When you click "Buy" or "Sell" on your trading platform, you probably assume the trade happens instantly at the price on your screen. But the mechanics behind that click depend on your broker's execution model, and the two primary models work quite differently.
Understanding the difference between market execution and instant execution affects which strategies work best with your broker, how you experience slippage and requotes, and ultimately how much your trading costs.
Market Execution
Under market execution, when you submit an order, it is sent directly to the liquidity pool and filled at the best price available at the moment the order reaches the market. You do not specify a price, you simply request to buy or sell, and the market gives you whatever price exists.
Key characteristics of market execution:
- No requotes. Your order always fills. There is no scenario where the broker says, "The price has moved, do you still want to trade?" Instead, the order executes at whatever price is current.
- Slippage is possible. Because the price may move between when you click and when the order arrives at the liquidity provider, you might receive a slightly better or worse price than what you saw on screen.
- Faster fills in practice. Without the requote negotiation step, orders tend to fill more quickly, particularly during volatile markets.
- Standard in ECN/STP models. Brokers using Electronic Communication Network (ECN) or Straight-Through Processing (STP) models almost universally use market execution because they are routing your orders to external liquidity providers who set the final price.
How Market Execution Works Step by Step
- You see EUR/USD at 1.08500 and click Buy
- Your order is transmitted to the broker's server
- The broker routes the order to its liquidity provider(s)
- The liquidity provider fills the order at the best available price, which might be 1.08500, 1.08502, or 1.08498
- You receive the filled confirmation at the actual execution price
The critical point: you have no opportunity to reject the filled price. The trade is done.
Instant Execution
Under instant execution, your order includes a specific price, the price displayed on your screen when you clicked. The broker attempts to fill your order at exactly that price. If the price has moved beyond a pre-set tolerance (called the deviation or slippage tolerance), the broker sends you a requote instead of filling the order.
Key characteristics of instant execution:
- Requotes are possible. If the market moves before your order can be filled, the broker presents a new price for your approval. You can accept the new price or cancel the order entirely.
- Price certainty (when filled). When your order does fill, it fills at exactly the price you requested, no better, no worse.
- Slippage within tolerance. Most platforms allow you to set a "maximum deviation" in pips. If the price moves within your tolerance, the order fills. If it moves beyond it, you get a requote.
- Common in dealing desk models. Brokers that act as the counterparty to your trades (market makers) often use instant execution because they are setting the prices and can choose whether to honor them.
How Instant Execution Works Step by Step
- You see EUR/USD at 1.08500 and click Buy
- Your order is transmitted to the broker with the instruction: "Buy at 1.08500"
- The broker checks if 1.08500 is still available
- If yes: The order fills at 1.08500. Zero slippage guaranteed.
- If no: The broker sends a requote, for example, "1.08500 is no longer available. The current price is 1.08507. Accept or reject?"
- You either accept the new price or cancel the order
Comparison Table
| Feature | Market Execution | Instant Execution |
|---|---|---|
| Requotes | Never | Possible |
| Slippage | Possible (positive or negative) | None within tolerance |
| Fill speed | Generally faster | Slower when requotes occur |
| Price certainty | No, price determined at fill | Yes, fill at requested price or requote |
| Broker model | Typically ECN/STP | Typically market maker |
| Best for | Scalping, fast markets, news trading | Traders who prioritize exact entries |
| Rejection risk | None, always fills | Yes, requotes may prevent entry |
Which Brokers Use Which
Market execution is the standard for ECN, STP, and hybrid brokers that aggregate liquidity from multiple providers. These brokers earn revenue through commissions or markups on the spread rather than from trading against you. Major institutional-grade brokers and those catering to professional traders almost exclusively offer market execution.
Instant execution is more common among market maker brokers, those that take the other side of your trade internally. This is not inherently problematic (market makers provide a legitimate service and are regulated accordingly), but the execution model reflects the different relationship between broker and client.
Some brokers offer both models across different account types. A broker might offer instant execution on their "Standard" account and market execution on their "Pro" or "Raw" account. Always check the account specifications before opening a position.
How Execution Type Affects Your Strategy
Scalpers and News Traders
If you trade on very short timeframes or around news events, market execution is generally preferable. Scalpers need guaranteed fills, even with a pip or two of slippage, because missing an entry entirely (due to a requote) can be more costly than getting a slightly worse price. During news events, requotes on instant execution can make it nearly impossible to enter the market.
Swing Traders and Position Traders
If you hold trades for days or weeks, the execution model matters less. A pip of slippage on an entry that you plan to hold for 100+ pips has a negligible impact on your overall result. Both execution models work well for longer-term strategies.
Exact-Price Strategists
If your strategy requires precise entry at specific prices, such as trading off exact support/resistance levels, instant execution gives you the certainty that your filled price matches your plan. The risk is that you receive requotes and miss the entry entirely.
Checking Your Broker's Execution Model
Before opening a live account, verify the execution model:
- Account specifications page, Most brokers list the execution type for each account type
- Legal documentation, The client agreement or order execution policy will specify the execution model
- Platform behavior, On MT5, you can check by opening a new order window. If you see a "Maximum deviation" field, the account uses instant execution. If you see only "Buy by Market" and "Sell by Market" buttons without deviation controls, it is market execution
- Ask support directly, A straightforward question that any legitimate broker should answer clearly
Regulatory Context
The FCA's Thematic Review on best execution (TR14-13) and ESMA's MiFID II framework both establish that brokers must execute client orders on the most favorable terms possible. This applies to both execution models. Under these regulations, a broker using instant execution cannot systematically requote in its own favor, and a broker using market execution must demonstrate that it routes orders to venues that provide the best available prices.
These regulations do not mandate one execution model over the other, both are compliant when implemented fairly. What matters is the outcome for the client: consistent, fair execution with transparent pricing.
Key Takeaways
- Market execution fills your order at the best available price with no requotes. Slippage is possible but the order always fills.
- Instant execution fills at your exact requested price or sends a requote. You get price certainty when filled, but risk missing entries.
- ECN/STP brokers typically use market execution. Market makers typically use instant execution.
- For scalping and news trading, market execution is generally better because guaranteed fills outweigh the cost of minor slippage.
- For longer-term strategies, the execution model has minimal impact since small slippage is negligible relative to larger profit targets.
- Check your broker's execution model before trading live. It affects your costs, your fill rate, and which strategies are practical.
- Both models are regulated and legitimate when implemented in compliance with FCA, ESMA, and equivalent regulatory standards.
This lesson is for educational purposes only. It does not constitute financial advice. Trading forex involves significant risk of loss and is not suitable for all investors.