Requotation

In forex trading, requotation refers to the situation where the broker is unable to execute a trade at the requested price and provides the trader with a new quote. It occurs when there is a delay or change in the market conditions, causing the original quote to become invalid.

Requotation can happen in both fast-moving and volatile markets. For example, if a trader places an order to buy a currency pair at a specific price, but by the time the order reaches the broker, the market has moved and the requested price is no longer available, the broker will requote a new price to the trader.

There are several reasons why requotation may occur in forex trading:

1. Market volatility: In highly volatile market conditions, prices can change rapidly, and the broker may not be able to execute the trade at the requested price. This can happen during important economic news releases or geopolitical events.

2. Slippage: Slippage occurs when there is a difference between the expected price of a trade and the price at which it is actually executed. Requotation can happen if the price at which the trade is executed is different from the initial quote due to slippage.

3. Lack of liquidity: In less liquid markets, it may be challenging for brokers to find counterparties to match trades at the requested prices. As a result, requotation may be necessary to find a suitable price to execute the trade.

4. Broker’s dealing desk: Some brokers operate a dealing desk model, where they act as the counterparty to their clients’ trades. In such cases, requotation can occur if the broker is unable to match the trade internally and needs to source liquidity from external providers.

Requotation can have both positive and negative impacts on traders. On one hand, it can provide an opportunity for traders to get a better price than initially requested. On the other hand, it can lead to delays and potential frustration, especially if the new quote is less favorable than the original one.

To minimize the chances of requotation, traders can consider using limit orders, which allow them to specify the maximum price they are willing to pay or the minimum price they are willing to sell at. This helps to avoid unexpected price changes and requotes.

It’s important for traders to understand that requotation is a common occurrence in forex trading, especially during volatile market conditions. It is essential to choose a reputable broker that has transparent execution practices and provides reliable quotes to minimize the impact of requotes on trading activities.