Market Maker vs ECN vs STP: How Your Gold Broker Fills Your Order, and What It Costs You

When you click Buy on XAUUSD, someone sells to you. Depending on your broker and account type, that someone is the broker itself or a bank or market maker behind it. The difference affects your spread, commission and, in some cases, the broker's incentives.

The three models

In practice, many brokers run a hybrid: they internalise some client flow (take the other side themselves) and pass the rest to liquidity providers, often called the "B-book" and "A-book".

Is a market maker bad?

Not by itself. A market maker that prices fairly, executes consistently and is regulated by a strong authority can be a good place to trade, and the all-in cost on a standard account may be similar to a raw account for small traders.

The concern is the conflict of interest: when a broker takes the other side, your loss is its gain. Strong regulators address this through best-execution rules, order-handling audits and complaint routes. Weak regulators do not.

How to compare costs

Convert everything to cost per round-trip lot:

• Standard account: spread × pip value. A 3-pip spread on gold (0.30 dollars) is about 30 dollars per standard lot.
• Raw account: raw spread × pip value + commission both ways. A 1-pip spread (0.10) plus 7 dollars round-trip commission is about 17 dollars per lot.

Use the pip value calculator for your lot size, and see how much it really costs to trade one lot of gold for the full calculation including swaps.

How to tell which model your account uses

1. Read the order execution policy. It must explain how orders are executed and whether the firm acts as principal.
2. Look at the account name and pricing. Commission per lot plus tight spreads usually means an ECN-style account.
3. Watch execution during news. Requotes are typical of dealing-desk execution; slippage is typical of market execution.

What matters more than the label

• Your entity's regulator, which polices how the firm handles your orders.
• Measured cost, including during news, not the advertised minimum spread.
• Withdrawal reliability.

These are exactly the things our broker rating measures, and execution model is not scored for its own sake.

Questions traders ask

Do market makers trade against me? They take the opposite side of your trade, which is different from manipulating prices. Regulated firms must give fair prices and best execution.

Is ECN always cheaper? For active traders and larger sizes, usually. For a trader doing a few small trades a month, the difference can be negligible.

Why do ECN accounts have higher minimum deposits? Brokers reserve them for active traders whose commission revenue justifies the account.