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Thread: Instant Execution compared to Market Execution.

  1. #1
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    Question Instant Execution compared to Market Execution.

    I have been trading on MT4 for a few years now, first on 'GKFX', then 'Alpari' and now most recently with ActivTrades as well . Alpari and GKFX seem to provide Immediate execution where I can specify stop-loss, take-profit and slippage levels at the time of trade placement, whereas with ActivTrades who offer Market execution I am not permitted to specify SL and TP at the time of trade entry but only afterwards. These are the functional observations seen from the corresponding deal tickets. What I was wondering was what are the deeper implications of this ? Obviously for the Immediate execution platforms where the price levels, SL, TP and slippage are specified I can get re-quotes which I would not get with Market execution, but with Immediate execution I can quantify more precisely the entry-level, but I often see 'off-market' messages with ActivTrades and also the actually filled levels may be quite different from the intended entry levels using this Market execution platform.
    From the brokers perspective hedging each position could be achieved easily with Market execution it would seem, since a corresponding opposite position could be placed alongside the original order, if they are hedging directly and immediately in the market. Alpari and GKFX may only be hedging certain profitable accounts or block hedging aggregate positions in the market at specified times, or may be still hedging in the market immediately, as the real market price I would assume is better than their quoted immediate price, so locking in the difference. This is only my conjecture based on a limited understanding of how things may work - the main question still remains as to what are the advantages of 'Market' versus 'Immediate' to both broker and to customer.
    Does 'Market' imply straight-through-processing plus/minus spread, and 'Immediate' imply a more broker massaged price level ?
    Last edited by silverado8; 01-20-2013 at 01:07 PM.

  2. #2
    Administrator Jim's Avatar
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    Hi Silverado,

    Have you seen this guest blog post, from Smart Live Markets as was?

    For an example of the benefits of so called "immediate" execution check out the antics of Ray Robot II. He hasn't had a "re-quote" yet, or "slippage" come to that!

    Cheers,

    Jim
    Reality is merely an illusion, albeit a very persistent one - Albert Einstein

  3. #3
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    Thanks Jim - very interesting read. I think that the situation where there is a potential for manipulation ( eg. the virtual trader plug-in, where the broker can tinker with slippage, spreads and delays as well as using the plug-in for legitimate mifid compliance ) means that customers definitely like the sound of NDD and STP. The article mentions of course that manipulation of this kind is illegal, but it didn't stop FXCM from doing just that in only passing on a re-quoted price to the customer when a delayed price was not in their favour and otherwise pocketing the difference. Always reminds me of that fantastic film 'The Sting' where they delayed the horse racing results .
    Having said that I've been very happy with GKFX and find it to be the best MT4 SB broker out there, and was only musing over the pros/cons of "Market" execution used by ActivTrades
    Will check out Ray Robot II's antics. When I last looked, he seemed very successful on a consistent basis for a period of time.

  4. #4
    Administrator Jim's Avatar
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    Ray's equity curve doesn't really count as "successful" any more. The markets have changed! However he is in positive territory for 2013 at least.

    After live trading for over a year now, he has still not lost anything to either slippage or requotes on his original choice of brokers. The wonders of letting your broker know where your stops and targets are located!

    However the same is not the case on some "STP" brokers he's been quietly experimenting with. See Ray's Armada Markets account for example.
    Reality is merely an illusion, albeit a very persistent one - Albert Einstein

  5. #5
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    Morning Jim. When Ray trades Alpari and GKFX to compare results has the starting account size been adjusted to account for the differences in the leverage or are the individual trades scaled ?
    It's just that in the past I've noticed the way the margin levels fluctuated in volatile markets between a broker offering 100 compared to 400 or 500 leverage, and been burned more than once, notably quite recently, for not paying careful attention to the leverage factors and obviously the amplified impact on your account ( up front nice and low yes, but controlling bigger positions meaning losers can quickly eat into the account ) margin = price*volume/leverage I think.

  6. #6
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    Ah Ray places and maintains one trade at a time. So no real bother on bank-roll utilisation comparisons
    Last edited by silverado8; 01-26-2013 at 01:01 PM.

  7. #7
    Administrator Jim's Avatar
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    Hi Silverado,

    Quote Originally Posted by silverado8 View Post
    Ray places and maintains one trade at a time.
    Young Ray's money management methodology is very conservative. Minimum possible size at all times! Unfortunately he's not explored the outer limits of 1:500 leverage, so he hasn't yet crashed and burned like his even less intelligent Dad.
    Reality is merely an illusion, albeit a very persistent one - Albert Einstein

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