What Should I Know About Execution Quality?

Price and timing factors

Execution quality depends on how fast your order reaches the market and at what price. In fast-moving markets, delays of milliseconds can cost money. Market makers (brokers or others) can fill your order immediately but may quote wider spreads than exchanges. Brokers routing to exchanges face variable delays and may receive better or worse fills depending on order flow.

How to measure it yourself

Place test trades of various sizes in liquid securities and compare your actual fill price to the bid-ask spread when you submitted the order. Over time, track whether you consistently fill better or worse than mid-market. Request your broker's execution policy—they're often required to publish one. Some brokers publish statistics showing percentage of orders filled at or inside the spread.

Red flags and questions

Be cautious if a broker consistently fills you at the worst end of wide spreads, or if market orders execute far from current quotes. Ask whether they make money from your trades (e.g., payment for order flow) and whether that creates incentives to delay or route orders unfavorably. Retail brokers with very low commissions often earn money this way; understand the tradeoff.