Requote

A requote occurs in financial trading when a broker offers a different price for a trade than originally quoted due to market fluctuations. This typically happens in fast-moving markets where the initially displayed price becomes invalid by the time the trader attempts to execute the order. Requotes are most common in the forex market, where price volatility can be high.

How It Works

When a trader attempts to execute a trade, the order is sent to the broker, who then attempts to fill it at the current market price. If the market has moved significantly, the broker may not be able to execute the trade at the initially quoted price. Instead, they issue a requote, offering the trader a new price to accept or reject. For instance, if the trader intended to buy GBP/USD at 1.3050, but the market quickly shifts to 1.3060, the broker may issue a requote at the new price of 1.3060.

Requotes can be two-sided, meaning the trader can receive a better or worse price than initially quoted. However, they are generally perceived negatively by traders, as they introduce uncertainty and can disrupt trading strategies. For example, scalpers, who rely on executing trades quickly to capture small price movements, may find requotes particularly problematic, as even a minor delay or price change can impact their profitability.

Key Points

• Requotes occur when the market price changes before an order is executed.
• They are more common in volatile markets, such as forex, and during major economic announcements.
• Requotes can offer a better or worse price than the original quote.
• Frequent requotes may indicate a broker with slower execution speeds.
• Some brokers offer no-requote trading, guaranteeing execution at the quoted price.
• Traders may avoid requotes by using limit orders, which set a maximum or minimum price for execution.

Relevance to Traders

Understanding requotes is crucial for traders when selecting a broker, as frequent requotes can affect trading performance and strategy implementation. Brokers that frequently issue requotes may have slower execution speeds, which can be detrimental in fast-moving markets. Traders seeking precision in trade execution might prefer brokers offering no-requote execution or those with a reputation for speed and reliability. Ultimately, the choice of broker can significantly impact the trading experience, particularly for strategies sensitive to price changes and execution speed.