Account Types Explained: Standard, ECN, and STP

Choosing the right account type is as important as choosing the right broker. Different account types offer different execution models, cost structures, and trading conditions. Understanding these differences helps you select an account that matches your trading style and goals.

This guide explains the main account types offered by forex brokers and helps you determine which is best for your needs.

Understanding Broker Execution Models

The Core Difference

Before diving into account types, understand how brokers execute trades:

Dealing Desk (DD) / Market Maker:

• Broker takes the opposite side of your trade
• Creates a "market" for you to trade
• Profits from spread and potentially from your losses
• Has potential conflict of interest

No Dealing Desk (NDD):

• Broker passes orders to liquidity providers
• Acts as an intermediary, not a counterparty
• Profits from commissions and/or marking up spreads
• Reduced conflict of interest

Account types typically align with these execution models.

Standard Accounts

What Is a Standard Account?

A standard account is the most common retail forex account type, typically using a market maker model.

Characteristics

Order Execution:

• Broker may act as the counterparty
• Orders executed internally when possible
• May hedge exposure with liquidity providers

Spreads:

• Fixed or variable spreads
• Often wider than ECN accounts
• Spread includes broker's profit margin
• Usually starts from 1.0-2.0 pips on EUR/USD

Commissions:

• Usually no separate commission
• All costs built into spread
• Simple cost structure

Minimum Deposit:

• Typically $100-$500
• Some brokers offer lower
• Accessible to beginners

Advantages of Standard Accounts

Simplicity:

• No commission calculations
• Spread is your only cost
• Easy to understand

Accessibility:

• Lower minimum deposits
• Good for beginners
• Widely available

Order Execution:

• Guaranteed fills (usually)
• No slippage on limits (with some brokers)
• Instant execution option

Disadvantages of Standard Accounts

Wider Spreads:

• Higher total trading costs
• Spread markup includes broker revenue

Potential Conflict of Interest:

• Broker may profit when you lose
• Questions about fair dealing

Requotes:

• Possible during volatility
• May reject orders at requested prices

Best For

• Beginners learning to trade
• Traders preferring simple cost structure
• Lower-frequency trading
• Smaller account sizes

ECN Accounts

What Is an ECN Account?

ECN stands for Electronic Communication Network. ECN accounts connect traders directly to a pool of liquidity providers, offering direct market access.

Characteristics

Order Execution:

• Orders matched with other market participants
• No dealing desk intervention
• True market prices
• Orders may be partially filled

Spreads:

• Raw/tight spreads from liquidity providers
• Often from 0.0 pips (can even go negative briefly)
• Variable spreads reflecting actual market
• Average 0.1-0.5 pips on EUR/USD during active hours

Commissions:

• Separate commission charged per trade
• Typically $3-$7 per lot round trip
• Commission replaces spread markup

Minimum Deposit:

• Often higher than standard accounts
• Typically $500-$5,000+
• Some brokers offer lower minimums

Advantages of ECN Accounts

Best Pricing:

• Tight spreads direct from liquidity providers
• No broker manipulation of spreads
• Often lower total costs for active traders

Transparency:

• See actual market prices
• Level 2 pricing (depth of market)
• Know exactly where orders are filled

No Conflict of Interest:

• Broker profits from commissions only
• Your success doesn't affect broker
• Aligned interests

Faster Execution:

• Direct market access
• No dealing desk delays
• Better for fast-moving markets

Disadvantages of ECN Accounts

Variable Spreads:

• Spreads widen during volatility and news
• Can be very wide during low liquidity
• Unpredictable costs at times

Slippage:

• Orders may fill at different prices
• Positive or negative slippage possible
• More common during high volatility

Higher Minimum Deposit:

• May be inaccessible for small accounts
• More capital required to start

Complexity:

• Must calculate spread + commission
• Less intuitive cost structure

Best For

• Active/frequent traders
• Scalpers and day traders
• Experienced traders
• Those prioritizing best execution
• Larger account sizes

STP Accounts

What Is an STP Account?

STP stands for Straight Through Processing. STP brokers pass orders directly to liquidity providers without a dealing desk, but may add a markup to spreads.

Characteristics

Order Execution:

• Orders sent directly to liquidity providers
• No dealing desk intervention
• Automatic routing
• Hybrid between standard and ECN

Spreads:

• Variable spreads based on liquidity provider quotes
• May include broker markup
• Typically wider than ECN but tighter than standard
• Usually 0.5-1.5 pips on EUR/USD

Commissions:

• Usually no commission (cost in spread)
• Some STP accounts charge small commissions
• Depends on specific broker offering

Minimum Deposit:

• Varies widely
• Often similar to standard accounts
• Some require higher minimums

Advantages of STP Accounts

No Dealing Desk:

• Orders pass through to market
• Reduced conflict of interest
• Better than market maker model

Reasonable Spreads:

• Tighter than pure market maker
• Still simple (usually no commission)
• Competitive for most traders

Middle Ground:

• Combines benefits of both models
• Good balance of cost and execution
• Suitable for most trading styles

Disadvantages of STP Accounts

Spread Markup:

• Broker adds margin to LP spreads
• Not as tight as pure ECN
• Some cost hidden in spread

Variable Pricing:

• Spreads still widen during events
• No fixed cost guarantee
• Must monitor conditions

Partial Execution:

• Large orders may execute partially
• Depends on liquidity available

Best For

• Intermediate traders
• Those wanting NDD without ECN complexity
• Swing and position traders
• Medium-frequency trading

Comparing Account Types

Cost Comparison

Example Trade: 1 Lot EUR/USD

Account Type	Spread	Commission	Total Cost
Standard	1.5 pips	None	$15
STP	1.0 pip	None	$10
ECN	0.2 pips	$7	$9

Costs are examples—actual costs vary by broker

Execution Comparison

Factor	Standard	STP	ECN
Dealing Desk	Yes	No	No
Market Access	Internal	NDD	Direct
Slippage	Rare	Possible	Possible
Requotes	Possible	Rare	Rare
Spread Type	Fixed/Variable	Variable	Raw Variable

Suitability by Trading Style

Scalping: → ECN (tightest spreads, fast execution)

Day Trading: → ECN or STP (balance of cost and execution)

Swing Trading: → STP or Standard (cost matters less, simplicity valued)

Position Trading: → Any (spreads negligible compared to profit targets)

Beginners: → Standard or STP (simpler, lower minimums)

Other Account Type Variations

Micro Accounts

Purpose: Trade with very small position sizes

Characteristics:

• Trade in micro lots (0.01 lots)
• Lower minimum deposits ($10-$50)
• Suitable for learning and small accounts

Cent Accounts

Purpose: Ultra-small trading for practice

Characteristics:

• Account displayed in cents
• $100 shows as 10,000 cents
• Allows trading with minimal risk
• Good for testing strategies

Professional Accounts

Purpose: For qualifying professional traders

Characteristics:

• Higher leverage available
• Reduced protections (no negative balance protection)
• Must meet experience/income criteria
• Available to qualifying EU traders

Islamic/Swap-Free Accounts

Purpose: Compliant with Islamic finance principles

Characteristics:

• No overnight interest charges
• May have alternative fee structures
• Available to all traders at most brokers
• May have limits on position hold times

VIP/Premium Accounts

Purpose: Enhanced conditions for larger deposits

Characteristics:

• Tighter spreads
• Lower commissions
• Dedicated account manager
• Priority support
• Often requires $25,000+ deposit

Choosing the Right Account Type

Consider Your Trading Style

High-Frequency Trading:

• Costs matter most
• ECN account preferred
• Every pip of spread affects profit

Occasional Trading:

• Simplicity may outweigh cost
• Standard/STP acceptable
• Commission-free convenience

Consider Your Experience Level

Beginner:

• Standard or STP account
• Focus on learning, not optimization
• Simple cost structure

Intermediate:

• Consider STP or ECN
• Begin optimizing costs
• Test different account types

Advanced:

• ECN for best execution
• Understand all cost components
• May use multiple accounts

Consider Your Capital

Small Account ($500-$5,000):

• Standard or micro accounts
• Lower minimum requirements
• Accept slightly higher costs

Medium Account ($5,000-$25,000):

• STP or ECN accounts
• Cost optimization becomes worthwhile
• More options available

Large Account ($25,000+):

• ECN or professional accounts
• Negotiate rates with broker
• Consider VIP accounts

Consider Your Pairs

Major Pairs Only:

• Any account type works well
• Spreads tight across all types

Minor/Exotic Pairs:

• ECN may have very wide spreads on exotics
• Standard accounts might be more stable
• Check typical spreads on your pairs

How to Test Account Types

Demo Accounts

Most brokers offer demo versions of different account types:

• Test multiple account types
• Compare execution quality
• Verify advertised spreads

Small Live Account

Nothing replaces real money testing:

• Deposit minimum amount
• Trade for 1-2 months
• Track actual costs and execution
• Compare to other account types

What to Measure

• Average actual spread during your trading hours
• Slippage frequency and direction
• Execution speed
• Order rejection frequency
• Total cost per trade

Conclusion

Choosing the right account type affects your trading costs and execution quality. While the differences may seem small, they compound over time and can significantly impact profitability.

Key Takeaways:

• Standard accounts: Simple, wider spreads, good for beginners
• ECN accounts: Tight spreads + commission, best for active traders
• STP accounts: Middle ground, good balance for most traders

Match your account type to your trading style, experience level, and capital. Don't hesitate to ask brokers for details about their account offerings—a good broker should explain exactly how your orders are executed and what costs to expect.

Test before committing. Use demo accounts and small live deposits to verify that the account type works as advertised. Your trading costs matter, and choosing the right account type is an important part of optimizing your trading business.

Take the time to understand and select the right account, and you'll set yourself up for lower costs and better execution.