FXRISK Manual

Markout Is Your Execution Score

Use when: Live results underperform a clean backtest, especially around specific times or events.

Execution quality isn’t the fill. It’s what the market does right after.

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Mechanism

Markout measures the price move after your fill (e.g., +1s, +5s, +30s). In liquid moments, good market orders have small negative markout and quickly normalize. In toxic moments, negative markout persists: you’re being filled *because* price is about to move against you.

Process upgrade: turn this truth into a rule you can actually enforce. If the rule can’t be enforced, it will be broken under stress.

  • Write the trigger condition in observable terms.
  • Write the action in one sentence.
  • Write the penalty for breaking it.
How it kills accounts

You judge execution by how fast the order filled. You never measure the *after*. Over time you unknowingly trade more in toxic windows, your edge becomes an execution subsidy to faster players, and your strategy “decays” for reasons you can’t name.

How it kills accounts:

  1. The rule exists only in your head.
  2. Stress arrives and you improvise.
  3. Improvisation becomes inconsistency.
  4. Inconsistency becomes random results.
  5. Random results become a slow bleed.
Rule that survives

Track markout by time-of-day and condition. If markout worsens, reduce size or change order type. The simplest guardrail: **no new market orders in the windows where your markout tail lives.**

Rule that survives:

  • Write the trigger in observable terms.
  • Write the action in one sentence.
  • Write the penalty for breaking it.
Example archetype

The disciplined trader with a good process who still bleeds because entries are concentrated around roll, opens, or news. The setup is fine. The *fill* is the leak.

Tell: if your rule isn’t enforceable, it’s a suggestion. Suggestions don’t survive stress.

Deep dive

How to use markout (practical version):

  • Record: fill price + the next mid-price at +5s and +30s.
  • Bucket the results by time-of-day and volatility regime.
  • If the worst 10% of markouts explains most of your drawdown, treat that bucket as a separate strategy (or a no-trade zone).

Glossary: markout, adverse selection, quote withdrawal.

Field checklist

  • Write the rule in observable terms: if X, then Y.
  • Remove choices under stress. Choices become rationalizations.
  • Track the precursor: what state were you in before the mistake?
  • Make deviations costly (size down, pause, review).
  • Turn lessons into gates, not notes.

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