Classic

You have not logged in

Market Execution

MARKET EXECUTION с LARSON&HOLZ IT LTD

The effectiveness of the trading strategies that require entering the market at manual mode mainly depend on the techniques of order execution. There are two types of order execution – Market Execution and Instant Execution, which have major differences between them.


Why do we use Market Execution and regard it as one of our chief advantages?


Market Execution – is an order execution mode, the main priority of which is trade order execution in the shortest period of time possible. This technology is used by over 90% of reliable brokers who are aimed at long-term work with professional traders, not at client losses. And there are two reasons for that:


1) Only Market Execution mode can provide high-quality hadging of client's positions on the open market. For at first one has to start a deal on an external principal, and only then accomplish the same deal on the client's side. Client's deal cancellation, which can be done when using Instant Execution, is not acceptable here.


2) Only Market Execution mode can allow the broker to guarantee that the deal will be made even in the conditions of fast market and that the trader will not have any requotes, which is a very important aspect of the majority of trading strategies.


Unlike Instant Execution mode, where the orders are attached to a certain price, the so-called indicative, Market Execution guarantees the order execution, even if the price has changed during the operation. It goes without saying that during the order execution period the price can change both to the better for the trader and for the worse, especially when it comes to the fast market.


Yet the main thing in this situation is that the deal will be made regardless of circumstances, and a possible small change in prices is a necessary fare for entering the open market. What is more, modern technologies allow us to reduce the time of order execution significantly, compared to Instant Execution, and even close up to 20% of deals with “better than in the market” prices.


Let us now take a closer look at Market Execution:

Comparison of Market Execution and Instant Execution in terms of conditions of order execution

Order execution parameters Marker Execution Instant Execution
Favoring change in prices during the period of order execution The order is executed on more profitable terms The order is executed regardless of the price changes (the price spread makes up broker's profit)
Unfavoring change in prices during the period of order execution The order is executed within the shortest period of time possible at the effective price Requote – order execution is denied
High level of volatility Guarantee of order execution Requotes may impede entering the market
Stop loss and take profit setting Available after entering the market Putting parameters into the request is available

As one can see from this table, Market Execution guarantees order execution even in the conditions of anomalously high market activity. Moreover, with such Market Execution function as Smart Dealer, over 20% of Larson&Holz orders are made at the prices by 1-2 points better than at market (both at the starting and the closing of a deal), which creates extra opportunities for gaining profits.

First-rate Forex brokers that use Market Execution technology*

Broker Technology Delay on the
slow market
Delay on the
fast market
FXCM Market Execution 1/2-4 sec 3-12 sec
Larson&Holz Ltd Market Execution 1-3 sec 5-10 sec
Saxo Bank Market Execution 2-5 sec 9-20 sec
Gain Capital Market Execution 1-5 sec 5-15 sec
GFT Market Execution 1-4 sec 10-20 sec

Another undeniable advantage of Larson&Holz IT Ltd is the applying of drifting market spreads technology. Brokers using Market Execution mode hold different positions when spreads are concerned – they can either have them at a fixed level or changing depending on market circumstances. In Larson&Holz deals spreads correspond current market situation, which means they can reduce down to 0,1 points at slow market and rise up by several points when the price changes quickly. The broker's interest is put in a part of the spread from liquidity providers and a small fixed commission, which reduces from 7 to 1 dollar as far as trading operations are made. Traders' expenses are compensated relatively effectively because of the high quality of order execution via Market Execution and Smart Dealer – and for up to 20% of deals the spread is partly or completely compensated by means of starting and closing the deal at more profitable prices. Our tariff politics is aimed at supporting active clients, so the commissions go down progressively as the trader makes a certain number of lots. Thanks to this politics, the traders working at the professional level at Larson&Holz IT Ltd have their commissions reduced down to most unprecedentedly low marks – less than $1 for every 100 thousand units of base currency.

Percentage of operations at Larson&Holz on different levels of ForexFamily based on the results of Larson&Holz internal investigation:

Therefore, trader's expenses are made up of spreads and commissions. As described earlier, Larson&Holz has market level spreads. It means that the spreads are minimized as much as it is possible at the open market. Spread is constantly changing, however, it can be measured by its average weighted (effective) amount. Commissions are also at the lowest level in this field and can be reduced down to $1. Commission reduction goes systematically in 5 steps. The average amount of Larson&Holz's effective spreads can be defined by the number of deals performed on different FF levels, and by the rise of deals profitability on the account of Smart Dealer.

First-rate Forex brokers spreads amounts for major currency pairs*

Currency pairs Larson&Holz
Max - Min spread
Larson&Holz
Average spread
Gain Capital GFT FXCM Saxo Bank
EURUSD 3,0-0,1 1,7 1,5 1,5 2,6 2
GBPUSD 3,0-0,5 2,1 2,2 2,2 3 4
USDCHF 3,0-0,8 2 1,9 1,9 3 3
USDJPY 3,0-0,7 1,7 1,2 1,2 2,4 3
USDCAD 3,0-1,0 2 2,3 2,3 2,8 4
AUDUSD 3,0-1,5 2,1 1,7 1,7 2,5 3
NZDUSD 4,0-3,0 3,3 2,3 2,3 3,4 4

*based on the results of Larson&Holz internal investigation