What it is
When you place a forex trade, something has to be on the other side of it. How your broker handles that — and who ultimately takes the other side — determines whether they are an ECN, STP, or market maker broker. Understanding the difference helps you choose the right account type for automated trading.
Market maker brokers
A market maker creates an internal market for their clients. When you buy EUR/USD, the broker takes the sell side themselves rather than passing your order to an external party. They profit from the spread on every trade, and they also profit when your trades lose.
This creates a conflict of interest. Regulated market makers are not allowed to manipulate prices, but the incentive structure is not aligned with your success as a trader. Market makers typically offer wider spreads but no commissions.
STP (Straight Through Processing) brokers
STP brokers pass your orders directly to their liquidity providers — banks and institutions that quote real market prices — without taking the other side themselves. The broker marks up the spread slightly and passes the rest through. Your trade executes at a real interbank price plus the broker's small markup.
STP removes the direct conflict of interest of the market maker model. The broker's revenue comes from volume, not from your losses.
ECN (Electronic Communication Network) brokers
ECN brokers connect you directly to a pool of liquidity from multiple banks, hedge funds, and other market participants. Your orders compete with real market orders from other participants. The spread can be as tight as 0.0 pips during peak liquidity. Brokers charge a fixed commission per lot traded rather than marking up the spread.
ECN is the gold standard for active and automated traders. Tightest spreads, fastest execution, no conflict of interest, and transparent pricing.
For EA trading: ECN or raw spread STP accounts are strongly preferred over standard market maker accounts. The difference in spread and execution quality can significantly affect an EA's profitability over hundreds of trades per month.
Common misconceptions
- Many brokers label themselves ECN when they aren't. True ECN requires a direct connection to a liquidity pool with transparent order matching. Some brokers use the ECN label loosely. Check whether they offer raw spreads plus commission — that's the clearest indicator of genuine ECN execution.
- Market makers aren't all bad. For very low-frequency traders who rarely trade, the wider spread on a market maker account with no commission may actually be cheaper than paying per-lot commission on ECN. Do the maths based on your expected trading volume.
The Karnek note
Karnek is read-only monitoring for MetaTrader - it watches every account you run, live on one dashboard, and alerts you the moment something stops. It never trades and never asks for a trading password.
Written and reviewed by the Karnek Research team. Last updated August 2026.
Educational content only - not financial advice. Past performance does not predict future results. Trading carries significant risk.