A bank or financial institution (or sometimes another broker) that provides liquidity to brokers by actively offering to buy and sell assets. In other words, an LP is a market participant ready to take the other side of trades and constantly quote bid and ask prices. In ECN/STP brokerage models, your trades are ultimately filled by these liquidity providers in the broader market. The quality and number of LPs a broker has will affect spreads, available volume, and slippage – especially for large orders or fast markets. For example, a broker connected to many top-tier LPs will likely provide better fills for a high-volume trading robot (less slippage) than a broker with limited liquidity sources. Essentially, LPs are what make it possible for your order to be executed quickly at a fair price in a decentralized OTC market like forex.

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