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2017-11-23
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What is a requote on Forex?

What is a requote on Forex?

Requote — is a repeated request for a quote or, in other words – requoting. How do we have to pronounce this word – requot or requote? In fact, requote is a quote, so perhaps we should say “trade without a requote”. But usually, traders follow no particular pattern when pronouncing this word. This issue is of no particular importance – what is really essential is to understand what requotes are, why they appear and how to bring them down to a minimum.

What is a requote on Forex and how they appear?

Requotes on the Forex market – are repeated requests made by a brokerage company for confirmation of orders execution under new prices. Most frequently, requotes appear in the following case:

A trader opens an order under the specified price, but the market fluctuates and prices change rapidly. Due to the delay in order processing or due to the sharp price fluctuation a brokerage company fails to open/close a transaction under the order’s price and sends another request – requote with a new price – for a trader’s confirmation. In case new prices are unsatisfactory for a trader, he/she can cancel this transaction. That means that requotes are necessary to ensure the correct compliance with the rules of orders execution under the exact price in the Instant Execution mode.

Most often, Forex requotes appear when orders are executed under the Instant Execution system. Such type of execution is typical for the trading accounts with a fixed spread. (Information on the spread types and orders execution is available in Compare Brokers section on our website.) The main task of requotes – is to ensure orders execution under the previously specified prices and prevent any uncontrolled slippages.

Requotes — is it something bad?

There are also some negative factors of trading with requotes — it is impossible to close a transaction immediately in the event of a strong down trend. Forex is characterized by sudden shifts of quotes against the background of economic and political news, and in 50% of such cases deviations will certainly not be in favor of traders. So, when the price goes down, losses start increasing rapidly and a broker doesn’t allow closing a transaction but sends requotes with new prices. Logically, in such situation a trader can accept any price level in order to close a transaction and save his/her capital, but a broker sends new notifications with requotes and he/she keeps losing money.

How to eliminate requotes?

In order to trade on Forex under the Instant Execution system, MetaTrader platform presents a possibility to set some acceptable deviations of the price. So, if the price deviates from the set out level, a trader will not receive any requotes and all orders will be executed under the new prices without his/her confirmation. In case there is a sharp turnaround in prices that exceeds the acceptable deviation, a trader will start receiving requotes for accepting or canceling his/her transactions.

This function makes it possible to significantly reduce a number of requotes and sometimes even eliminate them at all.

How to trade without requotes?

There are brokerage companies that execute orders under the Market Execution system – that is under the current price and with no requotes. This is explained by the fact that currencies are quoted with the accuracy of five decimal places and prices change constantly. This means that in this case requotes would be permanent.

In order to guard against requotes, you should trade only with companies that execute orders under the Market Execution system. So, for example, Alfa Forex brokerage company works. Such order execution system implies slippages, which may cause the situation when transactions are executed under the unprofitable price. Trading accounts with such execution system usually have a floating spread that is lower than a fixed spread, which contributes to the situation when small expenses arise for each slippage.

A basic premise for the success of the comfortable trading — is a profitable low spread and lack of requotes.

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