Order execution refers to the process of completing a buy or sell order in the market. Forex brokers offer Market execution and Instant execution. Let's take a closer look:
Market Execution:
- Definition: An order type where the trade is executed immediately at the best available current price.
- Key Point: Ensures that the order is filled quickly, but the exact price may vary slightly due to market fluctuations.
Instant Execution:
- Definition: An order type where the trade is executed at a specified price or is canceled if that price is not available.
- Key Point: Guarantees the price specified by the trader, but the order might not be filled if the market price changes and the specified price is no longer available.
FXTM accounts work on the Market Execution
At FXTM, we offer one type of order execution - Market Execution. The order execution type on our Advantage and Advantage Plus accounts is market execution. Orders are executed at the best current available price. No requote is given as the trade will still be executed at the best available price, even if it has changed from the price shown on the order window or requested price. Check out FXTM Slippage Statistics here: FXTM Performance Statistics.
To better explain how each approach works, consider the order execution mechanism using the following example:
When a trader wants to buy EURUSD, they open a BUY position. Let's assume the trader's requested price is at 1.18000. This price may change during the processing, to either a higher or lower price. Let's say the price has changed to 1.18500 by the time the order is processed.
Depending on the execution type, the result for the trader will differ:
- Market Execution: In this case, the order will be executed at the next available market price, which is 1.18500. The trader accepts the current market conditions and doesn't specify the exact price at which the order should be filled. The key advantage of this execution type is that it ensures the order is filled, though it may be at a different price than initially requested.
- Instant Execution: With instant execution, the trader's order will only be filled at the requested price, 1.18000, or within a specific range set by the trader. If the market price changes to 1.18500, the order will be rejected or a requote may be offered. This type of execution allows for more control over the price but may result in missed trading opportunities during fast-moving markets.
