First of all, let’s recall how the brokers basically work. There are two ways of order execution: Market execution or Instant execution.
Instant execution is not actually instant. Contrary to what its name states, it is not faster, sometimes even slower than market execution. In fact, it has nothing to deal with speed, it is the way the trades are executed.
In two words, with Instant execution, the broker promises to either execute your order at the price you sent or not execute at all.
There are the examples:
At 12:00:00 you place a Buy EUR/USD order at a price 1.48058. The broker gives you the messages ‘Order Accepted’ and ‘Order in process’. That means the broker tries to execute your order, it usually takes from 0.5 to 20 seconds. During that time, the price can go up, down, or not change at all. Let’s have a closer look at each of these situations:
- The price hasn’t changed. In this case your order will be executed precisely at the price you requested – 1.48058.
- The price has fallen. So, if the broker executes your order at 1.48058, he can earn not only the spread, but the price difference as well, because he can buy at a cheaper price than you ask. In this case, the order will be executed at 1.48058. (however, if the price goes to far against you, the broker probably will not execute your order).
- The price has improved. In this case, it is unprofitable for the broker to execute your order, because the market price is worse than yours, and you’ll get a requote – a message that the market price has changed and order won’t be executed.
So, with Instant Execution you get exactly the price you requested, that is the plus. Another plus is that you can specify exact Stop Loss and Take Profit price when you place order. The minus is, if the price has changed, you can get a requote fail to open the trade at all, especially when the market is moving rapidly.
With Market Execution the order is opened at the market price when the brokers places your order on the market. You will have you order open regardless of price changes with almost 100% probability, but the price can move against you.
There are the examples:
At 14:00:00 you place a Buy GBP/USD order at a price 1.65383, the broker gives you the messages ‘Order Accepted’ and ‘Order in process’. During that time, the price can still go up, down, or not change at all.
- The price hasn’t changed. In this case your order will be executed at the price you requested – 1.65383.
- The price has fallen to 1.65303. In this case, the order will be executed at 1.65303, i.e. 8 pips in our favour.
- The price has risen to 1.65462. In this case, the order will be executed at 1.65462, i.e. 7.9 pips against you.
The plus of Market Execution is that the orders are in general executed faster and with the probability close to 100%. The minus is that by the time your order is executed the price can change dramatically, sometimes it can make tens of pips leaps in any direction; additionally, you cannot specify Stop loss and Take profit when you place the order, because the system doesn’t know if the values will be valid by the time the order is on the market.
FXStat Signal Providers send open/modify/close trade signals at the moment of execution. They also periodicallty send open/modify trade signals as long as the trades are open, so if you didn’t receive open trade signal when it was opened – for example, if you wasn’t following the provider or get a requote – the trade will be opened when you receive the next repeat signal, a short time after you subscribe/reconnect, but only if the price is in your favor. However, FXStat cannot control your broker, and while the signals 99% of the time take less than 2 seconds to travel from the provider to follower, what happens after depends only on your broker.
If you get a requote, the system will repeatedly try to open the trade with a small interval between the attempts until the trade is eventually opened or the price goes beyond Price Differenceslimit (see below).
Stop loss/Take profit values are sent in relative, not absolute values. In other words, they are sent not as a set price, but instead as the interval between open trade price and S/L or T/P to make sure the values are valid by the time the trade is executed by the follower’s broker. So, while the exact prices might differ between the provider’s and follower’s trade,the interval between open price and S/L or T/P will always be the same.
The followers can set custom Stop loss/Take profit values. Custom values override provider’s, but when the provider closes the trade, it will always be closed for the follower regardsless of strategy settings.
FXstat has a safety mechanism that is called Price Differences. That’s how it works:
When you receive open trade signal (with Tradebook Bridge EA or FXStat Direct), the system checks if the price has changed against you.
If it did, and the difference between the provider and you is lower than the Price Differences value, the order is opened.
If it did, and the difference between the provider and you is higher than the Price Differences value, the order is not opened.
If the price has moved in your favor, Price Differences value is not checked and the trade will be opened.
Please keep in mind that FXStat cannot make a broker work faster or better. So, when a follower receives a signal, FXStat can control order placement, but not its execution. That’s why exact trade results might differ, especially when the market is moving fast and/or the follower’s broker uses Market execution method. In some rare occasions your copied Stop Loss or Take Profit value might even ‘touch’ the price and trigger trade close, while the provider’s price and S/L or T/P for that same trade might never meet and the trade might evenually be closed manualy, for example.