14 March 2023

Execution Speeds: Why time is money


To be a successful and potentially profitable trader you will need more than skills and a good trading strategy. Among the factors that can affect the result of a particular trade is the speed of trade execution; the speed of execution can have a major impact on a trade’s profitability.

Therefore, a trader must select a broker with a speedy and dependable trading platform, a robust and reliable internet connection, and a server located near the broker's server.

 This article will outline:

  • The Importance of Fast Execution Speed

  • Case Study Illustration that sometimes speed means money

  • Factors that affect execution speeds

  • Why Choosing the Right Broker is so important

  • Other steps to take to reduce risks

The Importance of Fast Execution Speed in Trading

In Forex, Crypto or derivatives trading, market opportunities appear and disappear in an instant, and traders must be fast and efficient to seize them. This is particularly important for day traders and scalpers who seek to make quick trades. The ability to execute trades at the price that traders see and want to buy or sell can make a significant difference in the profitability of trades.


Case Study: The Impact of Slow Execution Speed on Trades

As a case study example, let us suppose a trader wishes to buy 1 BTC at the current market price of $30,000. If it takes 10 seconds for the trader to place the order and execute it, and in the meantime, the price of Bitcoin has risen to $32,000, the trader will have missed out on potential profits of $2,000. This example illustrates how slow execution speed can negatively affect trading outcomes.


Factors Affecting Execution Speed in Trading

Various factors can impact the speed of execution in derivative, Forex, and Crypto trading. These factors include the quality of the broker's trading platform, the speed of the trader's internet connection, and the location of the trader's computer to the broker's server. Traders who are located far away from their broker's server may experience a delay in execution due to the time it takes for data to travel between their computer and the broker's server.

Steps novice and professional traders can take include:

  • Choose a broker with a fast and reliable trading platform that is optimised for a quick execution.

  • Depending on the legal restraints of your location, use a VPN (Virtual Private Network) to ensure that the trader's computer is using a server located near the broker's server, reducing data transfer time and latency.

  • Ensure that the trader has a stable and fast internet connection, such as a fiber-optic connection, to avoid delays in executing trades.

  • Consider using a VPS (Virtual Private Server) that is located near the broker's server to reduce latency and ensure fast execution.

  • Regularly test the internet connection speed and latency to identify potential issues that could negatively affect trade execution.

Disclaimer: Any information presented is for general education and informational purposes hence, not intended to be and does not constitute investment or trading advice or recommendation. No opinion given in the material constitutes a recommendation by M4Markets that any particular investment, security, transaction or investment strategy is suitable for any specific person.

It does not take into account your personal circumstances or objectives. Any information relating to past performance of an investment does not necessarily guarantee future performance.

Trinota Markets (Global) Limited does not give warranty as to the accuracy and completeness of this information.

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