Every day there are innovations related to the execution of orders in the forex market. It is rather difficult for a beginner to understand how they differ, and it is difficult to choose which type of execution will be the most profitable. So, there are two main types of orders that we will encounter – Instant Execution and Market Execution.
This is a classic type of order execution when an order is executed at a price specified by the client. If the price has changed, the broker will open a deal at the old price or will not open a position at all. In the latter case, “requote” occurs. A requote is a trader’s concern – is it worth opening a position at a new price? Often requotes help open a deal at a better price, but mostly they only get in the way.
For example, you urgently need to open a position in a very volatile market – when you try to open or close an order, the broker constantly asks about the new price, and the market goes against you, and the broker asks if you accept the new price. When a requote occurs, you have to decide whether to open a deal at a new price or not. However, it is not a fact that the trade will open and a new requote will not occur. Now you understand the harm that requotes can do.
Theoretically, the broker will open a trade at the price that it considers correct at the moment when your request came to them.
Example 1: You are sending a request to open purchase for 1.2000. The price dropped to 1.1995. In this case, the broker can open a deal at any price from 1.2000 to 1.1995. Most likely the latter.
Example 2: You are sending a buy request for 1.2000. The price goes up sharply to 1.2035. The deal is opened for 1.2035. It doesn’t matter that in a second, the price returned to 1.2014 or remained at 1.2035. The execution depends only on the broker’s honesty, who can wait 3 seconds and open a deal at a price that is unfavorable for you.
This type of execution + floating spreads (floating spreads are a separate topic) – these are the main tools of dealerships to squeeze money from unsuspecting traders who are blinded by promises of excess profits.
How to avoid requotes?
Firstly, you can work on accounts with other types of order execution, but this is not always correct, and even more so, it is not always profitable. If your broker often has requoted for your profitable trades, this is the first signal that it is worth leaving.
The classic way to avoid requotes in the MetaTrader is to select “Use the maximum deviation from the requested price” option in the order window while placing a trade.
By checking the box there, you can choose how much the price may differ from the requested one, i.e., the maximum value of the price difference at which a trade will be opened.
Example 1: you set a maximum deviation of 5 pips. You send an order for 1.2000. The price has changed 3 points higher. The order will open for 1.2003.
Example 2: you set a maximum deviation of 10 pips. After the order was sent, the price dropped by 15 points. In this case, a requote will occur.
It is recommended that you use this setting with caution because it gives the broker the right to open trades at unfavorable prices for you. On a medium volatile market, say for the EUR/USD, we advise the maximum deviation of no more than 3 points.
All of the above makes sense for brokers with four decimal places; if you have five decimal places – accordingly multiply the number of points by ten times, read the broker’s conditions for better understanding.
What type of execution should you choose?
It all depends on you and your broker. We recommend that you try both types to see what is best for you. Also, this way, you can assess how well you have chosen a broker and whether it is worth going with them (for example, when 99% of deals are opened at the worst price).