Forex Order Execution

Market Execution vs Instant Execution

This article was published on

Market Execution and Instant Execution explained

Client order execution is one of the most fundamental steps in any forex trade. Without trades, there is no market, and how forex brokers execute client orders is crucial to the whole process. In this article we’re going to examine market execution vs. instant execution.

In simple terms, forex execution refers to the price an instrument is bought or sold on your trading platform.

Market Execution vs Instant Execution

There are two types of execution methods, Market and Instant. In market execution, your clients are ready to buy or sell at any current available price. In the instant execution model, clients only open or close positions under specific conditions.

Market Execution

  1. Your client places an order specifying volume only.
  2. Actual market conditions determine the price of the order.
  3. Execution takes place at the current pricing levels without any requotes.

Liquidity providers and A-Book brokers with ECN (Electronic Communication Network) or STP (Straight Through Processing) environments tend to use market execution. The characteristics of market execution are shown in the list below:

  • Fast order execution
  • No price requotes
  • Guaranteed execution
  • Markets set prices
  • Possibility of price improvement
  • Unlimited scope for trading strategies (scalping, news trading, for example)

Instant Execution

  1. Your client places an order with the price and volume specified.
  2. The order is executed instantly with these parameters.
  3. If the order isn’t possible at a price the client set, they receive a requote that can be accepted or declined.

Re-quotes typically happen due to rapid price changes and market volatility. However, it is essential to note that clients must accept the requoted execution price. If they don’t, the order will be canceled.

Instant execution usually comes with fixed-spread trading. These fixed spreads tend to be higher than actual market spreads, allowing for more flexibility when processing transactions. As a result, B-Book brokers (market makers) tend to use instant execution. The characteristics of instant execution are shown below:

  • Slow order execution
  • Frequent Requotes
  • Market determines execution
  • Broker sets prices
  • No price improvement
  • Limited scope for trading strategies such as News or Expert Advisers, for example

So which model is the best?

There isn’t a “which is best” kind of answer here. It’s more about which model is best for your brokerage. The answer depends on your trading environment.

Are you an A-Book broker? Are you a Market Maker? Most liquidity providers use market execution. If you’re a B-Book broker, transmitting instant orders to these providers might cause problems.

Liquidity providers that employ market execution can’t guarantee you any specific prices. Brokers using instant execution have to offer specific prices to their clients.

Your business model will determine the execution model you use. For example, you could be using A-Book and B-Book, in which case you can offer different order execution types. The decision is yours to make.

One thing that can make your operations more straightforward, though, is our YOONIT suite of modules.

Designed to integrate directly with your MT4 or MT5 platform, all the modules in YOONIT can work independently or as part of our broker management solution, which took the top spot at the 2022 Ultimate Fintech Awards for the best All-In-One Brokerage Solution.

Whatever your model, Market Execution or Instant Execution, YOONIT can help your brokerage reach its potential. PLUGIT solutions lie at the heart of over one hundred leading brokers, so why not contact us today for a no-obligation demonstration of what we can do for you?

Subscribe to our newsletter