In short
- Market maker: the broker quotes prices and takes the other side of your trade.
- ECN/STP: your order is passed to liquidity providers; you pay a raw spread plus commission.
- Many brokers are hybrids and offer both account types.
- Choose by all-in cost and execution quality, not by label.
Market maker (dealing desk)
A market-maker broker creates its own bid and ask prices, based on the wider market, and acts as the counterparty to your trade. It may hedge your position with banks or other liquidity providers, or net it off against other clients' trades.
- Pros: simple commission-free pricing, small trade sizes, stable quotes in normal conditions.
- Cons: wider spreads; a potential conflict of interest that the firm must manage under FCA rules.
ECN and STP (no dealing desk)
STP (straight-through processing) brokers route your orders to one or more liquidity providers. ECN (electronic communication network) models go further, giving access to a pool of quotes from multiple participants. In both cases the broker earns mainly through commission or a small mark-up.
- Pros: raw spreads from 0.0–0.2 pips on majors, transparent commission, suited to high-frequency and automated trading.
- Cons: commission on every trade; spreads can widen sharply in illiquid moments.
Side-by-side comparison
| Market maker / standard | ECN / raw spread | |
|---|---|---|
| Typical EUR/USD spread | 0.6–1.5 pips | 0.0–0.3 pips |
| Commission | None | Per lot |
| Pricing | Broker's own quotes | Liquidity-provider quotes |
| Best for | Beginners, low-frequency trading | Active, scalping, algorithmic |
What FCA rules require either way
Whatever the model, FCA-authorised firms must take all sufficient steps to obtain the best possible result for clients ("best execution"), publish an order execution policy, manage conflicts of interest and treat customers fairly. Read a broker's execution policy to see how it handles slippage — good brokers pass on positive slippage as well as negative.
Which should you choose?
- New to trading or trading occasionally? A commission-free standard account is simpler.
- Trading several lots a week? Run the numbers — a raw-spread account is usually cheaper. See spreads vs commission.
- Using Expert Advisors or scalping? Raw-spread accounts and fast execution matter most; confirm the broker's terms allow your strategy.
How to tell which model a broker uses
Marketing labels like "ECN" are used loosely. These clues are more reliable:
- Order execution policy: FCA brokers must publish one. It explains whether the firm acts as principal (counterparty) or passes orders on, and how it handles slippage.
- Pricing structure: a separate per-lot commission with near-zero spreads usually indicates a raw-spread, liquidity-provider-based account.
- Minimum trade size: very small trade sizes are easier for brokers that internalise client flow.
- Depth of market: platforms like MT5 and cTrader can display market depth on some ECN-style accounts.
Slippage, requotes and execution speed
Slippage is the difference between the price you expected and the price you got. It happens with every model in fast markets. What matters is whether it's symmetrical — a fair broker passes on positive slippage when the market moves in your favour as well as negative slippage when it moves against you.
Requotes happen when a broker rejects your order at the requested price and offers a new one. They're more common with instant-execution dealing-desk models; market-execution accounts fill at the next available price instead.
Which is cheaper? Three trader profiles
Using EUR/USD at $10 per pip per lot, a 0.9-pip standard spread, and a raw account at 0.1 pips + $6 round-turn commission (illustrative figures):
| Trader | Lots per month | Standard account | Raw-spread account |
|---|---|---|---|
| Occasional | 2 | $18 | $14 |
| Regular | 20 | $180 | $140 |
| Active | 100 | $900 | $700 |
With these example numbers the raw account wins at every level, but the gap only becomes meaningful for regular and active traders. Plug in each broker's real spreads and commission before you decide.
Frequently asked questions
Is an ECN broker better than a market maker?
Not automatically. ECN-style accounts usually cost less for active traders, but market-maker accounts can offer simpler pricing and smaller minimum trade sizes. Regulation and all-in cost matter more than the label.
Do market makers trade against clients?
A market maker takes the other side of client trades and may hedge some or all of that exposure. FCA rules require firms to manage this conflict of interest and to deliver best execution.
Which account is best for scalping?
Raw-spread (ECN/STP) accounts are usually better for scalping because tight spreads matter most when you trade frequently. Check that the broker allows scalping in its terms.
What does ECN broker mean?
ECN stands for electronic communication network. An ECN broker passes orders to a network of liquidity providers and charges raw spreads plus commission, rather than quoting its own prices.
What is an A-book forex broker?
An A-book broker offsets (hedges) client trades with liquidity providers instead of keeping them on its own books, earning from spread mark-ups or commission.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading these products. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money.