A shared language for reviewing a trade
Plain definitions and two checklists to use before and after submitting an order.
Terms worth keeping separate
- Signal
- An intention or event proposing an action. It does not prove an order was sent.
- Accepted order
- An instruction received by the broker. It may still be pending or canceled.
- Fill
- A full or partial execution with an actual quantity and price.
- Bid-ask spread
- The difference between the best displayed bid and ask prices.
- Slippage
- The difference between expected and execution price; several factors can cause it.
- Net result
- The outcome after applicable costs, not merely the price difference.
Control questions
- Is this the right account and environment?
- Are instrument, expiration, side, and quantity correct?
- Is the market data current?
- Which order type will be sent?
- What will I do if it is rejected or remains pending?
What to reconcile
- Order status at the broker.
- Quantity and price of every fill.
- Open position and applicable protection.
- Fees and net result.
- Entry in the trading journal.
For these questions in context, read From signal to order: the steps worth checking and A trading journal that helps you find mistakes.