Order execution refers to the process of completing a buy or sell order in the market. Various execution types offer traders flexibility and control over how their trades are processed, helping them achieve specific investment goals and manage risk. In this article, we will explore the most common order execution types and how they can be utilized in trading. At FXTM, we offer one type of order execution - Market Execution.
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. The order execution type on our Advantage and Advantage Plus is market execution.
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Execution types explained
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:
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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.
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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.