The “fill price” in trading refers to the actual price at which a trade order is executed.
This can apply to both buy and sell orders for a variety of financial instruments, including stocks, bonds, futures contracts, and forex pairs.
When a trader places an order to buy or sell a security, they can specify the price at which they want the transaction to occur.
This is known as the “limit price” for limit orders. However, the price at which the order actually gets filled might be different, and this is the fill price.
In the case of a market order, which is an instruction to trade the security at the best available price, the fill price is whatever price was available when the order was executed.
Because market conditions can change rapidly, the fill price for a market order may not be the same as the price at the time when the order was placed.
On the other hand, with a limit order, a trader specifies the maximum price they are willing to pay when buying a security, or the minimum price they are willing to accept when selling.
The fill price for a limit order will be at the limit price or better. If the market does not reach the limit price, the order may not be filled at all.
Understanding the concept of fill price is important because it can influence a trader’s profit or loss from a trade.
The difference between the expected price of a trade and the fill price is known as slippage, and it’s a factor that traders need to consider, especially when trading in fast-moving or thinly-traded markets.