What Is Execution?
Execution is the process of completing a trade order — the actual filling of your buy or sell in the market. Execution quality encompasses: the fill price relative to the expected price, the speed of fill, the completeness of fill (full vs partial), and the total cost including fees and slippage.
How Execution Works
Execution is often the difference between a strategy that works on paper and one that works in reality. Backtests assume instant, zero-slippage execution at the exact price specified. Live execution involves spread costs, slippage from market impact, latency between signal generation and order placement, and partial fills that leave you with an incomplete position.
Why It Matters for Traders
Improving execution quality is the most underrated way to improve trading performance. Small improvements compound: if you save 0.05% per trade on average through better execution (using limit orders, trading during high liquidity, using aggregators), that's 5% saved over 100 trades — potentially the difference between a profitable and unprofitable year.
