Forex broker delays and re-quotes explained
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Delays and re-quotes are directly linked – one happens because of the other. In other words, your Forex broker will re-quote a new price for you if you experience a delay or ‘lag’ in making an order. These delays can work against you simply because they do not allow you to enter or exit the market when you want.
If your Forex broker is a true ECN broker or one that does not manipulate prices/market conditions then delays are very unlikely to happen. Your order execution will be instant and you will be able to enter or exit the market whenever you want.
However, it is the market makers that work slightly differently. Please know that not all market makers do the following but there is a select few that do. When you click your ‘buy’ or ‘sell’ button your order may not be executed straight away. Sometimes, it may not be executed at all but it is more than likely that you will have to wait a few seconds for your order to go through. This delay could be as long as 10 seconds or even more. As you are probably thinking – that is not fair, and you are right. You should be able to enter or exit the market at the quoted price, whenever you want.
The reason for the delay is that your Forex broker is not able to provide the price they are quoting at the time so they give you the next best thing – a re-quote for the same transaction at a different price. The price you originally wanted (and were shown by the broker) is no longer available.
This is a basic example of how some market makers ‘make’ the market and change conditions in their favour. You may find that the re-quoted price has a much wider spread so that they make much more money from you. The wider the spread, the more money they make. Don’t be surprised that the re-quoted price also gets re-quoted at periods of high volatility – always in the favour of the Forex broker.
In the above 1 minute chart let’s say we click the ‘buy’ button so that we can go long at 137.757 with a stop loss a few pips below at 137.753 and finally a profit target at 137.795. As this is a 1 minute chart where prices move quickly we are very confident that this is going to be a quick and easy trade with good profit potential. It is also crucial that our order is processed instantly, with no delays.
However, if our Forex broker does not allow us to enter at 137.757 despite us clicking the ‘buy’ button; and instead they delay us and make us wait a few seconds, we could be entered into the market around 137.775. This is no good because we have been entered into the market far too late. The broker has made more money from us by doing this but we are now stuck with a huge stop loss and a small profit target which will break-even if we are lucky. The worst case scenario occurs if we were wrong in taking that trade. If prices reverse back down-wards our loss will be far greater than the loss we would have had if we were able to take the trade at the original price we wanted.
If your Forex broker is re-quoting you, it very likely that the ‘buy’ and ‘sell’ buttons will have the words ‘market’ or ‘please wait’ written on them. If you do click it then this is where the world stands still while you wait for the broker to make up their mind.
As we mentioned earlier, if you have experienced any of the above then is highly likely that you are using a market maker broker who wants to make more money from you by providing re-quoted prices. You should always be able to enter the market straight away at the originally quoted price and it should always be up to you when to enter or exit the market NOT the broker. So, make sure that you are careful, investigate as much as possible and if any of the above happen to you, contact them straight away and find out why this is happening.
To make it easier for you we have created a list of approved Forex brokers for you to choose from. Each one has its own information row and a link to either open a live or a demo trading account. Scroll down the list to find the right one for you.