Requotes and slippages
When working in the foreign exchange market, there are a lot of technical issues, without knowledge of which it is simply not possible to achieve the planned profit.
Moreover, it should be taken into account that there are times when a transaction simply does not open or is opened at a completely different price than you indicated in the order.
These two points have long been familiar to any trader and are called requotes and slippage.
Requote is a refusal to execute an order at the requested price; instead of opening a deal, you see a message on your screen like “The price has changed and the order cannot be executed at the requested price,” followed by the question of whether to accept the new price or not.
As a result, you find yourself far from a good place to enter the market.
This moment is especially unpleasant if trading is carried out according to a short-term strategy, in which every point of profit is important, and if a refusal occurs, sometimes you even have to change the direction of the transaction.
The reasons for its occurrence are high market volatility, variants of the order execution method, and execution speed.
High volatility - implies a rapid movement of the trend, in which the current quote changes every fraction of a second, the order simply does not have time to catch the price and is rejected.
In this case, you just need to change the trading instrument by choosing a less dynamic pair or try to enter the market using a pending order.
Execution option - usually requotes occur if you work with a broker that uses instant order execution or Instant Execution, sometimes also called exact execution. In this case, the broker guarantees that your order will be executed at the price you specified in the order, and if this cannot be done, it will be rejected.
Order execution speed - the faster the speed at which your order is executed, the less likely a requote will occur, so this phenomenon is most common when trading on cent accounts, where orders are executed last.
There are two options for solving the problem - simply change the dealing center, choosing the company with the fastest execution speed, or change the account type, choosing the option with market execution; some brokers also have this option. In this case, you can independently set the acceptable size of deviation from the current quote.
Slippage - a trade was opened, but the price does not correspond to the one you saw on the screen, usually the discrepancy is only a few points, but when using some Forex trading strategies, even these couple of points can be quite significant.
This trouble can be planned when you work on an account with Market Execution and set the slippage amount yourself, or unexpected, which occurs as a result of a malfunction of the broker or trading terminal.
In the first case, everything is under control, set a deviation of 2 points and work calmly, but if the second option works, there can be quite big troubles, especially if there is a large gap in an unfavorable direction. As a result, you suffer losses or receive less profit.
The solution to the problem in this case is to change the dealing center with which you work.
In order to avoid such misunderstandings during your work, first test the terminal on a demo account, then try to work with a minimum lot, and only after testing start trading in full force.