MT4 brokers have the capability to configure their trade servers to handle MT4 market orders in one of 2 ways.
Type 1: “Instant Execution”
As you can see in the above trade window, the type is designated as “Instant Execution”, and you’ll also see an optional maximum deviation field. This was the most common type of market order configuration when MT4 first came out. The trader is able to control slippage on a market order by specifying the maximum tolerated pips deviation from the ask price in the case of a buy, or the bid price in the case of a sell. If the trade server is unable to fill within that deviation, the trade is rejected and a requote message is returned.
Examples – Alpari micro/classic, FXDD, Fx Pro, Forex.com
Type 2: “Market Execution” or STP
You’ll note that there is no maximum deviation field on this trade window, and the type is designated as “Market Execution”. There is no slippage control. When an order is placed, you’ll get the next best price the broker offers. There’s nothing stopping the broker from slipping the trade by 10 pips or more. You’ll never get a requote with this type of market order. This configuration is often marketed by the MT4 forex brokers as “Straight Through Processing (STP)” or even “ECN”. The reality is they’ve just stripped off the ability to control slippage.
Examples – MB Trading, InterbankFx, Go Markets, FXCM, PFG Best, Axitrader
What does this mean for Forex Megadroid?
It’s important to appreciate the differences because Megadroid only places MT4 market orders, and each type of market order can present it’s own unique problems.
The “Instant Execution” type can be problematic if the broker requotes excessively, causing missed trades. The advantage is your trade won’t get slipped outside the maximum deviation you set in the Megadroid settings. So you’ll either get a good fill, or no fill.
The big problem with the “Market Execution” or STP type of MT4 broker is slippage. You have no slippage control, so if your broker is prone to slip a lot, you’ll end up with terrible fills that will reduce the profit on a trade, and increase the chance of a stop occurring because the take profit target is further away than it would otherwise have been. Although you’ll never get a requote message on this type of broker, in practice trades can still get rejected for other reasons e.g. “Trade Context Busy”, “No Connection” etc.
I personally trade on both types of MT4 brokers, and both can work with Forex Megadroid. But I’ve had more failures on STP brokers because of excessive slippage. When you compare the performance of trades on various brokers over a few months you’ll soon notice the ones causing problems.