The Short Answer
An ECN (Electronic Communication Network) broker routes your order to a pool of external liquidity providers and earns a fixed commission. A market maker — also called a dealing desk — sets its own bid and ask and can take the other side of your trade. For active traders, scalpers and algo traders working the majors during peak hours, an ECN or true STP model usually means tighter raw spreads and no conflict of interest on execution. For very small or infrequent traders, a well-run market maker with fixed spreads can be simpler and occasionally cheaper.
This guide explains how each model actually works, where the conflict of interest sits, and how to tell which one your broker is using — so you can match the model to how you trade rather than to a marketing label.
If you already know you want raw pricing plus commission, Eightcap and Pepperstone both publish raw accounts with EUR/USD spreads from 0.0 pips plus a per-lot commission — but a raw account is a pricing model, so read each broker's order execution policy to see how your orders are actually filled.
How a Market Maker Works
A market maker quotes its own prices. When you buy, it can sell to you from its own book rather than passing the order to the wider market. That is not automatically bad: it lets the broker offer fixed spreads and fill small orders instantly, even in quiet markets.
The complication is the incentive. Because the broker can hold the opposite side of your position, a losing client can — in the narrow accounting sense — be a profitable outcome for the desk. Reputable market makers manage this by hedging their net exposure with liquidity providers and by internalising offsetting client flow, so they are not literally betting against every ticket. But the structural conflict exists, and it is the single biggest reason many active traders prefer no-dealing-desk execution.
How an ECN Broker Works
An ECN aggregates quotes from banks and other liquidity providers and shows you the best available bid and ask. Your order is matched against that external liquidity, not against the broker. The broker is not on the other side of your trade, so it has no reason to want you to lose — it earns a transparent, fixed commission per lot instead of a marked-up spread.
The trade-off is the cost structure. Raw spreads on EUR/USD are advertised "from 0.0 pips", but you pay a commission on top — Eightcap's Raw account, for example, lists USD 3.50, EUR 2.75 or GBP 2.25 per standard lot per side, and Pepperstone's global Razor account "from $3.50/lot/side" (both read 30 September 2026). During illiquid hours or high-impact news the raw spread can widen sharply, because you are seeing the real market rather than a smoothed, fixed number.
STP (Straight-Through Processing) is closely related: your order passes straight to liquidity providers without a dealing desk, though pricing may be aggregated slightly differently from a pure ECN. In practice, most "raw" retail accounts are ECN/STP hybrids.
ECN vs Market Maker at a Glance
| Feature | ECN / STP | Market Maker |
|---|---|---|
| Who fills your order | External liquidity providers | The broker's own desk |
| Typical EUR/USD cost | Raw spread from 0.0 pips + commission | Wider spread, usually no commission |
| Conflict of interest | None on execution | Broker may hold the opposite side |
| Spreads during news | Can widen sharply (real market) | Often fixed |
| Best suited to | Scalpers, algo and high-volume traders | Casual or very small traders |
How to Tell Which Model Your Broker Uses
- Check the account type. "Raw", "ECN", "Razor" and "Zero" accounts with a per-lot commission are almost always no-dealing-desk. Commission-free "Standard" accounts are frequently market-maker or STP.
- Read the order-execution policy. Regulated brokers publish this document; it states whether they act as principal (dealing desk) or agent (routing to liquidity providers).
- Watch behaviour around news. Persistent requotes and suspicious price spikes that only hit your positions are warning signs — the same red flags covered in our guide to spotting a forex scam broker.
Is Pepperstone a market maker? Pepperstone's site carries a "How we make money" page, and like other regulated brokers it publishes legal documents including its order execution terms. Those documents, not a review site, are the authority on how it fills your trades — and they can differ by entity. Our Pepperstone review covers which entity you would be dealing with.
Does the Model Change Your Costs?
Yes, and the maths is simple — as long as you count the commission on both sides of the trade. On a raw account with an assumed 0.1-pip average spread and $3.50 commission per side, one round-turn standard lot costs $1 of spread plus $7 of commission: about $8 all-in. A spread-only account at an assumed 1.2 pips costs $12 per lot. On those assumptions the raw account is cheaper for anyone trading regularly — the same conclusion we reach in spread vs commission and in our round-up of the lowest-spread forex brokers.
The execution model also interacts with strategy. Scalping and high-frequency approaches depend on no-dealing-desk fills, which is why every broker in our best brokers for scalping list runs ECN or STP. Two of the most compared ECN names go head-to-head in Pepperstone vs IC Markets, and you can browse regulated names by platform in our trading platforms category.
The Bottom Line
Neither model is universally better — it depends on how you trade. What matters far more than the label is regulation, transparent pricing and a published execution policy. Confirm the licence on the regulator's register first, then match the account type to your trading style. The broker comparison lists the account types and costs of the brokers we cover side by side.
Frequently Asked Questions
What is the difference between an ECN broker and a market maker?
An ECN broker passes your order to external liquidity providers and charges a commission; a market maker quotes its own prices and can take the other side of your trade, earning from the spread.
Is a market maker broker bad?
Not in itself. A regulated market maker must follow best-execution and conflict-of-interest rules. The conflict is structural, so check the order execution policy and the regulator before trusting any model.
How do I know if my broker is ECN or a market maker?
Read its order execution policy: it states whether the firm acts as principal (dealing desk) or passes orders to liquidity providers. The account name alone — "Raw", "ECN", "Zero" — describes pricing, not always execution.
For readers looking beyond leveraged trading, our sister site YieldNav covers longer-horizon investing — its guides to index funds and ETFs and to bonds are the natural next step — and AiCryptoCoin looks at spot-crypto execution and exchange fees.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. A majority of retail investor accounts lose money when trading CFDs — brokers commonly disclose figures between 51% and 89%. Capital is at risk, regulation and product availability vary by country, and nothing here promises any outcome.
This article is for informational and educational purposes only and does not constitute financial advice. Verify each broker's regulation and current pricing directly before opening an account.
