Order execution and slippage, explained

Traders compare spreads endlessly but rarely ask a more important question: when you press the button, what actually happens to your order? Execution quality — how quickly and at what price your trades are filled — shapes your real costs as much as the advertised spread, and it is far harder to see. Here is how it works.

Market orders and slippage

A market order fills at the best available price, which in a fast-moving market may differ from the price you saw when you clicked. That difference is slippage. It can go against you or, occasionally, in your favour. Small amounts are normal and unavoidable; consistently large negative slippage, especially around news, is a sign of poor execution worth investigating.

Requotes and rejections

On some dealing models the broker may respond to your order with a requote — an offer to fill at a new price — or reject it outright. Frequent requotes during volatile periods can stop you entering or exiting when it matters most. Brokers that route orders straight to liquidity providers tend to requote less, which is one reason execution model matters.

Dealing desk versus direct routing

A dealing-desk (market-maker) broker may take the other side of your trade; a direct-routing (STP/ECN) broker passes it to external liquidity. Neither is automatically bad, but the models create different incentives, and the better brokers are transparent about which they use. If a broker will not say how your orders are handled, that opacity is itself information.

Judging execution for yourself

Watch how your orders behave around major news, at the open, and on larger sizes — the moments execution is tested. Persistent slippage, hangs or rejections at exactly those moments tell you more than any marketing page. This article is educational and not financial advice; test with small size and confirm behaviour before relying on any broker’s execution.