

To distinguish the difference STP and OTC, you will need to know what they do in terms of business.

STP is ‘Straight Through Processing’ and DMA is ‘Direct Market Access’.

In the previous article, we went over the work principles of the main two broker types, a MarketMaker and an ECN broker.

Today, we’re going to talk about the main source of income for companies.

We used to hear a lot and talk about the brighter side of the coin: advantages, rewards, leverages, super-profits.

However, there is a very important question: where does their bread and butter come from?

Let’s review the sources of income of two broker types: A MarketMaker and an STP broker.

Go to Tickmill Official Website

What is OTC (Over the Counter)?

OTC stands for Over the counter, meaning that the financial service is provided between traders and brokers but not the actual market.

So in this case you will trade with your broker only and the broker is the so called maker maker in this case.

The market maker is the ruler, so the broker can even decide what price they offer or if they accept the orders from its clients.

Many brokers are OTC brokers or partially OTC brokers.

Being an OTC does not directly affect the order execution on client side, so the execution speed and slippage etc are not really related to OTC/STP businesses.

Open Tickmill Real and Demo Account

Why some broker choose the OTC model?

Well, technically if a broker adopts OTC model, the broker is not a broker but a market maker.

A Broker is an entity which transmits the orders from clients to exchange market. Brokers’ job is to be a mediator between clients and markets and providing them a solution to get access to the markets.

In case a broker is being a Market Maker, the broker will be covering all trades for clients.

This means that the broker will hedge your positions as in if you buy EUR/USD, the broker will sell the same amount of EUR/USD at the same time.

So in this case, there is a 100% conflict of interest between brokers and traders. In another word, the broker makes profits when traders lose their fund.

And generally speaking about more than 80% of traders will lose their invested funds win FX, the brokers should be making money in more than 80% probability.

So the reason why some brokers are Market Makers(OTC) is  because it makes more money for brokers.

Visit Tickmill Official Website

What is Market Maker?

Market Makers create the market, setting the bid and ask prices on their assets.

Market Makers make profit on the spread, because they always buy cheaper than sell.

They take their rates from various sources, such as large banks and other Market Makers.

After that, they use special software to generate their own rates and offer them to their clients.

Market Makers’ objective is to provide liquidity at their own price.

That means that they don’t bring buyers and sellers together.

Market Makers stand on the other side of the fence, acting like a direct counter party in a transaction.

The profit goes to a Market Maker if a client loses their deposit.

Register for Tickmill online

What is STP (Straight Through Processing)?

STP stands for Straight Through Processing.

It is the classic model of a broker as it is the main job for the broker to adopt STP model in its financial service.

Adopting a STP model means that the broker is acting as a broker, but not a maker maker(OTC).

So in this case, the broker will directly send the orders from clients to the real exchange market and the broker will only act as a mediator between traders and exchange market.

There are not so many STP brokers in the world and Tickmill is one of them.

Go to Tickmill Official Website

What is the merit of being STP broker?

If a broker is a STP broker, there is not much benefit for broker side comparing to OTC model, but there is a big merit for traders.

Some brokers adopt STP model, because they don’t have the technology to be a Market Maker or they believe in the true benefit of being a real broker for its traders.

If you are trading with a complete STP broker, there is no trading restrictions at all.

Even swap arbitrage, News time trading is allowed for traders. But if a broker is not a complete STP broke, you are absolutely not allowed to trade arbitrage with the broker.

Only thing which is prohibited by a STP broker is “latency arbitrage”.

The second biggest benefit of trading with a STP broker is that there is no conflict of interest between traders and brokers, so there shouldn’t be order rejections or profit cancellation.

So traders can trade without worrying about any troubles after generating profit, because STP brokers like Tickmill wants you to make more profit and  continue the tradings.

Open Tickmill MT4 Account

Fees are a guarantee of fair STP trading

Fees on transactions serve as the only source of income for an STP broker.

STP brokers offer real prices to the client without changing the market rates.

There are no other sources of income for this type of broker.

There might be different ways of charging fees. separately for opening and closing of a lot, or a doubled fee at one time.

Of course, a STP broker does not have the chance to get a super profit that Market Makers get in the case a client loses their deposit.

However, due to a large demand on their services, an STP broker can enjoy a steady profit from the fees.

Tickmill has achieved to offer 0.0 pips Forex spread by adding more market liquidity.

With Tickmill, you can benefit from the low costs and fees with STP execution.

Visit Tickmill Official Website

STP brokers are also safer

A trader can estimate all their expenses in advance if he’s dealing with an STP broker.

It’s important to understand that an STP broker does not bear any risks, that’s why there is not reason for them to hinder their clients success.

If there is no conflict of interests, that means your broker is on your side, and that changes everything.

An STP broker is interested in his client trading longer and achieving higher results.

Many Bucket Shop companies intentionally provide false information about their work principles purporting themselves as STP brokers.

You should only deal with verified companies if you don’t want to be scammed.

Signup for Tickmill online

Invest with the NDD and STP broker – Tickmill

Tickmill is a reliable regulated STP broker with flawless reputation that offers all services necessary for successful trading and investments.

Table of tariffs and fees is publicly available at the main page of Tickmill Official Website.

Also, you can check the regulation and legal documents in the “About Tickmill” section.

Tickmill’s goal is to make people successful and happy, and they have all the necessary instruments: a professional team of portfolio and risk managers, client support service, trading platforms and more.

Tickmill runs $30 No Deposit Bonus promotion which you can get for free to start investing in Forex and CFDs. Find out more about Tickmill’s $30 No Deposit Bonus promotion here.

All Forex Brokers

  • IFC Markets
  • FxPro
  • IronFX
  • Axiory
  • FBS
  • Land-FX
  • MyFX Markets
  • Titan FX
  • Traders Trust
  • XM
  • LMFX
  • FXDD
  • ForexClub
  • KVB Kunlun
  • Tradeview
  • EightCap
  • FXOpen
  • HotForex
  • FXGiants
  • LQDFX
  • Fortrade
  • CM Trading
  • InstaForex
  • FXPRIMUS
  • ForexMart
  • Valutrades
  • AvaTrade
  • Yadix
  • easyMarkets
  • JustForex
  • Swiss Markets
  • FXTM
  • HYCM
  • FP Markets
  • SimpleFX
  • IC Markets
  • Evolve Markets
  • Tickmill
  • Markets.com
  • UFX
  • Anzo Capital
  • LiteForex
  • 4xCube
  • OctaFX
  • Tifia
  • XTB
  • AAAFx
  • NordFX
  • FXGlory
  • Capex
  • ClickTrades
  • TopstepFX
  • HotForex ZA (South Africa)
  • XMTrading
  • PaxForex
  • ITRADER
  • ITRADER Global
  • FortFS
  • MiltonMarkets
  • ETFinance
  • ATFX
  • XBPrime
  • Oinvest
  • VantageFX
  • EXNESS
  • BlackBull Markets
  • SuperForex
  • Deriv

All Crypto-Currency Exchanges

  • CEX.IO
  • HitBTC
  • Paxful
  • BitMEX
  • C-CEX
  • Binance
  • YObit
  • Bibox
  • BKEX
  • CoinPark
  • CoinEx
  • IRONX
  • CoinField
  • bybit
  • Bitpanda
  • XBTFX
  • Trade8
  • PrimeBit

This website uses cookies

By using our site, you acknowledge that you have read and understand our Privacy Policy (Cookie Policy), and our Terms of Service.