Order Execution Workbook

Execution Readiness Checklist: Verify Liquidity, Venue, Order Type, and Risk Limits Before You Send

If you’re going to trade, you need a fast pre-flight check that answers four boring-but-critical questions before the order leaves your workstation: Is there enough liquidity where I’m sending this? Am I using the right venue? Does the order type behave the way I think it does? And does the trade stay inside my risk limits even if the market does something annoying? That’s the whole job of your Execution Readiness Checklist.

Treat it like a gate. If any gate fails, you don’t “hope” your way through. You adjust the order, switch venues, or wait. The checklist isn’t about being perfect - it’s about being consistent under pressure (when spreads widen and fills get weird). Key takeaway: Never send an order until liquidity, venue, order type, and risk limits all pass your checklist in one pass.

Use this checklist structure every time you place a live order (or place a simulated order in your system test that you plan to trust). The components are:

1. Liquidity check: expected fill probability and size vs available depth (at your chosen venue).

2. Venue check: the routing destination matches your plan (and your constraints).

3. Order type check: time-in-force + execution behavior (maker/taker intent, partial fills, queue impact).

4. Risk check: hard limits (max loss, max notional, leverage exposure) and kill-switch rules.

Your Turn (quick setup): Open a text editor or your trading notebook and create a one-page template titled Execution Readiness Checklist v1. You’ll fill it in during the exercise below so it becomes your default workflow.

Materials needed:

• Your usual order ticket fields (symbol, side, size, venue, order type, time-in-force)
• Your risk limits doc (even if it’s messy)
• One live or paper trade you’ve been considering (pick a real one)

Time required: 25-35 minutes

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Guided Practice: Fill Out Your Checklist for One Real Order (and Get a Pass/Fail)

Here’s the hands-on part. You’re going to run one order through the checklist and end with a clear decision: PASS (send) or FAIL (fix and re-check). No hand-waving.

Your Turn (exercise): Build a readiness check for a single order).

1. Pick the order. Choose one trade you’d actually place today. Write these fields exactly as they’ll appear on the ticket:

• Symbol: ____
• Side: ____ (Buy/Sell)
• Size: ____ (shares/contracts/coins - whatever you trade)
• Price reference: (last / mid / limit you intend): ____
• Planned order type + TIF: (e.g., Limit GTC, Market IOC, Stop-Limit day): ____

2. Set your liquidity threshold. Pick a rule you can measure quickly. Use one of these concrete defaults (or your own):

• If limit order: require at least 2× your order size in visible book depth within the price band you’re willing to pay/receive (example: ±1 tick for a tight limit, ±0.10% for a looser one).
• If market order: require that the estimated slippage stays under your max slippage (example: “I won’t accept worse than 3 bps vs mid”).

Write your threshold in numbers:

• Liquidity rule you’re using: __________
• Price band / slippage cap: ________

3. Verify liquidity at the venue you’ll route to. Look at the order book or your venue’s liquidity view and record:

• Venue to route: ____
• Depth near your band (buy or sell side as relevant): ____
• Estimated slippage or fill probability proxy: ____

4. Confirm venue routing matches your plan. This is where people mess up - especially when they’re “just testing.”

• Venue you’re actually sending to: ____
• Venue you intended to use: ____
• If different, note why you’re overriding: ______

5. Order type behavior check (no vibes). For your chosen order type, fill in these:

• Will it rest, take liquidity, or both? ______
• Does it allow partial fills? (Yes/No) ____
• What happens if it doesn’t fill immediately? (cancel/expire/keep resting): ____

6. Run the risk check using your hard limits. You need numbers here. Use your real limits:

• Max notional per order: ____
• Max loss per trade (or stop-defined max): ____
• Max daily loss / max drawdown kill-switch: ____
• Current exposure (open P&L or notional): ____

Then compute:

• Order notional: ____
• Worst-case loss estimate (using your stop/limit assumptions): ____
• Result: PASS / FAIL (circle one)

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