Reference: Fataawa al-Mu’aasirah – Page 392
Question: Is the istikhaarah supplication to be made in the prostration [position during the istikhaarah prayer] or after completing the [istikhaarah] prayer?
Response: The istikhaarah supplication is to be done upon completing the two units of [istikhaarah] prayer, as the Prophet (sal-Allaahu ‘alayhi wa sallam) said:
«…then let him pray two voluntary units [two rak’ah naafilah] of prayer and after which he should supplicate…» [From the hadeeth of Jaabir ibn ‘Abdullaah (radhi-yAllaahu ‘anhu) as transmitted by al-Bukhaaree]
…and then he (sal-Allaahu ‘alayhi wa sallam) mentioned the [istikhaarah] supplication.