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Forex Trading: Execution Quality as Trade Size Increases

By on January 12, 2021 0 30 Views
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My answer to a readers question about how fills are affected in the forex market when trade size increases specifically when trading news events.

Today someone asked me if the fill you get in the forex market will be the same around news if you are trading 1 Million or 10 Million. Below is my answer:

The fill you get comes down to the following factors:

1. The currency pair that you are trading (If you are trading EUR/USD you are going to be more likely to get 1 M off as quickly as you are 10 M than if you are trading USD/CAD for example)

2. The liquidity in that pair in the interbank market at the time you place the trade ( This is going to depend on number 1 plus how big the news event that you are trading is and how close to expectations the news comes in. The bigger the news event and the further away from expectations that the news comes in the less likely you will be able to get 1 M off as easily as 10 M)

3. The access the broker that you are trading with has to the available liquidity in the interbank market and/or their willingness to take and hold the opposite side of the trade if they are a market maker. (In general the bigger the broker the better access that they are going to have to the liquidity available in the interbank market)

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