Having fair and accurate prices means nothing if your orders don’t execute properly.
📌 Key Takeaway: Order execution quality is how well your broker fills your trade orders—it affects:
✔ Execution speed
✔ Slippage (positive or negative)
✔ Trade rejection rates
✔ Spread costs
📌 What is Order Execution?
When you place a trade, your broker must execute your order at the best possible price.
🔹 Order execution factors:
✔ Speed (how fast is your order filled?)
✔ Accuracy (was your order executed at the requested price?)
✔ Slippage (did you get a better or worse price?)
✔ Liquidity (was your order fully executed?)
🚀 Good execution = Fast speed, minimal slippage, and fair pricing.
🚨 Bad execution = Delays, negative slippage, or manipulation.
📌 What is an Order Execution Policy?
A transparent broker should provide a written Order Execution Policy detailing:
✔ How prices are determined (LPs, Prime of Prime, internal liquidity)
✔ How orders are executed (A-Book, B-Book, Hybrid)
✔ How orders are routed (internalization vs. external LPs)
✔ How slippage is handled (fair execution vs. asymmetric slippage)
🧐 Ask Your Broker:
✔ Can I see your Order Execution Policy?
✔ How do you determine order execution priority?
✔ How do you handle slippage?
🚨 Red Flag: If your broker refuses to provide this, be cautious.
📌 Key Factors in Order Execution Quality
1️⃣ Execution Speed (How Fast Are Trades Executed?)
Execution speed is how fast your broker fills your order.
💡 Why It Matters:
✔ Faster execution = Better fills at desired prices.
✔ Slower execution = Higher risk of slippage.
🔹 Good brokers execute orders in:
✔ 0.1 seconds or less (100 milliseconds) – Excellent 🚀
✔ Under 1 second – Acceptable ✅
✔ Over 1 second – 🚨 Warning sign (slippage likely)
🧐 Ask Your Broker:
✔ What is your average execution speed?
✔ What percentage of orders are executed in less than 1 second?
🚨 Red Flag: If execution speeds are slow (>1 sec), expect more slippage.
2️⃣ Slippage: Positive vs. Negative
💡 Slippage occurs when the execution price differs from your requested price.
🔹 Types of Slippage:
✔ Positive Slippage = Order filled at a better price than requested ✅
✔ Negative Slippage = Order filled at a worse price than requested ❌
🔹 When Slippage Happens:
✔ During high volatility (news events, market openings)
✔ Due to slow execution speeds (broker delays filling orders)
✔ If liquidity is low (LPs widen spreads or reject orders)
🧐 Ask Your Broker:
✔ What percentage of trades experience slippage?
✔ What percentage of orders get positive slippage?
✔ What percentage of orders get negative slippage?
🚨 Red Flag: If your broker only gives negative slippage, they may be manipulating execution.
3️⃣ Requotes & Order Rejections
💡 Requotes happen when a broker rejects your order and offers a new price.
🔹 Why Requotes Happen:
✔ Broker delays execution to avoid filling orders at favorable prices.
✔ Liquidity providers pull quotes (usually during volatile conditions).
🔹 Good Brokers vs. Bad Brokers:
✔ Good brokers fill orders quickly with minimal requotes.
✔ Shady brokers use requotes to disadvantage traders.
🧐 Ask Your Broker:
✔ What percentage of orders are requoted?
✔ What percentage of orders are rejected?
🚨 Red Flag: High requote/rejection rates = Broker manipulation possible.
4️⃣ Spread Costs & Order Execution Performance
💡 Spreads affect your trade costs.
🔹 Ask Your Broker for Average Spreads:
✔ During all trading hours (normal market conditions).
✔ During peak trading hours (London/NY overlap).
✔ During low liquidity periods (Asia session, weekends).
🧐 Ask Your Broker:
✔ What is your average spread for major currency pairs?
✔ Do spreads widen during news events?
✔ Do you offer fixed or variable spreads?
🚨 Red Flag: If spreads widen excessively without justification, the broker may be manipulating execution.
📌 How to Test Your Broker’s Order Execution
1️⃣ Open a Demo & Live Account: Compare price execution.
2️⃣ Check Execution Speed: Test market orders on different platforms.
3️⃣ Compare Spreads & Slippage: Use independent price feeds (e.g., TradingView, LMAX).
4️⃣ Check for Stop-Hunting: Look for unusual price spikes on your broker’s platform.
5️⃣ Use a Trade Journal: Track execution quality over time.
📌 How to Choose a Broker with Good Execution
✔ Transparent Pricing – Broker explains how orders are executed.
✔ Fast Execution Speed – Orders filled in 0.1 sec or less.
✔ Low Slippage & Requotes – Minimal delays in execution.
✔ Regulated in a Strong Jurisdiction – Ensures fair trading practices.
✔ No Asymmetric Slippage – Positive & negative slippage occur equally.
🧐 Ask Your Broker for Proof:
✔ Can I see execution statistics for the past 6 months?
✔ Do you offer post-trade execution reports?
✔ What percentage of orders are executed at the requested price?
🚨 Red Flag: If a broker hides execution reports, they may be manipulating trades.
📌 Final Thoughts: How to Ensure High-Quality Order Execution
✔ Order execution quality matters more than just low spreads.
✔ Good brokers execute orders quickly, with minimal slippage.
✔ Bad brokers manipulate execution (slippage, requotes, stop-hunting).
✔ Ask for execution reports and compare brokers before funding an account.
🚀 The best brokers are transparent about execution quality. If they won’t answer your questions—find a better broker!
