Forex traders may occasionally experience complications when opening or closing orders. An unexpected issue known as "requotes" can interfere with these operations, potentially causing them to miss out on prospective transactions. This article will clarify the requotes, explain their causality, and propose viable solutions to this principal issue.
What Are Requotes?
"Requotes" represent an instance where a Forex trader attempts to open or close an order, only to have the system deny the request and modify the price line. This alteration can lead the trader to lose the chance to enter or exit a Forex trade at a specific price. Besides missing trading opportunities, requotes also affect a trader's profit margin as they amplify the risk of potential losses. Sometimes, it occasionally referred to as "order rejection."
Causes of Requotes
Several factors can trigger requotes, including:
1. Engaging in Trading During Periods of Volatile Price Fluctuations
Forex trading has appropriate and inappropriate periods for activity. Trading during periods of high volatility, especially when significant news announcements cause rapid currency pair price changes and high trading volumes, can lead to requotes. Brokers might struggle to adjust prices swiftly enough to correspond with the rapidly changing market conditions.
2. Account Type:
While requotes can occur with any broker, brokers are aware of this issue. Consequently, many brokers offer ECN accounts or other account types equipped with features designed to prevent requotes, although they come with higher fees.
3. Internet Connection Speed
Profiting from currency movements related heavily to speed—both in information tracking and analysis, as well as in internet connectivity. A slow internet signal might result in requotes. It is advisable to evaluate your internet signal's suitability or opt for an appropriate connection.
4. Incomplete Trading Platform Installation
Forex trading, like other forms of asset trading, requires the use of a trading platform. Installation errors or issues with the platform can lead to requotes. Nevertheless, this cause is relatively uncommon.
How to Prevent the Occurrence of Requotes?
1. Avoid Trading During Volatile Market Conditions
Given the difficulty in predicting market directions and the associated risk of requotes, it is advisable to refrain from trading during volatile periods. If you are uncertain about price forecasts, price analysis, news processing, order execution, or even internet speed, it is best to avoid trading during such times.
2. Switch Your Trading Account
If requotes pose a significant concern for your trades, an ECN account may prove more advantageous than a Standard or regular account lacking requote protection features. With an ECN account, your orders are routed directly to central banks or exchange markets, bypassing intermediaries, which are often the cause of requotes.
3. Utilize Pending Orders
If you are not comfortable or want to keep the type of account you use for trading securities, another way to solve requotes is to use Pending Orders to open trading orders at your desired prices. If the price is not available, the order will be canceled. Additionally, setting Take Profit and Stop Loss levels helps determine profit-taking and stop-loss points, which can help prevent requotes.
Conclusion
Requotes occur when your trading system rejects your orders at the price you've set, leading to potentially missed profit opportunities. This challenge can occur with any broker, particularly during periods of high market volatility in the Forex market. Requotes can be attributed to both service provider errors and user errors. Thus, to prevent requotes, traders should select an account type equipped with requote protection features to avoid triggers that might lead to requotes.
