Requotes and slippage
When working on the foreign exchange market, there are many technical aspects, without knowledge of which it is simply impossible to achieve the planned profit.
It should be taken into account that there are times when a transaction simply does not open or opens at a completely different price than the one you specified in the order.
These two points have long been familiar to any trader and are called requotes and slippage.
A requote is a refusal to execute an order at the requested price. Instead of opening a trade, you see a message on your screen like "The price has changed, and the order cannot be executed at the requested price." Then comes 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 is especially unpleasant if you are trading using a short-term strategy, where every point of profit is important, and if a rejection occurs, you sometimes even have to change the direction of the transaction.
The reasons for this are high market volatility, the order execution method, and the speed of execution.
High volatility implies a rapid trend movement, in which the current price changes every fraction of a second; the order simply doesn't have time to catch the price and is rejected.
In this case, you simply need to change the trading instrument, choosing a less dynamic pair, or try entering the market using a pending order.
Execution option – requotes typically occur if you work with a broker that uses instant order execution, or Instant Execution (sometimes 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 is not achieved, the order is rejected.
Order execution speed - the faster your order is executed, the less likely you are to receive a requote, so this phenomenon is most common when trading on cent accounts, where orders are executed last.
There are two solutions: simply change your dealing center, choosing one with the fastest execution speed, or change your account type, choosing one with market execution. Some brokers offer this option. In this case, you can manually set the acceptable deviation from the current quote.
Slippage – a trade has opened, but the price does not match the one you saw on the screen. Typically, the discrepancy is only a few pips, but when using some forex trading strategies, even these few pips can have quite a significant impact.
This problem can be planned, when you work on an account with Market Execution and have 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; you set a 2-point deviation and can work without any problems. However, if the second scenario occurs, it could lead to significant problems, especially if there's a large unfavorable gap. As a result, you suffer losses or lose profits.
The solution to the problem in this case is to change the dealing center you work with.
To avoid such misunderstandings during your trading, first test the terminal on a demo account, then try trading with a minimum lot, and only after testing should you begin trading at full capacity.
