Forex requotes and how to avoid them

What is a forex requote?

A forex requote occurs when there is a price difference between the price you decided to enter or exit a trade by clicking on the buy/sell and the actual price on the market by the time your order reaches your forex broker. Forex requotes is a common phenomenon when the markets are moving fast and/or there is low liquidity. A currency pair with more liquidity can be easily traded without significant impact on it’s pricing because of the high volume of of trading activity. Forex requotes is also referred to as slippage.

Ideally your forex broker should have high liquidity and be tied to different liquidity providers in order to successfully execute your orders without requotes/slippage.

Forex requotes are often misunderstood and traders do tend to jump to the conclusion that their forex broker is messing around with the forex prices. However, this is not the case all the time. A forex requote happens due to the time difference between the order time and the execution time.

Forex requotes can play a crucial role based on your trading style. Say for example if you are a scalper who is out to make a profit trading the news, then every pip matters. This is where forex requotes can tend to work against you. In the same note, if you are trading significat lots then your forex broker might want to confirm that you meant to execute your order.

When the requote statement comes up on your trading screen it infers that your forex broker is informing you that the price has changed and the trader would have to confirm if they wish to place an order at the present price. In fast moving volatile markets, price requotes are a common occurance.

Forex requotes – Trading tips to avoid forex requotes

Prevent forex requotes by placing Limit Orders

By placing limit orders when trading, you are in effect placing a trade when a specified price is reached. Placing limit orders can definitely help you to avoid requotes as you are specific on the exact price at which you wish to enter the markets. When using limit orders, your trade might initially go into ‘Pending’ until your specified price is reached. Read more about Market and Limit orders.

Set up take profit and stop loss levels to avoid forex requotes

Forex RequotesTraders can also set up a take profit and stop loss levels before entering the markets. A take profit order is executed when the currency price reaches a specified price above your initially declared price.

The trick is not to modify either of them when the trade is live. The market prices might swoop by what your risk level was. Be sure NOT to use automated stop losses as prices might get too close and bounce back. Stop orders can be used to BUY or SELL, whatever your preference maybe.

Wait for the prices to slow down

If the above seems a bit too complicated, the best bet is to wait until the mometum slows down and the price stalls for a while. Forex requotes do not happen during this period. If you are in a profitable trade and the price hit the take profit levels set by you and the price stalls, it would be advisable to exit the trade as this can be a sign of retracement.

Dealing with Forex Requotes

Forex requotes are more common with bucketshops. That being said, forex requotes cannot be avoided completely. Even if you are trading with the best ECN/STP Forex brokers, you would at some point have to deal with forex requotes. However, forex requotes is much less infrequent with ECN/STP brokers such as Thinkforex offers high liquidity thus greatly reducing on forex requotes.