Requotes
When trading in the market (including Forex), at some point one will inevitably encounter requotes. Although this does not happen all the time, a trader should understand what they are and how to avoid them.What Are Requotes
Traders often encounter a situation where, when attempting to open a trade, a message appears in the trading terminal indicating that the order cannot be executed at the requested price. This means that the broker we are working with is unable to execute the trade at the price initially requested when the order was placed. This unpleasant phenomenon is called a requote.As a result, the trader must either cancel the trade altogether or agree to a new price, which is not always favorable. More often than not, the new price is worse than the originally requested one. It is also common for trades to be executed instantly only when the price moves against the trader.
Why Requotes Occur
There are two main reasons why requotes may occur: the price changes too quickly, or the broker executes orders too slowly.In the first case, the primary reason for requotes is rapid price movement. This usually happens in volatile markets, where prices rise or fall very quickly, often during periods when important economic or political news is announced that significantly impacts the market. In such conditions, it is difficult for the broker to execute clients’ orders at their desired prices. When this happens, the trading platform shows a message about the requote, letting the trader know that the price has changed and giving them the option to accept the new price.
The second case is particularly characteristic of brokers that execute client orders in Instant Execution mode. Even on calm markets, attempts by a slow broker to execute a market order in Instant Execution mode often lead to requotes.
In any case, regardless of the reason (poor broker performance or increased volatility), executing an order takes a few seconds. This is enough time for the price to change significantly.
How to Avoid Requotes
You can protect yourself from requotes by using a limit order. This way, you inform the broker that you are willing to open a position at the requested price, or you will remain out of the market if the position is not opened at the specified price.It is also advisable to avoid trading during the release of important economic news, or at least wait a few minutes until the market stabilizes.
If the broker uses Instant Execution, to avoid requotes, the trader should increase the allowed deviation from the requested price in the order. However, this approach carries certain risks, as the price at which the position is opened may differ significantly from the one the trader expects.
Another option is to trade with a broker in Market Execution mode. In this mode, all orders are executed at the market price, regardless of the price when the trader placed the order. But, as in the first case, the price at which the order is executed may be significantly worse than the one the trader expects.
The most effective way to minimize the possibility of requotes is to work with a reliable broker who executes orders instantly, regardless of price movements. This factor should be taken into account when choosing a broker.
Conclusions
Requotes occur in all markets at various times and should be taken into account by traders. However, if we notice that our broker frequently issues requotes (even in calm market conditions), this may indicate that the broker is suffering from a lack of liquidity providers or is slightly manipulating trades. In such cases, it may be advisable to consider switching to another broker.On the other hand, if requotes occur during the release of important news, this is considered normal.
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One thing to check is whether the broker uses instant execution. If they do, switching to market execution can get rid of most requotes. Just remember, execution won’t always match the exact price you requested—it can be slightly worse or slightly better, but that’s part of trading.