How a broker processes an order — by taking the other side of it as counterparty, or by routing it outward to external liquidity providers.
also: order execution model, broker execution type, dealing desk vs no dealing desk
Updated
When you press buy, either the broker sells to you itself, or it passes the order to someone else and takes a fee for doing so. That single choice decides how your costs are presented, who gains when you lose, and which trading behaviour the broker is willing to allow.
Everything a trader argues about — spread, commission, requotes, scalping restrictions, execution quality — follows from where the order goes. Reading the model first turns a list of unrelated complaints into one explanation.
The same market order for one standard lot of EUR/USD, seen from each of the three models. The trader's experience differs before any market movement has happened.
The tester cannot distinguish these accounts. Only a forward record on the account itself can.
Calculation 1.8 · 1.1 · 0.2 + 0.7 = 0.9 (pips per round trip)
Result Three costs, one backtest, and no way to tell them apart from the report
Identify the model from how the broker is paid and how orders are filled, then match it to what the strategy needs rather than to what sounds most advanced.
| Range | What it means |
|---|---|
| Raw quote plus stated commission, market execution | Costs are explicit and fills are not requoted. Suits frequent trading and small targets. |
| Variable spread with markup, market execution | Routed outward, cost folded into the quote. Fine for targets measured in tens of pips. |
| Fixed spread, instant execution | Counterparty model. Workable for slow strategies; read the holding-time terms before deploying. |
| Any model with a documented minimum holding time | A scalping EA cannot run here regardless of how good its record is. |
Broker pages on this site record the execution model as a field rather than describing it in prose, so accounts can be lined up on the same row.
A counterparty broker under a serious regulator, with negative balance protection and published terms, is a legitimate arrangement and often the cheapest way to trade small size on slow strategies. The conflict of interest is real and is a reason to read the terms, not a reason to assume misconduct.
The Strategy Tester fills every order from the price series at the configured spread. Two accounts with completely different routing produce identical tester reports, which is why forward records on the actual account are the only evidence about execution that exists.
Most retail brokers run different models on different account types and frequently on different symbol groups within one account. The question is not what the broker is but what the specific account and symbol are.
Minimum holding times, scalping restrictions and the right to adjust trades executed on off-market prices live in the contract, not in the platform. An EA restricted by contract will run perfectly and have its results reversed.