Execution

DEFINITION of execution

Execution in trading, it is the completion of a buy or sell order from a trader. The broker has to carry out about it.

WHAT IT IS IN ESSENCE

The execution of an order comes when it gets filled, not when the investor places it. When the investor submits the trade, it is sent to a broker. Then he or she decides the best way for its execution, as quickly as possible. 

When the order is finalized and your trade is completed, it is executed.

Different types of orders will have different parameters for execution. Day orders, for example, will not be carried out if they cannot be executed on the day that they are placed.

Good-‘til-cancelled (GTC) orders, on the other hand, can be executed at any point until the trader recall the order.

When employing market execution on FxPro MT5, you will be unable to set stop-loss or take-profit levels before the order is executed.

How to use

There are various ways in which brokers can carry out orders. They can send a request to the floor of an exchange. Make the trade with a market maker. Or even complete the trade digitally.

Orders put with market execution are executed at once at the prevailing market price. The system automatically aggregates the volume which it receives from third-party liquidity providers. 

And executes the ‘market order’ at VWAP (‘Volume-Weighted Average Price’). That is the average and the best available price at the time of the execution.

Many investors who trade through online brokerage accounts assume they have a direct connection to the securities markets.

But they don’t. When you push that enter key, your order is going over the Internet to your broker. Then he or she, in turn, decide which market to send it to for execution.

A similar process occurs when you call your broker to place a trade.

SEC rules have the same aim at improving public disclosure of order execution. The routing practices require all market centers that trade national market system securities to make the disclosure. The monthly, electronic disclosures of basic information. Concerning their quality of executions on a stock-by-stock basis, for instance. Including how market orders of various sizes are executed relative to the public quotes.

These reports must also disclose information about effective spreads.

About the spreads which investors were paying. And, their orders have to be sent to a particular market center. In addition, market centers must disclose the extent to which they provide executions. And at prices better than the public quotes to investors using limit orders.