Order Execution
Definition
Order execution is the process by which a broker fills a trade at a given price. It determines how quickly and at what price your order is completed. Poor execution can increase costs through slippage, missed fills, or rejected orders, making execution quality one of the most important but least visible factors in broker selection.
In Plain English
In plain terms, order execution is how your trade actually gets done. You place an order on a platform, and the broker finds a price and fills it. The difference between what you expect and what actually happens depends on market conditions and how the broker executes orders behind the scenes.
How It Works
- You submit an order (market, limit, stop, or other order type) through the trading platform.
- The broker receives the order and applies its execution rules.
- Depending on the model, the order may be filled internally, matched externally, or routed to a liquidity provider.
- The broker executes the order at the best available price at that moment.
- If prices move between submission and execution, the fill price may differ.
- Execution may involve partial fills, slippage, or rejection if conditions change rapidly.
- The final execution price and time are recorded in the trade confirmation.
- Execution behaviour can vary by instrument, market conditions, and time of day.
Why This Matters for Traders
Execution quality directly affects trading costs and risk. Even with low spreads and commissions, poor execution can erode performance through slippage, delayed fills, or unexpected rejections. This matters most for frequent traders and those using tight stop-losses, but it also affects longer-term trades during volatile periods and market gaps.
Common Misunderstandings
- Execution is instant and guaranteed: execution speed and price depend on liquidity and volatility.
- All brokers execute orders the same way: execution models differ materially.
- Spread is the only execution cost: slippage and rejected orders also matter.
- Market orders always fill at the quoted price: they fill at the best available price.
- Regulation eliminates execution risk: regulation sets standards but does not remove market effects.
How This Affects Broker Choice
Order execution is a core differentiator between brokers. When comparing platforms, users should evaluate:
• Execution model (market maker vs agency-style/STP).
• Average execution speed and slippage statistics.
• Whether positive slippage is passed on to clients.
• Frequency of order rejections or requotes.
• Transparency of execution reporting and trade history.
From a monetisation and comparison perspective, execution quality often explains why two brokers with similar pricing deliver very different real-world outcomes. This makes it a natural bridge into broker reviews and comparison pages focused on fairness and reliability.
Risks & Common Mistakes
• Choosing brokers based solely on advertised spreads without testing execution.
• Using market orders during high-impact news without accounting for slippage.
• Assuming stop losses will always execute at the set level.
• Ignoring execution differences across instruments and trading sessions.
• Trading with brokers that provide limited transparency on execution quality.
Risk note: poor execution can magnify losses during fast or illiquid markets, particularly when combined with leverage.
Real-World Example
You place a market order to buy an index CFD at 7,000 during a volatile session.
• The price moves rapidly as your order is processed.
• The trade executes at 7,010 instead of 7,000.
The 10-point difference is not part of the spread but a result of execution conditions. On a leveraged position, this difference can materially affect the trade outcome.
What to Check Before Trading
- Does the broker disclose execution speed and slippage data?
- Are positive slippage outcomes passed on to clients?
- How are different order types handled during volatility?
- Are trade confirmations transparent about requested vs executed prices?
- Does execution quality vary by instrument or session?
- Is the broker regulated under an execution standards framework?
- Can execution behaviour be tested on a demo or small live account?
Related Concepts
Slippage is a direct outcome of how orders are executed in changing markets.
Market orders prioritise execution speed, making execution quality critical.
Limit orders control price but may not execute if conditions change.
Liquidity availability influences execution speed and price quality.
Spread is quoted pricing, while execution determines the final trade cost.
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Risk Warning: This website does not provide financial, investment, or trading advice. All information is for educational purposes only. Trading and investing involve substantial risk of loss. You should carefully consider your financial situation and consult with qualified professionals before making any financial decisions.