Execution risk - Financial definition
Financial acronyms
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Concise definition of the term execution risk
The risk of financial loss occurring due to a problem which can occur when trying to carry out an arbitrage trade (e.g. cash-and-carry in the futures market) by entering into two markets at once.
Comprehensive definition of the term execution risk
Thus it is possible that the price in the second market changes whilst the trade in the first market is being placed, resulting in a lower profit or even a loss.