Some things in forex trading are uncommon and better left inexperienced. One of these unfortunate things that you should be aware of in order to avoid it is a requote. What exactly is requote? Why does it happen? How does it affect your trading?
Forex Trading Requotes Explained
What is a requote?
A requote happens when there is a difference between the price you decided to enter a trade by clicking buy/sell and the price on the market when your order actually reaches the broker.
Not always a requote means a blatant attempt to screw a trader. First of all a requote might be somewhat a risk management – if you trade large lots, the broker may want to confirm that you really meant to make that big of a trading order.
Most requites happen to big players, not a trader trying to make couple of bucks with mini lots during some economic press release. It is expected from a reputable broker to ask you first, before executing a potentially risky trade.
The requote statement pops up on your trading platform letting you know price has changed, and lets you decide whether or not you are want to accept that price. It is almost always a price that is worse than the one you ordered.
You may notice that requote occurs only in fast markets. Forex broker has a right to fill you on a market or stop market order and call it “slippage”. Instead, however, a broker is decent enough to let you know that the market has moved away and if you continue with a trade order, you will end up with unfavorable price.
If you do suspect your broker in routine requites and you cannot get a decent explanation for it, it might be a good idea to take your business to another broker. Keep in mind, though, that most brokers don’t have to screw anyone over. They make plenty of money from spreads.
How to avoid a requote?
When trading with reputable forex broker, it is rather easy to dodge a requote. A solution is simple – place limit orders. This way you let your broker know that you want to place an order at a specified price or better.
With limit orders, you basically state that you are not interested in a trade with a difference price and in case the market goes the wrong way, you prefer to stay away from it.
Requotes are common in fast markets and are a part of forex trading curriculum. If you bump into requites during non-farm payroll reports, there is nothing to worry about. Every broker is hectic during major press releases.
Of course, too much requites, especially without a reason, should get you on alert and consider changing a broker with more liquidity option.