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The following guest post is courtesy of Jens Chrzanowski, Member of the Management Board of Admiral Markets Group AS.
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Today, I’d like to focus on something that beginners often overlook, but experienced traders know the importance of: Order Execution Quality.
The first things that new traders take into consideration are spreads and commissions. This is the right thing to do, because these are your main trading costs, but they definitely don’t paint the entire picture! Another really important aspect is order execution quality. The reason why this aspect is essential is because the cost of your transactions can be affected by how and where your order is executed.
A requote happens when an investor begins a trade at a certain price, but the broker returns the request with another quote. Many brokers still advertise the benefit of “No Requotes” — even we, at Admiral Markets, do so from time to time, but most brokers no longer offer requotes.
In addition, ‘No Stop Distances’ are important, and indeed here I have some big names of brokers in mind, which still need three to five pips distances for the main trading instruments. This may not be such a big amount, but it’s still not necessary. Options like ‘hedging’, ‘partial closing’, ‘scalping’ and using ‘expert advisors’ should all be standard possibilities when trading with reputable brokers.
Yet, this isn’t all that I want to talk about today. I want to shed more light on the average order execution times, the typical slippage and the quote of rejected trades. You can check the publicly available statistics for these numbers from Admiral Markets. The EURUSD order execution speed is shown as 0.067 seconds, while the AUDUSD speed is a little faster even at 0.061 seconds. Good brokers should be fast!
For trades with no slippage, order execution ‘at price’ for EURUSD is shown as 59.7%, and even better, with ‘positive slippage’ it’s 13.3 %.
Maybe there are some brokers that, from time to time, have an even faster speed or even better slippage rates. But the question you should ask yourself is: do you think it’s important for a broker to publish such statistics, ensuring that all their traders are reliably informed. I believe the answer should always be “yes”.
So, to sum it all up, here’s my message for this week: make sure you see the bigger picture! Look at spreads, commissions, swaps – if you hold overnight – but never forget order execution quality. In the end, this could also be considered an order cost and is a super-important consideration.
See you next week!
Do you have feedback, concerns, requests, maybe even compliments? I’d love to hear. Please contact me via: [email protected].
Forex and CFD trading carries a high level of risk, and this article should not be seen as advice or solicitation to buy or sell. It’s written for informational purposes only.