> For the complete documentation index, see [llms.txt](https://docs.drake.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.drake.exchange/trading/hybrid-clob-+-amm/trade-execution-flow.md).

# Trade Execution Flow

When you place a market order, the following sequence occurs:

**Step 1: Order Validation**

The system performs critical pre-flight checks:

* Verify portfolio ownership and trading permissions
* Check instrument is tradeable and not in emergency mode
* Validate order size meets minimum requirements and doesn't exceed position limits
* Confirm sufficient margin available for the trade
* Verify order price (if specified) falls within allowed price bands

**Step 2: Price Fetching**

Current market price is fetched from the OracleAggregator:

* Multiple oracle sources queried (Pyth, Chainlink)
* Prices normalized and standardized
* Stale or invalid prices filtered out
* Simple average calculated for final price

**Step 3: Venue Routing Decision**

Hybrid Order Router analyzes market conditions and determines optimal execution split:

Market Analysis:

* **Vault Utilization**: How much vault capital is currently deployed
* **OI Imbalance**: Difference between total longs vs shorts
* **Vault Liquidity**: Available capacity for new positions
* **Order Book Depth**: Resting order volume at best prices

Venue Analysis:

* **Vault Price**: Oracle price + spread, estimated slippage
* **Order Book Price**: Best bid/ask, available volume, estimated slippage

**Step 4: Execution**

Order is split according to router decision (e.g., 70% Vault / 30% Order Book):

For Vault Portion:

* Trade executed at oracle price ± spread
* Vault assumes opposite position
* Trading fee charged to user
* Open interest updated

For Order Book Portion:

* Matched against best available resting orders
* Price-time priority determines fill sequence
* Maker/taker fees applied
* Orders removed or reduced from book

**Step 5: Position Update**

Your portfolio reflects the executed trade:

* Position size increased/decreased by filled amount
* Entry price calculated as weighted average of fills
* Unrealized PnL begins tracking from entry price
* Margin requirements updated
* Open interest recorded in OIAndPnLManager

**Step 6: Settlement**

Final accounting and event logging:

* Fees deducted from collateral
* Portfolio balances updated
* Trade recorded in order history
* Events emitted for transaction record


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