What is STP?
STP stands for Staight Through Processing, which basically means in XBTFX's case that when a trader places a trade on their MetaTrader 5 terminal that same trade is instantly placed on our liquidity account. It means the trades get executed instantly and go through real liquidity by matching buyers and sellers on the interbank market. The benefits of STP is the fact that prices are real market prices and that execution is ulta fast, this is most common visible during market events such as FOMC meetings. However, there are some downsides, because STP means that each order is matched on the liquidity provider, big orders can be executed on several batches and slippage can occur.
Having explained what STP is we want to get to the core of the issue and provide full transperancy for our clients in the way we deal with processing their orders.
No broker regardless of how big or small they are can provide ECN/STP on a large number accounts with significant enough deposits with 500:1 leverage. Of course balances that are small can be accomodated even with 500:1, however, having a lot of traders with 500:1 makes it impossible to consistently pass such leverage through liquidity providers.
Because such leverage is not supported by institutional liquidity. XBTFX model is based on full transparency which is why we came up with this innovative feature called STP Lock.
We understand some traders want high leverage, which while we don’t recommend we offer. Clients in turn must understand that if an account uses their full margin we cannot possibly hold that exposure consistently and maintain the required margins on our liquidity accounts, which is why we transperantly state that accounts with 500:1 leverage can be in situations where XBTFX acts as a dealing desk. Furthermore, clients need to understand that our liquidity providers are mindful of repeation of events like the Swiss National Bank removal of peg and as such we are also further limited in maximum allowable exposure. We know some of our competitors might say they offer True STP with 500:1 leverage and while we will refrain of accusing them of lying we will simply state the probably of that being true is less than 1%.
We want to assure clients that even in those situations we will maintain trading conditions well above par for all participants.
However, we also understand some clients will not want to be DDed, which is why we have implemented the innovative function STP lock. Clients that request STP lock will have their leverage set to a maximum of 100:1 but will be guaranteed to have their orders executed at all time as STP.
To request STP Lock just e-mail us at email@example.com with your account number stating you want STP Lock.