You click “buy” and the trade opens. But what happens between your click and the fill? Understanding trading mechanics — order types, execution, slippage — is what separates traders who know why they got filled at a certain price from those who just accept whatever they get. This glossary covers how the market engine actually works.
Trading involves risk. Binary options and forex trading involve substantial risk of losing your capital. This glossary is for educational purposes only. Never trade money you cannot afford to lose.
Order Types
Market Order
An order to buy or sell immediately at the current best available price. In forex, a market order executes at the current ask (buy) or bid (sell) price. In binary options, a market order opens a trade at the current strike price with the selected expiry. Market orders guarantee execution but not the price — you get whatever’s available at that moment (see how execution differs between binary and forex →).
Example: You place a market order to buy EUR/USD at 1.0850. By the time it executes, the ask price is 1.0852. You’re filled at 1.0852 — 2 pips worse than expected. That’s the cost of instant execution.
Limit Order
An order to buy or sell at a specific price or better. A buy limit order executes only at or below your limit price. A sell limit order executes only at or above your limit price. Limit orders give you price control but no execution guarantee — if the market never reaches your price, the order doesn’t fill. In binary options, most platforms don’t support limit orders; you trade at the current market price (use limit orders at Fibonacci levels →).
Stop Order (Stop Loss)
An order that becomes a market order when price reaches a specified level. A stop-loss order is designed to limit losses: you set a stop below your entry (for longs) or above (for shorts). A stop-entry order (or stop buy/sell) opens a new position when price breaks through a level — useful for breakout strategies (use stop-entry orders for breakout trading →).
Example: You buy at 1.0850 and set a stop loss at 1.0830 (20 pips). If price drops to 1.0830, your stop triggers a market sell order. In fast markets, you might slip to 1.0828 — that’s the difference between “stop” and “stop-limit.”
Execution Concepts
Execution
How and when your order gets filled in the market. Two main types: market execution (instant fill at current price) and pending execution (fill when price reaches your level). Execution quality depends on your broker’s liquidity providers, the asset’s liquidity, and current market conditions. ECN brokers typically offer faster, more transparent execution than market makers (compare execution across brokers →).
Slippage
The difference between the price you expect and the price your order actually fills at. Slippage happens when volatility is high or liquidity is low. It can be positive (you get a better price) or negative (you get a worse price). In binary options, slippage affects entry price; in forex, it affects both entry and stop-loss/take-profit levels (see which brokers minimize slippage →).
Example: You place a market order to buy GBP/USD expecting to fill at 1.2650. But during a news release, volatility spikes. Your order fills at 1.2658 — 8 pips of negative slippage. On a standard lot, that’s $80 you didn’t plan to lose.
Requote
When your broker rejects your requested price and offers a new one. “You wanted 1.0850, but now the price is 1.0852 — do you accept?” Requotes are a sign of poor execution quality and are more common with market maker brokers than ECN brokers. If you constantly get requotes, your trading is being handicapped. Switch to a broker with better execution (find brokers with no requotes →).
Fill
When your order is successfully executed at a price. “Partial fill” means only part of your order was filled at the requested size (common with large orders in low-liquidity markets). “Full fill” means the entire order was executed. In binary options, fills are typically instant and complete because the trade size is fixed. In forex with ECN brokers, large orders may get partial fills (compare fill quality across platforms →).
Common Confusions
Market Order vs Pending Order — A market order executes immediately at the current price. A pending order (limit or stop) executes only when the market hits your pre-set price. Market order = buy now. Pending order = buy if it hits X.
Stop Loss vs Stop Limit — A stop loss becomes a market order when triggered (may slip). A stop limit becomes a limit order when triggered (won’t slip, but may not fill). Use stop loss for critical protection. Use stop limit only when you need price control and can accept non-execution.
Next Steps
Now that you understand trading mechanics, here’s what to learn next:
Compare Broker Execution Quality → — ECN vs market maker and what it means for your fills.
Forex Terminology → — Learn pips, lots, spread, and leverage.
Breakout Strategy → — Use stop-entry orders to catch breakouts.
Trading involves substantial risk of losing your capital. This glossary is for educational purposes only. Past performance does not guarantee future results. Always do your own research before trading.
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