MT4 STP vs MT4 Dealing desk
STP brokers use Market execution, which doesn’t allow stop loss and take profit orders to be specified & set at the moment of placing a new trade. SL and TP orders can be added only after the trade is open, so that the price of the open position is already known. A trader then needs to modify an existing trade to add stops and profit targets in the FX market.
Dealing desk brokers use Instant Execution, which allows stop loss and take profit orders to be set with the initial entry order.
A trader writes:
I noticed that some of the brokers disabled instant execution from the MT4
platform, jadefx, Iamfx, fxcbs, gallantfx, etc… i.e, before with the
instant execution option you could enter the trade with a stoploss amount.
Now they replaced it with Market execution or pending order option. So if
you choose market execution they have the stoploss option greyed out and you
have to then enter trade without a stoploss. Then you have to modify the
order to add a stoploss. I don’t like this one bit. It’s like walking a
tightrope without a safety net. What happens if the market spikes before you
get a chance to modify it? Or you loose connection with broker before you add
a stoploss. Do you have any idea why they are doing this?
The answer is in MT4 ->STP (ECN) bridge technology, which doesn’t allow Instant execution mode. Apparently, in STP technology they don’t allow any modification to the order before it’s filled.
Below is the document from MetaQuotes, where you can confirm it:
MT4 STP vs MT4 Instant (pdf) by Boston Technologies
You’re right about risks that trades face when entering without stops. That can be viewed as a definite disadvantage of MT4 STP/ECN. Dealing desks brokers, on the other hand, provide Instant Execution.
Market Execution – STP
Instant Execution – Dealing desk