Understanding Requotes: How They Impact Your Forex Trades
When trading forex, you may encounter a term called “requotes.” Requotes are a common occurrence in the forex market and can have a significant impact on your trades. In this article, we will explore what requotes are, why they happen, and how they can affect your trading experience.
What are Requotes?
A requote in forex trading occurs when you place an order to buy or sell a currency pair at a specific price, but the broker is unable to execute the trade at that price. Instead, the broker provides you with a new price, which may be different from the original price you requested. This delay between the requested price and the execution of the trade is known as a requote.
Why Do Requotes Happen?
Requotes can occur for a variety of reasons, including market volatility, liquidity issues, and technical issues with the broker’s trading platform. When market conditions change rapidly, brokers may not be able to fill your order at the requested price, leading to a requote. Additionally, if the broker’s liquidity providers are unable to fulfill the order at the desired price, a requote may also occur.
How Do Requotes Impact Your Trades?
Requotes can have significant impacts on your trades, as they can result in slippage, where you end up executing the trade at a different price than originally requested. This can lead to increased costs and potential loss of profits. Additionally, frequent requotes can cause frustration and impede your overall trading experience.
How to Deal with Requotes?
While requotes are an unavoidable aspect of forex trading, there are some strategies you can employ to minimize their impact. One approach is to use limit orders instead of market orders, as limit orders allow you to specify the exact price at which you want to enter or exit a trade. Additionally, choosing a broker with strong execution speeds and reliable liquidity providers can help reduce the likelihood of requotes.
FAQs
Q: Are requotes common in forex trading?
A: Requotes are not uncommon in forex trading, especially during periods of high volatility or low liquidity.
Q: Can requotes be avoided?
A: While requotes cannot be completely avoided, selecting a reputable broker with reliable execution speeds can help minimize their occurrence.
Q: How do requotes impact my trading strategy?
A: Requotes can disrupt your trading strategy by introducing delays and potential slippage into your trades.
References
1. Investopedia – Requotes
2. DailyFX – What is a Requote in Forex Trading?
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