Smart order routing is the automated logic that decides where each order, or each part of an order, is sent for execution. A router reads the prices streamed by connected liquidity providers and venues, then chooses among them using rules such as best available price, expected fill probability, historic rejection rates and latency. Large orders may be split so that several providers each fill a slice.
Routing behaviour affects the outcome a client actually receives: two brokers pulling prices from the same providers can deliver different fills depending on how their routers rank, size and time orders. Execution policies normally describe, in general terms, the factors a firm weighs when routing and how it monitors the results.
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Order Types and Slippage Explained
Market, limit and stop orders trade price certainty against execution certainty — plus what slippage is, where it comes from, and what a stop-loss caps.