When you are ready to start trading Forex, you need to make sure that you understand the different types of Forex trade execution. There are four basic types of Forex trade execution: instant, market, limit, and stop. In this lesson, we will discuss each type of Forex trade execution in detail and help you decide which is the best option for you.
Instant Execution
Instant execution is one quote method used by dealing desk brokers. What happens in instant execution is that traders execute at the exact cost that’s displayed at the top of the page.
In comparison to market execution, which fills an order with the next available price, regardless of how large the slippage, the instant execution option will not fill your order if the price isn’t available.
So, the fundamental features of this method of quoting are:
- You can decide on your stop loss and then take profit-taking orders prior to entering the market.
- You will be able to fill the order at the quoted price in the event that it is still available. If not re-quote.
- The delivery of your purchase is dependent on the current market conditions.
- Your market access is indirect, and through the dealer.
If the precise price for filling is essential in your trade style and you usually trade in shorter time frames, then instant execution might be the best option for you.
Market Execution
Market execution orders will be fulfilled with the most competitive price on the market. Requests for trades will be placed through a liquidity service. There are no requotes However, you may not receive the exact rate you wanted.
The main features of this method of quoting are:
- You are able to decide on your Stop-Loss or Take Profit levels prior to you entering the market.
- The fulfillment of your order is assured.
- You can directly access the market.
- The price is directly via the internet.
If you tend to trade on more timeframes, in which a slight slippage does not really matter, Market execution should be your first choice.
Limit Execution
With limit execution, your trade is executed at a specific price that you specify. This type of Forex trade execution is ideal for traders who want to get the best possible price for their trade.
Stop Execution
With stop execution, your trade is executed when the market price reaches a specific level that you specify. This type of Forex trade execution is ideal for traders who want to get out of their trade quickly.
Now that you know the different types of Forex trade execution, it’s time to decide which is the best option for you. If you want to get your trade done quickly, then instant execution is the best option for you. If you are looking for the best possible price, then market execution is the best option for you. If you want to get out of your trade quickly, then stop execution is the best option for you. Choose the type of Forex trade execution that best suits your needs and start trading today!
The risk involved with forex trading online shouldn’t be overlooked. There is a chance of losing a significant amount of money if you don’t know what you’re doing. It is crucial to gain a knowledge of the market prior to you even begin investing with money. Keep reading our lessons.