What is the Market Execution?
Market execution is a type of order execution used in the forex market. When a trader places an order using market execution, the order is executed at the prevailing market price at the time the order is received by the broker. This means that the trader does not have any control over the exact price at which the order is executed.
Market execution is commonly used in fast-moving markets where prices can change rapidly. It is also used for trading strategies that require immediate execution of orders without delay. With market execution, the order is executed quickly and efficiently, but there is a risk that the price at which the order is executed may differ from the price at the time the trader placed the order due to price fluctuations.
It’s worth noting that market execution differs from instant execution, where the trader has the ability to set a specific price at which the order should be executed.
What is the Instant Execution?
Instant execution is another type of order execution used in the forex market. When a trader places an order using instant execution, the order is executed at a specific price set by the trader. The order is only executed if the market price reaches the specified price set by the trader.
Instant execution is commonly used when the trader wants to control the exact price at which the order is executed. For example, if a trader wants to buy a currency pair at a specific price, they would use instant execution to set that price and the order would only be executed if the market reaches that price.
With instant execution, the trader has more control over the execution price, but there is a risk that the order may not be executed if the market does not reach the specified price. This can be especially risky in fast-moving markets where prices can change rapidly.
It’s worth noting that instant execution differs from market execution, where the order is executed at the prevailing market price at the time the order is received by the broker.
Market Execution vs Instant Execution
Here are the main differences between market execution and instant execution in the forex market:
Market Execution
- Order is executed at the prevailing market price when the order is received by the broker.
- Trader has no control over the exact execution price.
- Order is executed quickly and efficiently, but execution price may differ from the price at the time the order was placed.
- Typically used in fast-moving markets and for trading strategies that require immediate execution.
Instant Execution
- Order is executed at a specific price set by the trader.
- Trader has more control over the execution price, but the order may not be executed if the market does not reach the specified price.
- Can be risky in fast-moving markets where prices can change rapidly.
- Typically used when the trader wants to control the exact execution price.
Advantages and Disadvantages
Here are some advantages and disadvantages of market execution and instant execution for forex:
Market Execution
Advantages
- No re-quotes or price slippage.
- Order is executed quickly and efficiently.
- Best used for fast-moving markets and trading strategies that require immediate execution.
Disadvantages
- Execution price may differ from the price at the time the order was placed.
- No control over the exact execution price.
Instant Execution
Advantages
- Execution price is guaranteed.
- Trader has control over the exact execution price.
Disadvantages
- May experience re-quotes or price slippage if the market moves away from the specified price.
- Order may not be executed if the market does not reach the specified price.
- Can be risky in fast-moving markets where prices can change rapidly.
Final Thoughts
Here are some final thoughts on market execution and instant execution for forex:
Market Execution
Best used for fast-moving markets and trading strategies that require immediate execution.
Offers quick and efficient order execution without re-quotes or price slippage.
Execution price may differ from the price at the time the order was placed, which can be a disadvantage in certain situations.
Trader has no control over the exact execution price, which can be a disadvantage for traders who require precise control over execution prices.
Instant Execution
Best used when the trader wants to control the exact execution price.
Guarantees execution at a specific price, which can be an advantage for traders who require precision in their trades.
May experience re-quotes or price slippage if the market moves away from the specified price, which can be a disadvantage.
Can be risky in fast-moving markets where prices can change rapidly, and the order may not be executed if the market does not reach the specified price.
Ultimately, the choice between market execution and instant execution depends on the trader’s trading strategy, risk tolerance, and level of control over execution prices. Traders should carefully consider the advantages and disadvantages of each type of execution and choose the one that best fits their needs.
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