Market Execution And Instant Execution - Facts You Must Fully understand

Published: 23rd December 2011
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Forex brokers have the capability to configure MetaTrader platforms. The trade server whether MT4 or MT5 can be configured by the broker to process trade orders in two methods namely instant execution or market execution. This greatly depends on their decisions. Just as the name suggest, instant execution configuration execute orders instantly without being influenced by the market condition. Most MT4 platforms uses instantly execution configuration. In opposite, the design of market execution does not process orders instantly but rather uses the best price offered by the broker when you submit your order. These are the only two configuration that MetaTrader uses and have different advantages and disadvantages as we shall discuss below.

Slippage Control

The ability to control slippage varies significantly with these two order execution configuration. Ability to control slippage is one of the most important aspects that every Forex trader is looking for. A trader has high ability to control slippage on the market orders when using instant execution configuration. He can do this simply by specifying the maximum pips deviation from bid price or ask price that he can tolerate. The trade is rejected if the MetaTrader is unable to fill execute within the deviation. With market execution, there is no slippage control and the trade is executed at the next best price offered by the broker.

Requote

Whenever the trade is rejected under instant execution configuration a requote message will be sent. The trade is only rejected when the MetaTrader cannot execute the order within the specified deviation allowed by the trader. Under market execution, the server proceeds to use the next price offered by the broker to execute the trade without sending requote message. In this case, the broker is allowed to slip trade by massive margin even more than 10 pips because there is no control.

Stop Loss And Take Profit Orders

Under market execution configuration, a trader is not allowed to use Stop Loss and Take Profit orders. Besides, this configuration does not allow the trader to set SL and TP orders when placing new trades. The market execution only allows traders to add SL and TP orders after the trade is open when the price of the open position is known. In contrast, the instant execution configuration allows for SL and TP orders. Unlike under market execution, a trader cannot modify his existing trades when setting new stops and profit targets.

Execution Prices Vary

Varying execution prices are used under market execution configuration. It is a big disadvantage because prices can move against the trader without control. For instant execution, the executed price is exactly what you click hence there is reduced level of risk. Unlike under market execution, the server MetaTrader server does not wait for the price provided by the broker.

Conclusion

You should understand the type of configuration that your broker uses is very important because they have full control of this. Most MT4 platforms uses instant execution configuration. Brokers which are known to use this type of configuration include Alpari micro/classic, Forex.com, FXDD, and Fx Pro, while market execution is used by MB Trading, Go Markets, FXCM, InterbankFx, PFG Best, and Axitrader. All these configurations are reliable however market execution is more risky because the trader is forced to prices offered by the broker even if they are not the best. On the other hand instant execution works with all currency pair and you cannot accept quotes offered by your broker if it is different from the market quotes.

Instant execution could provide you with more benefits. You should see the details of an instant-execution broker with low fixed spread in Loyal Forex Broker. Then again, if you have more fund to use, I suggest you have a look at a review of Dukascopy for a low ECN spread with instant execution.

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