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What is Market Execution?

What are the advantages and disadvantages of Market Execution?

The literal translation of the term Market Execution - execution or performance of a market by market. As in the case Instant Execution, this system does not determine the speed at which you will be treated requests - a principle that you have taken out into the market. Although in practice, brokers who use Market Execution, execute orders faster than the brokers who work on the Instant Execution.

If the broker uses this system of order execution, it ensures you almost 100% probability that your order will be filled, but it is possible, although not required, it will be executed not for the price you see on the screen, but by that which would exist in the market at the moment execution of a warrant. This price may be a better and worse than the one you seen in the chart, the button is pressed Buy or Sell. Let us consider in more detail the mechanics of the process with an example:

At 16:19:23 you press the button that says Buy GBP / USD 1.54282

Broker gives you a message received and warrant warrant for performance. As with the Instant Execution This means that the broker has started processing your request and try to bring your transaction to the interbank market (Forex). While it does, the price can - go up, down or stay in place.

Price has not changed.In this case, your order will be executed at a price of 1.54282

Price has gone down and is 1.54202 .In this case, your order will be filled by price of 1.54202 and your order will be opened at 8 points better than you planned.

Price has gone up and is 1.54361 .In this case, your order will be filled by price of 1.54361 and your order will be opened by 7.9 points worse than you planned.

As you can see, your order will be filled in any event, no matter how behaved in the price, but better or worse than the price you see - it is entirely depends on the will of the case.

What are the benefits Market Execution?

If your strategy is important, not the accuracy of input, and the fact that it, it's best to choose a broker with the system performance of Market Execution.

The logic of this system allows the execution of a broker to handle the faster client requests and bring them to market. For systems with the expectation Spread the nuances of a large log have no meaning, and if they are not important accuracy of input, and the fact that it, it is best to choose a broker with the system performance of Market Execution.

What are the disadvantages Market Execution?

The main drawback Market Execution is its advantage, namely, in the performance of the price prevailing in the market at the moment execution. During periods of abnormal volatility, ie release of important moments in the news, market opening after the holidays and the like, the price can vary discontinuously for tens of points. At such times, your order can be opened as a big plus for you, and vice versa with great loss.

While working on this system can not specify the TakeProfit and StopLoss immediately when sending an order the broker. Since the not known in advance, by What price the order will be executed, it is impossible to determine whether TakeProfit and StopLoss located outside the permissible Stop / Limit levels or not. That is, you must first open an order, and after This set TakeProfit and StopLoss modifying it.

Some trading systems are not sensitive to the fact that the transaction will be opened slightly better or worse than the asking price. More importantly, that it was open in general, in particular this is true for feathered (always in the market) systems. Such system built on a series of transactions, and a series of break can disrupt the entire system. In this case it is better to choose a broker with the system performance of Market Execution.

What is Market Execution?