You click “Buy.” What happens next? The order travels from your device to the broker’s server, then to a liquidity provider or exchange, and the confirmation comes back — all in milliseconds. But those milliseconds matter. Understanding order execution terms helps you choose the right broker, avoid slippage, and understand why your trade filled at a different price than expected.
Trading involves risk. Forex and CFD trading involves substantial risk of losing your capital. This glossary is for educational purposes only. Never trade money you cannot afford to lose.
Order Execution Terms
Market Order
An order to buy or sell immediately at the current best available price. Market orders execute fast — typically within milliseconds — but you don’t control the exact price. You accept whatever the market offers. Market orders are the most common order type for binary options (where you need immediate entry at the current price) and for forex traders entering a breakout (see market orders in breakout strategies →).
Example: EUR/USD is at 1.0850. You place a market order to buy. Your order fills at 1.0852 — 2 pips higher. That’s the slippage. In fast markets, slippage can be 5-10 pips.
Limit Order
An order to buy or sell at a specific price or better. A buy limit order executes only when the price drops to your level. A sell limit order executes only when the price rises to your level. Limit orders let you control entry price, but they might not fill if the market doesn’t reach your level. Useful for mean reversion strategies and support/resistance bounces (combine limit orders with S&R levels →).
Example: You set a buy limit order at 1.0840 on EUR/USD. Price drops to 1.0840 and your order fills. Without a limit order, you might have bought at 1.0850 and paid 10 more pips.
Stop Order (Stop Loss)
An order that becomes a market order when price reaches a specified level. Used for two purposes: stop-loss (exit a trade at a loss to prevent further damage) and stop-entry (enter a trade when price breaks a level). Stop orders are essential risk management tools — every forex and CFD trader should use them. Binary options traders don’t need stop-losses (risk is fixed per trade), but they use stop-entry for breakout trades (master stop-loss placement →).
Example: You buy EUR/USD at 1.0850 with a stop-loss at 1.0830. Price drops to 1.0830 — your stop triggers as a market order. You sell at 1.0828, losing 22 pips instead of 50+ if you’d held on.
Take Profit (TP)
A limit order that automatically closes your position when the price reaches a specified profit level. TP orders lock in gains without you needing to watch the chart. Combined with stop-loss, a TP order defines your risk-reward ratio before you enter a trade. Most forex traders set TP at 2-3 times their stop-loss distance (see TP targets in MA crossover strategies →).
Example: You buy EUR/USD at 1.0850. Set SL at 1.0830 (20 pips risk) and TP at 1.0890 (40 pips target). Risk-reward ratio: 1:2. If price hits 1.0890, your TP executes automatically — you profit 40 pips.
Slippage
The difference between the expected price of a trade and the actual price at which it executes. Slippage is common during high volatility (news events, market opens) and with large orders. Positive slippage works in your favor (you get a better price). Negative slippage works against you. ECN brokers typically have less slippage than market makers. Scalpers care about slippage more than any other trader type (compare slippage across brokers →).
Example: GBP/USD during NFP news. Price is 1.2650. You place a market order to sell. Your order fills at 1.2642 — that’s 8 pips positive slippage. You got a better price because liquidity was high.
Requote
When a broker cannot fill your order at the requested price and offers a new price instead. Requotes happen in fast markets when the price moves before your order executes. You can accept the new price or reject it. Requotes are a sign of a market maker broker (not ECN). Persistent requotes are a red flag — consider switching brokers if they happen frequently (compare ECN vs market maker brokers →).
Example: You try to buy EUR/USD at 1.0850. The broker responds: “Requote: 1.0852.” The price moved 2 pips while your order was processing. You can accept 1.0852 or cancel.
ECN (Electronic Communication Network)
A trading system that matches buy and sell orders directly between market participants without passing through a dealing desk. ECN brokers show real-time market depth and typically have variable spreads. Execution is faster and more transparent than market maker brokers. ECN is preferred by scalpers, day traders, and anyone executing high-volume strategies (compare ECN brokers →).
Example: IC Markets is an ECN broker. When you place a buy order, it’s matched directly with a seller or liquidity provider. The broker doesn’t take the other side of your trade — they just facilitate it. Spreads can be as low as 0.0 pips (with commission).
Market Maker
A broker that takes the opposite side of your trade. When you buy, the market maker sells to you. When you sell, the market maker buys from you. Market makers provide fixed spreads and guaranteed execution but may requote in fast markets. There’s a conflict of interest: the market maker profits when you lose. However, regulated market makers (like those with FCA or CySEC licenses) must follow strict rules (see which brokers use market maker model →).
Example: Pocket Option is a market maker. When you buy a CALL option, Pocket Option takes the other side. If you’re wrong, the broker keeps your trade amount. If you’re right, the broker pays your payout.
Order Book
A real-time list of all buy and sell orders for a specific asset, showing price levels and volume. The order book reveals supply and demand at each price level — where the big orders are sitting. Traders use the order book to identify support/resistance zones and potential liquidity grabs. Only ECN/STP brokers provide order book access; market makers don’t (see how order book levels create S&R →).
Fill or Kill (FOK)
An order instruction that requires the entire order to be filled immediately at the specified price or canceled entirely. Partial fills are not allowed. FOK orders are used by institutional traders and scalpers who need exact position sizes. Retail traders rarely use FOK — standard market and limit orders are sufficient (compare order types across platforms →).
Example: You place a FOK order to buy 10 lots of EUR/USD at 1.0850. If all 10 lots can’t fill at 1.0850, the entire order cancels. No partial fills.
Next Steps
Now that you understand order execution, here’s what to learn next:
ECN vs Market Maker → — See how broker type affects your trading.
Compare Broker Execution → — Find the broker with the best execution for your style.
Forex Terminology → — Learn pip, lot, and spread basics.
Trading involves substantial risk of losing your capital. This glossary is for educational purposes only. Past performance does not guarantee future results.
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