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What is a Requote?

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  • 14 July, 2011 GMT

By: Christopher Lewis

When you are trading Forex, you are going to come across the term “requote” sooner or later. While it isn’t all that common, it can happen and you should be aware of what it means and how to avoid them.

What is a requote?

A requote in the forex world means that the broker you are dealing with is not able or willing to give you a trade based upon the price you entered. Generally this happens in a fast-moving market, usually around the time of a big news announcement or some kind of shock to the system. In essence, you decide to buy or sell a currency pair at a particular price and press the button to do so. By the time your broker gets the order, the market will have moved too fast to execute at the price advertised. The requote announcement comes up on your platform letting you know price has moved, and gives you the opportunity to decide whether or not you are willing to accept that price. It is almost always a price that is worse than the one you ordered. This is why reputable brokers ask you first, before executing the trade.

What causes Forex requotes?

As mentioned above, the markets are normally moving very quickly, but they can move even more quickly suddenly, when news is announced. This makes it very difficult for the broker to place the order at the price you request. The broker you are dealing with has their own brokers that they deal with. The liquidity pool, or broker’s brokers, can pull orders, raise the prices, or even simply refuse to acknowledge anything if they want to. Your broker finds that the available price isn’t the one you asked for – and it warns you that you are going to get a worse fill than you wanted.

How to protect yourself from a requote

With a solid Forex broker, it’s easy to protect yourself from a requote. By placing a limit order, you are telling your broker that you are only willing to place an order at a specific price or better. By doing this, you are telling them ahead of time that you are not willing to pay more for the trade than this specific price, and that you are willing to sit out on the trade if it can’t be done in these parameters.

Requotes are common in particular markets, and are a part of any Forex trading career. However, if you find your Forex broker requotes frequently (especially during quiet markets) your broker may be suffering from a lack of liquidity. If that is the case, you may want to find a new Forex broker. However, if find requotes primarly during the Non-Farm Payroll report, give your broker a break – every broker is swamped at times like these.

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