Requote

In the dynamic world of Forex trading, market conditions can change rapidly, leading to price fluctuations. A requote is a situation where a broker offers a new price for a trade when the original price quoted becomes unavailable or obsolete due to market volatility. This can occur when there's a delay in the execution of a trade, or when the market moves significantly between the time a trade is requested and when it's executed.

How It Works

When a trader places a trade, the broker's platform typically provides an initial quote based on the current market price. However, if the market moves significantly before the trade can be executed, the broker may offer a requote, which is a new price based on the current market conditions. This can happen due to several reasons:

• Liquidity providers: Brokers often get their prices from liquidity providers. If these providers are unable to fill the trade at the original price, the broker may offer a requote.
• Market volatility: High volatility can cause rapid price changes. If the market moves significantly between the time a trade is requested and when it's executed, a requote may be offered.
• Execution delay: If there's a delay in executing a trade, the original price may no longer be available, leading to a requote.

Brokers usually have settings that allow traders to choose how they want to handle requotes. These settings can include:

• Accepting the requote automatically
• Rejecting the requote automatically
• Being notified of the requote and deciding whether to accept or reject it

Why It Matters for Traders

Requotes can significantly impact a trader's strategy and profitability. Here's why:

• Risk management: Accepting a requote can expose a trader to more risk than they initially anticipated. For instance, if a trader places a sell order at a certain price and the market moves down, the requote might be at a worse price, increasing the potential loss.
• Profit potential: Conversely, if the market moves in the trader's favor, a requote could offer a better price, potentially increasing profits.
• Trade execution: Requotes can disrupt a trader's strategy, especially if they're using automated trading systems or have specific price targets in mind.

Example

Let's say a trader wants to buy EUR/USD at 1.18500. They place the order, but the market moves up to 1.18550 before the trade can be executed. The broker may offer a requote at 1.18550. The trader then has to decide whether to accept the requote, reject it, or wait for a better price.

Key Takeaways

• Requotes occur when the original price quoted for a trade becomes unavailable due to market volatility or execution delays.
• Brokers usually offer requotes to reflect the current market price, but they can impact a trader's risk exposure and profit potential.
• Traders can manage requotes by adjusting their platform settings and being mindful of market conditions when placing trades.