Glossary of execution terminology
Key terms and concepts used throughout NoDealingDesk research. Each definition includes cross-references to related metrics, articles, and other glossary entries.
B-Book
An execution model where the broker acts as the counterparty to client trades, internalizing the order flow. The broker profits when clients lose. Also known as 'dealing desk' or 'market maker' execution. Common among retail forex brokers.
Bridge
Software that connects the MT5 trading server to external liquidity providers. The bridge handles order routing, price aggregation, and trade confirmation. Common bridge providers include OneZero, PrimeXM, and Gold-i.
ECN (Electronic Communication Network)
A type of execution venue that matches buy and sell orders from multiple participants (banks, funds, retail brokers) in an anonymous order book. True ECN execution provides direct market access with no broker intervention. Orders are matched on price-time priority.
Fill Ratio
The percentage of submitted orders that are executed at the requested price or better. A key metric for evaluating NDD execution quality. High fill ratios (>97%) indicate efficient liquidity routing.
Last-Look
A practice where liquidity providers reserve the right to reject or delay an order after receiving it, typically within a 5-25ms window. Used to protect against latency arbitrage but can be abused to reject profitable client orders. Controversial in the FX industry.
Latency (Execution)
The time delay between order submission and fill confirmation, measured in milliseconds. Includes client processing, network transit, broker server processing, LP routing, and LP processing. Lower latency reduces slippage risk.
Liquidity Aggregation
The process of combining price feeds from multiple liquidity providers to create a composite order book with tighter spreads and deeper liquidity. The aggregator selects the best available price across all connected LPs for each order.
Liquidity Provider (LP)
An institution (bank, prime broker, non-bank market maker) that provides executable price quotes to a broker. LPs earn from the bid-ask spread. The quality and number of LPs directly affects execution quality metrics.
Requote
When a broker cannot fill an order at the requested price and offers a new price instead. The trader must accept or decline the new price. Frequent requotes indicate either high volatility, insufficient liquidity, or dealing desk intervention.
Slippage
The difference between the expected price of a trade and the price at which it is actually executed. Can be positive (favorable to trader) or negative (unfavorable). In fair NDD execution, slippage should be approximately symmetrical.
STP (Straight Through Processing)
An execution model where client orders are automatically passed through to liquidity providers without manual intervention. True STP means no dealing desk involvement, though the broker may still add a spread markup to LP prices.
Swap (Rollover)
The interest rate differential charged or credited for holding a position overnight. Swap rates vary significantly between brokers and can materially impact the total cost of longer-term positions.
VPS (Virtual Private Server)
A remote server used to run MT5 terminals with lower latency to the broker's trading server. Co-located VPS (same data center as the broker) can reduce network latency from 50-100ms to under 5ms.