ForexNewsNow – Three very important terms that you need to know about as a forex trader are forex broker requotes, slippage, and trade execution times. They are simple to understand terms, but can make a huge difference in how profitable your trades are. Here is what you need to know about them and how they affect your trading.
In short, forex broker requotes are when the forex exchange rates changes between the time that you push the close trade button and the time the trade is executed by the broker. When a requote happens, the forex trading platform that you are using will display a message letting you know the price has changed and ask you whether or not you want to accept the new price. Requotes usually leave you with a price worse than the one you were previously quoted.
Requotes are caused mostly by fast moving markets. If you are trading around news spikes, occasional requotes will be a fact of life. However, they are mostly limited to traders trading large lots. If you are trading large lots in fast moving markets, it may be hard for your broker to find enough buyers to take your lot off the market before the price changes.
A disreputable forex trading broker may use requotes to skim extra profits off their traders. To avoid this, make sure to read forex broker reviews to make sure your broker is certified by the relevant financial authorities.
Forex broker requotes may be a fact of life in fast moving markets, but there are several things that you can do to limit your exposure. First and easiest is to make sure that you choose a forex trading broker that has fast execution times. Faster execution times will always result in less requotes. Another trick that you can use is to set take profit and stop loss orders. Setting these orders will automatically execute them when your target price hits, eliminating requotes.
If you’re placing stop loss or take profit orders, you are avoiding forex broker requotes, but then you will have to contend with slippage. Slippage is the difference between the price that you think the order will execute at and the actual price that it does. Once again, this is almost always worse and cuts into your profits. Slippage happens less often than reqoutes and with a good broker they should be almost a non-factor. Before you deposit money, always read forex broker reviews and look at what their slippage percentage is. Many brokers guarantee no slippage on all trades.
Slippage is usually caused by lack of liquidity in the market. During volatile trading times, or when you are trading large lots, your broker might not be able to fill your order at your target price as the price shoots through your limit order. The easiest solution to this is trading with a market making broker. Market makers can dictate prices easier and are more likely to have the liquidity needed to fulfill even your largest orders at your set prices.
Trade Execution Times
Trade execution time is the time between when you click trade and when your order is executed by your broker. It can be affected by the speed of your broker’s servers, their access to liquidity, and the volume of trading in the market.
Every forex trading platform will have varying execution times, but the faster the better. Faster execution times gives you better prices and reduce the amount of requotes and slippage that you will have to contend with.