Short answer: it’s about who takes the other side of your trade. A market maker takes it itself. An STP broker passes your order straight to a bank or liquidity provider and adds a markup to the spread. An ECN account connects you to a pool of prices from several providers and charges a commission instead. For most traders, what matters more than the label is the all-in cost per lot.
The three models side by side
| Market maker | STP | ECN / raw | |
|---|---|---|---|
| Who takes the other side | The broker | A liquidity provider | Several liquidity providers |
| How the broker earns | Spread, and sometimes from clients’ losses | A markup built into the spread | A commission per lot, plus a small or no markup |
| Typical EUR/USD pricing | Fixed or wider spread, no commission | ~1.0–1.5 pip spread, no commission | ~0.0–0.3 pip spread + about $6–7 commission per lot (round turn) |
| Requotes | Possible | Rare | Rare |
Market maker
The broker quotes its own prices and takes the opposite side of your trades. That isn’t automatically bad: it means orders fill instantly, small trade sizes are easy, and spreads can be fixed. The concern is the conflict of interest. When a broker keeps the risk of client trades, your losses can be its profit. Regulated market makers have to manage that conflict and disclose it in their order execution policy.
STP (straight-through processing)
Your order is passed to one or more liquidity providers, usually banks or large trading firms. The broker earns by adding a markup to the price it receives, so you see a wider spread but pay no commission. Most “Standard” accounts are priced this way.
ECN (electronic communication network)
You trade on a pool of prices from several providers, close to the raw market spread, and pay a separate commission. The spread is tighter, often 0.0–0.3 pips on EUR/USD, but the commission is added on top. Accounts sold as “Raw”, “Razor” or “ECN” work like this.
Why the label matters less than you think
Most brokers are hybrids: they keep some client trades in-house and pass others on, depending on size and risk. “ECN” is also a marketing word, and nobody checks how it’s used. The honest way to compare is to add up what one trade costs you:
All-in cost per lot = (average spread in pips × $10) + round-turn commission
A Standard account at 1.2 pips with no commission costs about $12 per lot. A raw account at 0.1 pips plus $6 commission costs about $7. That’s why we show the all-in cost per lot on every broker card, whatever the broker calls its account.
Which should you pick?
- Trading often or in larger size: a raw/ECN account almost always works out cheaper.
- Small, occasional trades: a Standard account keeps it simple, and the cost gap is small in pounds or dollars.
- Either way: check the broker’s order execution policy, and how it handles slippage on fast markets.
Compare real costs across brokers on our compare page.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
