Execution Speed

In this comparison of the fastest brokers on the market 2024 we also explain why speed is so important. A broker’s execution speed is the time it takes for the platform to complete a trade – from the moment the order is placed by the trader, to the moment it is carried out on the live market. In this tutorial we have ranked the best brokers for execution speed and explain how to get the best execution quality out of your trading platform.

Fastest Brokers 2024

Click a broker for details
  1. 1
    FOREX.com
    Active Trader Program With A 15% Reduction In Costs

    Ratings
    4.9 / 5
    4 / 5
    4.3 / 5
    4.6 / 5
    4.6 / 5
    4.3 / 5
    4.8 / 5
    4.5 / 5
    3.6 / 5
    3.8 / 5

    $100
    0.01 Lots
    1:50
    NFA, CFTC
    Forex, Stocks, Futures, Futures Options
    MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
    Wire Transfer, Credit Card, Debit Card, Visa, Mastercard, Skrill, Neteller, ACH Transfer
    USD, EUR, GBP, CAD, AUD, JPY, CHF, PLN
  2. 2
    NinjaTrader

    Ratings
    4.3 / 5
    2.8 / 5
    2.9 / 5
    4.3 / 5
    4.5 / 5
    4 / 5
    4 / 5
    3.5 / 5
    3 / 5
    3.2 / 5

    $0
    0.01 Lots
    1:50
    NFA, CFTC
    Forex, Stocks, Options, Commodities, Futures, Crypto
    NinjaTrader Desktop, Web & Mobile, eSignal
    ACH Transfer, Debit Card, Wire Transfer
    USD
  3. 3
    eToro USA
    Invest $100 and get $10
    https://www.daytrading.com/ is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD.

    Ratings
    4.3 / 5
    3 / 5
    3.9 / 5
    3.4 / 5
    4 / 5
    3 / 5
    4.3 / 5
    4.5 / 5
    4.3 / 5
    4 / 5

    $10
    $10
    SEC, FINRA
    Stocks, Options, ETFs, Crypto
    eToro Trading Platform & CopyTrader
    ACH Transfer, Debit Card, PayPal, Wire Transfer
    USD
  4. 4
    OANDA US
    CFDs are not available to residents in the United States.

    Ratings
    4.5 / 5
    3.5 / 5
    2.8 / 5
    4 / 5
    4.5 / 5
    3.5 / 5
    4.3 / 5
    3.8 / 5
    4.7 / 5
    3.7 / 5

    $0
    0.01 Lots
    1:50
    NFA, CFTC
    Forex, Crypto with Paxos (Cryptocurrencies are offered through Paxos. Paxos is a separate legal entity from OANDA)
    OANDA Trade, MT4, TradingView, AutoChartist
    Wire Transfer, Visa, Mastercard, Debit Card, ACH Transfer
    USD, EUR, GBP, CAD, AUD, JPY, CHF, HKD, SGD

A broker’s execution speed is an important factor to consider when day trading. When the market is at its most volatile, execution speed could mean the difference between profit and loss.

However, some parts of the order execution chain are outside the broker’s control, and there are local factors that you can manage yourself.

But crucially, be aware that the quality of execution may be a better metric for comparing brokers and improving your trading returns.

Order quality covers a number of variables, including speed, price and likelihood of execution, ultimately measuring whether you got the best trade possible.

Order Execution Speed Explained

Why is a Fast Broker with High Execution Speed Important?

The best investors know that execution speed is vital for securing their intended trades in volatile markets. Let’s look at an example scenario to see the effect it can have.

Medium-cap company, Alfresco, has hit the news headlines for securing a deal with the world’s largest e-commerce retailer. As more details trickle through the media outlets, the stock price starts rising dramatically, from $2.00 to $4.00 in a matter of minutes.

You place a buy order for 1000 shares at $4.08, with a stop-loss set at $4.50. A direct market broker may fill your trade at $4.08, meaning when the price jumps to $5, you’ve made a profit of $920 (1000 x $0.92). If your retail broker was slow to the mark, filling at $4.50 – your profit is only $500 (1000 x $0.50). You’ve lost $420 ($920 – $500) by trading with a broker with poor execution speeds.

Execution speed is measured in milliseconds (with the unit, ms). Anything less than 100 is considered excellent, anything more than 200 is fairly poor and could lead to price slippage or failure.

Should You Be Monitoring Your Broker’s Execution Speed?

Execution times can vary depending on a number of factors:

This vast array of factors makes it difficult to assess accurately. In fact, order size and market conditions are crucial elements to take into account, meaning a broker execution speed comparison is almost impossible to perform with any certainty.

This is where execution quality comes in.

Execution quality uses speed as just one metric for assessing a broker’s performance. But it also uses other factors, like price, their business model, and much more.

In this article, we’ll explain how we came up with our own broker execution ‘Quality & Efficiency’ rating and explain why it’s a better metric for assessing performance than speed alone.

broker speed

How We Scored Our Brokers On Their Execution Speeds

How The Market Works

Broker Business Models

There are a few ways that a broker can structure their business and facilitate trading. Depending on their model, they can choose how to route your trade, as long as it fulfils the requirements you’ve set. Therefore, the model used by your broker can impact execution speed as they may be incentivised to fill your trade through a less efficient route.

Brokers may have different priorities depending on their model and speed of execution may not always be at the top of their list, therefore execution quality may be a better metric.

What Is Payment For Order Flow (PFOF)?

Payment for Order Flow is the fee that a broker receives for routing trades to certain market makers. It’s the transfer of profit to the brokers selling the trades from the market makers who will execute them. Small trading brokers will usually operate in this way, as it allows them to sell positions to the bigger market makers that specialise in certain assets.

Clients are often not aware that their broker is routing trades in this way, profiting from slowing their trade execution speed – unless they are told by the broker. For this reason, PFOF has been largely controversial as investors’ best interests are not always the priority.

In 2005, the SEC even went digging into the issue, aiming to increase transparency by introducing Rule 606.

SEC Rule 606

SEC Rule 606 requires that brokers publish a quality report, providing a general overview of their routing practices. By doing this, investors can discover exactly how brokers make cash from their trades and if any conflicts of interest arise on the way.

Over the years, the requirements on these reports have changed to ensure that investors can access the information they need. In 2020, the SEC made it mandatory for brokers to publish the net PFOF payments they make each period from market makers. This covers trades executed in S&P 500, non-S&P 500 equity trades, and options.

Financed Information Forum (FIF)

The Financed Information Forum is a group of brokers and market makers that aims to standardise the reporting required as part of the SEC 606 Rule. The group found that the reports created were not giving retail investors transparent information, so they introduced the following requirements.

Each report should contain the metrics below:

Note, you can find a list of the FIF members on their website.

National Best Bid Or Offer (NBBO)

Another SEC mandate aimed at protecting retail investors is the National Best Bid or Offer (NBBO). This regulation requires brokers to trade at the best available ask and bid prices when executing positions for US investors.

The NBBO is calculated from a composite of prices across all exchanges and market makers (excluding alternative markets). However, due to the nature of live markets, this is extremely difficult to calculate and it is almost impossible to know for sure whether a trader actually received the NBBO, meaning holding brokers accountable to this is tough.

Alternative Trading System

But, one thing to be aware of is that Alternative Trading Systems (or ATS) are not included in the NBBO, so what is an ATS?

An ATS is a venue for trading that has less stringent regulation than an exchange. In Europe, they’re known as multilateral trading facilities. An example of an ATS is an ECN (electronic communication network) broker – one of the most popular broker types in the US. ECN brokers electronically match buy and sell orders.

Importantly, ATS transactions do not show on national exchange order books, so are often used by traders making large institutional moves to conceal the size of a trade and prevent it from impacting the price of an equity.

Broker vs Market Maker

A broker is a party that facilitates trading by bringing together a buyer and seller. They have the authorisation to buy or sell on behalf of their clients from larger institutions that hold the assets. In most countries, brokers must be regulated by the national body that protects financial services e.g in the UK, this is the Financial Conduct Authority (FCA), or in the US there is Financial Industry Regulatory Authority (FINRA).

A market maker is an organisation that creates a market for an asset by taking a trade. Sometimes these firms can facilitate a trade by finding an opposing party on their order book i.e someone else wants to buy what you’re selling. However, crucially, if there’s no one to take the other side, they’ll form the trade themselves.

Note, a market maker can also be a broker, but brokers are not always market makers.

Top brokers for execution speeds

What Impacts Execution Quality?

Now that we understand how markets work, we’ll look at the factors that impact execution quality and speed. These can be variables between brokers, or the trades themselves.

What Else Impacts Execution Speed? – Local Factors

On top of the variables above, local factors also impact execution speed. These are unique to you as a trader and not impacted by the broker or the position that you choose.

What Can You Do?

Final Thoughts

Whilst execution speeds are a useful metric to assess, their complexity and exposure to external factors mean they shouldn’t be reviewed in isolation. Our broker speed assessment looks at more than just how fast they are, instead focussing on quality as a whole. Try out one of our recommendations to get started.

FAQ

What Does Execution Speed Mean?

Execution speed is the time it takes for a broker to fulfil a trade order, or more simply, how fast the broker is at carrying out your request. From the moment you press execute on MT4NinjaTrader, or other trading platforms, to the moment the trade is placed. This can take anywhere from a few seconds to days depending on factors like your broker’s infrastructure, revenue streams, or the specifications of the trade.

Which Brokers Offer The Best Execution Speed?

We’ve compiled a list of the fastest brokers here. But as you’ll see, the number of factors that impact speed make it almost impossible to accurately assess. Instead, our list takes into account the execution quality as a whole, to ensure you get the best trade for your strategy.

Can I Complete My Own Order Execution Speed Comparison?

Yes – many brokers will list their best execution speeds on their website in their marketing material. If you combine this with an investigation into the size of the broker, their liquidity partners, and their revenue model, you can get a good idea of which brokers will have the best execution speed for your trading strategy.

What Factors Impact Execution Speed?

Execution speed is impacted by a range of factors, not all within the broker’s control. Whilst their size, technological infrastructure and revenue model will all make a difference, the size of your trade, the volatility of a market and the asset itself can all affect the quality of execution.

Is High Execution Speed Important When Trading Forex?

While it’s true that fast executions are important when trading forex, it’s not the only factor to consider. Ultimately, you want the best price possible for an asset, so speed should not be examined alone, execution quality is a fairer metric for ranking a broker.