Instant execution is a type of forex trading order execution that allows traders to execute trades instantly at the current market price. It is one of the two main types of order execution available in forex trading, the other being market execution.
Instant execution is a popular choice for traders who want to enter and exit positions quickly and at a specific price. This type of execution is usually offered by forex brokers that operate using a dealing desk (DD) model, which means that the broker acts as a market maker and takes the opposite side of their clients’ trades.
How Does Instant Execution Work?
When a trader places an instant execution order, they are requesting to buy or sell a specific currency pair at the current market price. The broker then checks its liquidity providers to see if there are enough buyers or sellers at that price to execute the trade. If there is sufficient liquidity, the broker will execute the trade at the requested price.
However, if there is insufficient liquidity at the requested price, the broker may execute the trade at the next available price, which may be higher or lower than the requested price. This is known as slippage and is a common occurrence in forex trading.
Advantages of Instant Execution
One of the main advantages of instant execution is that traders can execute trades at the current market price, which can be beneficial in volatile market conditions. This is because market orders can be subject to slippage, which can result in trades being executed at a worse price than expected.
Another advantage of instant execution is that traders have more control over their trades. They can set their entry and exit points at specific prices and have the assurance that their trades will be executed at those prices if there is sufficient liquidity.
Disadvantages of Instant Execution
One of the main disadvantages of instant execution is that traders may experience slippage, which can result in trades being executed at a worse price than expected. This can be particularly problematic in fast-moving markets, where liquidity can dry up quickly.
Another disadvantage of instant execution is that it may not be suitable for all traders. Some traders may prefer market execution, which allows them to enter and exit positions at the best available market price. This can be beneficial in markets with high volatility, where the price can change rapidly.
Conclusion
Instant execution is a popular type of forex order execution that allows traders to execute trades instantly at the current market price. It is one of the two main types of order execution available in forex trading, the other being market execution. While instant execution has its advantages, such as greater control over trades, it also has its disadvantages, such as the risk of slippage. Ultimately, the choice of order execution will depend on the trader’s individual preferences and trading style.
