For those of you who have no experience using the MT4 platform but are planning to switch over, there’s one major difference that you should know about how STP brokers and dealing desk brokers execute your trades on the platform.
STP brokers use market execution when they accept your orders through their system. This means that you WILL NOT be able to place stop loss and take profit orders at the time that you are entering a trade.
When you are using the MT4 account, you’ll notice that the stop loss and take profit boxes are grayed out.
One issue with having different types of execution is that it can get confusing.
If you are used to instant execution, you will find it difficult to enter trades without at least setting a stop loss order. Also, take note that trading without stop loss levels can be very, very dangerous.
Let’s take Dan the Scalper who is used to trading using instant execution with Broker A. All of a sudden, Broker A changes their execution style to market, preventing Dan from placing take profit and stop loss levels the moment he enters a trade. This can be troublesome for Dan because as a scalper, he relies on small spikes in price to profit. If prices were to go against him quickly, he could incur a huge loss and his account would take a major hit.
Expert advisor programmers could also encounter problems with market execution. When they program, they must first get in a trade before the program can place profit and stop loss levels. This could lead to difficulties in both the actual creation and execution of the expert advisor.
So, before going live with a broker, ALWAYS – no ifs or buts – do your research. Demo trade first so you can get a feel of how the broker executes orders. “I was not informed,” is not a very good excuse in losing money.