Types of order execution

When choosing a broker, some traders often overlook very important aspects. They pay attention to the leverage size or spreads but they ignore one of the most crucial trading conditions – the type of order execution. It is the key criterion for cooperating with a broker, as it influences the process of order execution and, consequently, results of your trade.

There are two main types of order execution:

Market execution
Instant execution

Each of these types has its peculiarities and is appropriate for certain trading strategies. Amateur traders can mistakenly assume that the key difference between these types is the speed of execution. But the names of these types have nothing to do with the speed; they are diverse mechanisms for carrying out trading operations.

The market execution term is self-explanatory. The deals are executed based on the market itself, precisely on the market price that is fixed at a certain period of time. In other words, after a broker receives an order, it executes it anyway with no regard to the price movement that can be either upward or downward. Naturally, brokers tend to close a deal at the most beneficial price, but some slippages may occur when the actual price differs from the expected one. Usually, it happens during the period of higher volatility.

The instant execution type ensures that orders are executed instantly. What is important here is that traders can enter the market at the preset fixed price. Moreover, the deals are conducted at the price that is determined in the order, i.e. the price is fixed at the moment when traders click the BUY or SELL buttons. Otherwise, if the market price does not match the preset price, then the order is canceled and a trader sees a message about a change in quotes.

To get a clear understanding of what order execution type can suit you best, let us provide the pros and cons of both types.

Market execution *

  • ○ orders are always executed at the price that you see in a trading platform;
  • ○ this type is suitable for most trading strategies;
  • ○ it provides the highest speed of execution.
  • ○ a spread is changing all the time depending on the market volatility;
  • ○ the risk of losses increases during the period of higher volatility;
  • ○ you cannot set take profit and stop loss levels while placing an order, you can do it only when the deal is opened.

Instant execution *

  • ○ an opportunity to enter the market at a definite price;
  • ○ high accuracy of execution;
  • ○ fixed spreads.
  • ○ requotes occur frequently, and a broker often requests permission to open a deal at a different price if it changes from the moment when the order was sent;
  • ○ investors may find it difficulties with certain trading strategies;
  • ○ investors may face troubles at opening or closing a deal under the fast market conditions, i.e. when key economic reports are published.

To sum up, you need to weigh up the pros and cons of these two types of order execution and choose the one that suits your trading goals, strategy, and experience level. The instant execution is appropriate for newbies while seasoned traders who have a clear understanding of the benefits and risks of trading in the currency market are better to work with the market execution type.

The company reserves the right to switch from Instant execution to Market execution type if any of the conditions are met: the total balance on all trading accounts exceeds 10,000 EUR, the max. volume of opened lots per trade is above 10, the accumulated number of opened lots on all trading accounts is above 100.