What is execution?
Execution is the process of completing a buy or sell order in the market.
It covers everything from the moment an order is placed to the point at which it is filled at a given price, and how well it is carried out can affect trading results.
In simple terms, execution is how and when your order actually gets filled.
How execution works
When a trader places an order, it is routed to be matched with a counterparty at an available price. Execution can be almost instant for liquid markets or slower where liquidity is thin. The price at which an order is filled may differ from the price seen when it was placed, especially in fast markets, a difference known as slippage. Quality of execution includes speed, price and reliability.
Factors that affect execution
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Market liquidity at the time of the order
-
The speed at which the order is processed
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Volatility and how fast prices are moving
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The order type being used
Market order compared with limit order execution
| Feature |
Market order |
Limit order |
| Priority |
Speed of fill |
Specific price |
| Price certainty |
Lower |
Higher |
| Fill certainty |
Higher |
Lower |
What affects how an order fills
Several factors shape execution. Liquidity is central: in a deep, active market, orders tend to fill quickly and close to the quoted price, while thin markets can see wider gaps. Volatility around news can cause prices to move between the click and the fill. Order type matters too, as a market order prioritises speed while a limit order prioritises price. The broker’s technology and routing also play a part, which is why traders weigh execution quality when choosing where to trade. Some brokers publish execution statistics, such as average fill speed and how often orders improve on the quoted price, which traders can use to compare providers. In practice, execution quality tends to matter most for active traders and in fast-moving markets, where small differences add up over many trades.
Slippage and execution quality
In volatile or thin markets, orders may be filled at prices different from those expected, and not every order fills in the way a trader hopes. Understanding how different order types execute helps manage this. Traders should be aware that execution quality can vary between providers and market conditions, which is part of the overall risk of trading.
Execution in action
Take a trader who clicks to buy. Execution is the moment the order is actually filled at an available price. In fast markets, the fill can differ slightly from the price shown when the order was placed, an effect called slippage, which is why execution speed and quality matter to active traders.
What affects the quality of execution
Execution is where a trading decision becomes a real position, and its quality can influence outcomes just as much as the decision itself. Understanding how orders are filled helps traders set realistic expectations and choose appropriate order types, while keeping in mind that market conditions can affect execution and that trading carries risk.
Risk Warning:Trading CFDs involves significant risk and may not be suitable for all investors. Losses can exceed your initial deposit. Please ensure you fully understand the risks involved before trading.
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