Forex trading is a complicated business with many technical terms and concepts that traders must understand to make informed decisions. One of the most fundamental concepts in forex is the execution type – instant or market. In this article, we will explore the differences between these two types of execution.
Instant Execution
Instant execution is a type of forex execution where traders can execute trades at the current market price without any delay. It is also known as a “buy/sell at the current price” execution type. When traders use instant execution, they can buy or sell a currency pair at the current market price, which is displayed in the trading platform.
Instant execution is best for traders who want to trade at a specific price level. For example, if a trader sees that the EUR/USD pair is trading at 1.2000, they can use instant execution to buy or sell the pair at that price level. If the market moves quickly, the trader can execute the trade instantly at the current market price without any delays.
One of the significant advantages of instant execution is that it allows traders to enter or exit trades quickly. Traders can place trades using a one-click trading feature, which allows them to execute trades with a single click. This feature saves time and reduces the risk of slippage, which occurs when the market moves against the trader before the trade is executed.
Market Execution
Market execution is a type of forex execution where traders can execute trades at the best available market price. It is also known as a “buy/sell at the market price” execution type. When traders use market execution, they can buy or sell a currency pair at the price that is available in the market at the time of execution.
Market execution is best for traders who want to trade at the best available price. For example, if a trader wants to buy the EUR/USD pair but is not concerned about the price, they can use market execution to buy the pair at the best available price in the market. If the market is volatile, the trader may experience slippage, which occurs when the execution price is different from the expected price due to market fluctuations.
One of the significant advantages of market execution is that it provides traders with better price transparency. Traders can see the current market price, the bid and ask prices, and the volume of trades in the market. This information can help traders make informed decisions about the best time to execute trades.
Difference between Instant and Market Execution
The primary difference between instant and market execution is the way trades are executed. Instant execution allows traders to execute trades at the current market price, while market execution allows traders to execute trades at the best available market price.
Another difference between the two execution types is the risk of slippage. Instant execution has a lower risk of slippage since trades are executed at the current market price. Market execution has a higher risk of slippage since trades are executed at the best available market price, which may be different from the expected price due to market fluctuations.
Finally, instant execution is best for traders who want to trade at a specific price level, while market execution is best for traders who want to trade at the best available price.
Conclusion
In conclusion, the execution type is an essential concept in forex trading. Traders must understand the differences between instant and market execution to make informed decisions about the best time to execute trades. Instant execution is best for traders who want to trade at a specific price level, while market execution is best for traders who want to trade at the best available price. Both execution types have advantages and disadvantages, and traders should choose the one that best suits their trading style and objectives.
