Understanding spreads and execution

Spread is only part of the picture. Slippage, liquidity depth, and rejection rates matter just as much when you evaluate a broker. A tight spread on a quiet screen means little if your order cannot be filled at that price when volatility spikes. Execution quality is the sum of many parts, not a single number.

This post walks through the moving pieces so you can compare providers on the parts that actually affect your P&L. Spread is the difference between the bid and ask. It is the most visible cost and the easiest to advertise. But a spread quoted at one moment may not be available at the moment you trade, especially around news or session transitions.

Slippage is the difference between the expected fill price and the actual fill price. Some slippage is normal in fast markets. Excessive slippage suggests poor liquidity management or conflicted execution. We publish our slippage statistics because we believe traders deserve to see what happens after they click.

Liquidity depth determines how much size can be filled near the top of book. A one-lot trader does not need to think much about depth. A fifty-lot trader does. Deep liquidity means less market impact and better average prices on larger orders. It is one of the reasons institutional clients ask about depth before spreads.

Rejection rates and fill ratios complete the picture. A broker that rejects or requotes orders during volatility is adding uncertainty to your trading. We aim for high fill ratios and low rejections because we know that an unexecuted valid order is more frustrating than a slightly wider spread.

When comparing brokers, look at the full execution picture, not just the marketing headline. Ask for data. Test with real orders in real market conditions. The best execution is rarely the cheapest on paper; it is the one that delivers what was promised when it mattered.