Forex Requotes - Truth About Market Makers And Forex Ecn Brokers

Re-quotes in forex is one of the problems that ranks high with forex traders

. Most traders tend to sign up with a forex broker without doing due research. This ultimately leads to "ugly" surprises such as re-quotes. To be honest, there is nothing ugly about it, because in almost 90% of the cases, the forex broker would have mentioned a few things about re-quotes.

If you are trader who is struggling with constant requotes, then perhaps this article will shed some light. But firstly, know that you are not along.

A widely popular misconception with forex traders is that they believe when they make use of "one click trading" especially when trading forex on news events that it takes a bit of time for your order to reach the broker's server (known as latency) and by that time the price would have moved considerably thus resulting in a requote. This popular misconception has thus given rise to another market, what we call as forex VPS services which promise you 0 latency and well just about anything else under the sky. Traders end up investing a lot more money to trade via the VPS in an effort to reduce on the requotes, but do you really need to invest so much? The answer is simply no.

In an ideal scenario, requotes in forex should not appear especially when you are using one click trading. Meaning that the moment you click, the trade should be executed at that prevailing market price. The way forex brokers work is that they work with liquidity providers in order to present the best bid and ask prices. So when you are placing your order, you are infact shown the market prices as they were. So where is the question or re-quotes?

How to check what is causing you requotes

A small trick to check the problem of forex requotes is to go to the folder on your computer where you have the MT4 trading platform installed and click on the logs. The logs folder consists of an archive saved in a .txt format which has a log of all your trades.

To check why you were being requoted, just go to the archive section and identify a particular date when you were trading and you got to see a lot of re-quotes. While doing so, you can ignore the time in the logs as that is generated by your local computer.

In most cases requotes happen due to either of the two reasons

1. You are trading with a market marker forex broker who makes their own pricing based on the market conditions. By the time your order reached the broker (or the dealing desk) the market conditions changed which required the broker to send you back a new pricing.

2. You are trading with a forex ecn broker and by the time your order was passed through the pricing changed resulting in no bid/ask price at the price you wanted to trade.

Most traders believe that slippage or requotes in forex tends to happen only with market marker forex brokers, but that is only partly true. Requotes can happen even with forex ecn brokers irrespective of their liquidity pools. While requotes are normal, if you notice that you are being requoted a bit too often, especially with a forex ecn broker, then it is something to be concerned about.

by: Forex ECN

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