STP Vs Market Maker Brokers - "Why are there less STP, ECN & DMA Brokers?" - Article 5

Why are there limited ECN, STP  & DMA brokers on the market?

The answer is simple, with profit making strategies of dealing desk brokers, the likelihood of clients losses is greatly increased. This means that a market maker broker or dealing desk has the chance to make much more profit from clients’ losses when comparing to an STP, ECN or DMA broker.

Let’s use maths to prove it! In both scenarios, we will use the same numbers and compare the profitability:

STP, ECN or DMA Broker

Deposits: $1,000, 000

Lots traded in one month: 10,000

Profit from spread (1 pip per lot, not using notional values) = 10,000 * $10 = $100,000 gross profit

Dealing Desk or Market Making Broker

STP, ECN or DMA Broker

Deposits: $1,000, 000

Lots traded in one month: 10,000

Profit from spread (1 pip per lot, not using notional values) = 10,000 * $10 = $100,000 gross profit

Due to potential manipulation, clients total loses are $900,000 of the $1 MIO deposited = $900,000 gross profit

Total Gross Profit = $900,000 + $100,000 = $1 MIO profit

Now you can see the profitability of a True STP, ECN or DMA broker when comparing to a dealing desk/market maker, the reasons are very obvious.

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