Instant execution versus market execution, side by side

[Fairman]

Instant execution versus market execution, side by side

These two modes get explained badly, so here is a plain comparison.

Instant execution: the platform sends the price on the screen. The broker either accepts it, rejects it, or offers a new price within a deviation setting. Fills tend to land at the clicked price when quiet, and requotes show up when fast.

Market execution: the platform sends the order with no price attached. The broker fills at whatever the best available price is at that moment. No requotes, but slippage can go any direction and there is no protection built in.

For a scalper the trade-off looks like this:

- Instant gives control over entry price, at the cost of missed trades when the market runs
- Market gives certainty of getting in, at the cost of paying whatever the book charges
- Instant with a tight deviation setting behaves almost like a limit order and can reject a great deal of fast entries
- Market with a loose setting never rejects anything, which sounds nice until a news candle

Neither is better in general. The one that matches the way entries are taken is better. Breakout entries usually want market. Mean reversion entries into a pullback often do fine with instant and a modest deviation.

There is a hybrid in some platforms, request execution or exchange execution, where the trader sees a price and the broker confirms it with a short delay. It behaves like instant execution for the user and like market execution for the broker. Knowing which mode applies to which symbol is worth checking, because brokers sometimes set different modes for different instruments on the same account, and a strategy trading several pairs can be running under three sets of rules without anyone noticing.

Which mode did the strategy actually get backtested under, and does the live account use the same one?