Understanding Order Execution

Order execution is the process by which your instruction to buy or sell becomes a filled position at a specific price. It covers how quickly the order reaches the broker's server, which pricing sources the broker uses, whether the broker takes the other side of the trade or passes it on, and what happens when the price moves between your click and the fill. Execution quality is one of the least visible and most important differences between brokers, and the only reliable way to understand a broker's approach is to read its order-execution policy.

The path of an order

When you click "buy" on a platform such as the JDGlobalFX terminal, the following sequence happens in milliseconds:

1. The platform sends the order to the broker's trade server.
2. The server checks your margin, the instrument's trading hours and any restrictions.
3. The broker applies its execution model: filling the order internally, routing it to one or more liquidity providers, or a combination.
4. A fill price is confirmed and the position appears in your account.

Each stage introduces potential delay (latency) and potential price movement. During calm conditions the price you see and the price you get are usually identical or within a fraction of a pip. During fast markets the gap can widen. That gap, and how the broker handles it, is the core of execution quality.

Market execution versus instant execution

These two terms describe how the broker responds when the price changes between your request and the fill.

Neither model is inherently superior. Market execution prioritises getting you into or out of the position; instant execution prioritises the price. Most brokers today use market execution on the majority of their accounts, and it is the more common model behind Pro- and ECN-style labels. What matters is that the broker discloses which model applies to your account, and whether slippage is passed through symmetrically.

Slippage and requotes

Slippage is the difference between the price you requested and the price you received. It occurs when the market moves during the fraction of a second between your order being sent and being filled, or when there is not enough volume at the quoted price to fill your full size.

Slippage can be negative (worse than requested) or positive (better than requested). A fair execution model passes through both. If you consistently see negative slippage but never positive, that is a signal worth raising with the broker. Our article on what is slippage covers this in more depth.

Requotes are the instant-execution equivalent: instead of filling at a different price, the broker asks whether you will accept the new price. Frequent requotes during normal conditions suggest either a slow pricing feed or a model that is not keeping up with the market.

Execution models: what the labels mean

Brokers describe their execution models with a handful of common terms. It helps to know what each one is supposed to mean, while remembering that the actual implementation varies widely.

• Dealing desk / market maker. The broker takes the other side of your trade and manages the resulting exposure on its own book, hedging some or all of it externally. Prices may be derived from external sources but the fill comes from the broker.
• STP (straight-through processing). Orders are passed to one or more external liquidity providers. The broker earns from a markup on the spread, a commission, or both.
• ECN (electronic communication network). In its strict sense, a venue where multiple participants post bids and offers that are matched against each other. In retail marketing, "ECN" is often used loosely to mean any account with raw spreads and a commission. The two are not the same thing.
• Hybrid. Many brokers use a combination, internalising smaller or offsetting orders and routing larger or riskier flow externally.

A broker that internalises trades is not automatically acting against clients, and a broker that routes externally is not automatically delivering better fills. What you should insist on is transparency: the broker's order-execution policy should explain which model applies to which account, how prices are sourced, how slippage is handled and what happens in exceptional conditions. Check JDGlobalFX's published trading conditions and legal documents rather than relying on account names alone.

Reading an execution policy

A well-written order-execution policy will address the following points. Use them as a checklist:

• Capacity. Does the broker act as principal, agent or both, and for which instruments?
• Price sources. Where do quotes come from and how are they aggregated?
• Execution type. Market or instant, per account type.
• Slippage. Is it symmetric? Are there tolerance settings you can adjust?
• Order handling in fast markets. How are stops, limits and pending orders filled during gaps?
• Partial fills. Can large orders be filled in pieces, and how is that reported?
• Latency and rejections. Under what circumstances are orders rejected, and how is that communicated?

If the policy is vague or absent, treat that as meaningful information about the broker's priorities.

How pending orders are executed

Pending orders behave differently from market orders. A Buy Stop or Sell Stop becomes a market order when its trigger price is touched, so it can slip in fast markets just as any market order would. A Buy Limit or Sell Limit specifies a maximum or minimum acceptable price, so it fills at that price or better, but it may not fill at all if the market does not trade through the level. Many platforms, including the JDGlobalFX terminal, also support Buy Stop Limit and Sell Stop Limit orders, which place a limit order once a stop level is reached.

Stop-loss orders are typically executed as market orders once triggered, which is why they can fill beyond the stop level during gaps. Understanding this distinction is essential when reading your trade history and when placing protective orders around news. See how to set stop loss and take profit for practical guidance.

Measuring execution quality yourself

You do not need to take a broker's word for it. From your own trade history on a live account, record the requested price and the fill price for each market order and calculate the average slippage in pips, separating positive from negative. Note the time of day and whether a news release was imminent. Over a few dozen trades a pattern will emerge, and it is far more informative than any advertised execution statistic.

Key takeaways

• Execution is the process of turning an order into a fill; its quality depends on latency, pricing sources and the broker's model.
• Market execution fills at the best available price and may slip; instant execution fills at your price or requotes.
• Slippage should be passed through symmetrically; watch for persistent one-sided results.
• "ECN", "STP" and "market maker" are labels whose real meaning varies; the order-execution policy is the document that matters.
• Stop orders become market orders when triggered and can fill beyond the level in gaps; limit orders fill at the specified price or better, or not at all.
• Track your own fills over time to measure execution quality directly.