Execution Risk

In processing a securities transaction (for example market order in foreign exchange, or stop order in equities), execution risk refers to the possibility that an order may be slipped in price or lost entirely, resulting in loss or reduced profit.

The most common form of execution risk comes in the form of slippage (where the market price has moved between the time an order is initiated and when it is executed, resulting in execution worse what was expected). An order also be lost and deleted due to a technological or processing error, and especially if the market price has moved significantly from the price ordered.

Although such risk is minimal, execution risk refers to the specific possibility that an exchange traded transaction may be imperfect.

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