In live Forex trading, the price displayed on your chart is an indicative quote, not a guaranteed execution price. The difference between the price at which you order a trade and the price at which your order is actually filled in the interbank market comes down to two major market mechanics: Slippage and Re-Quotes.
Understanding how these execution phenomena work—and how your broker handles them—is essential for preserving your trading capital and protecting your strategy’s statistical edge.
1. Slippage: Causes, Types, and Mechanics
Slippage occurs when a trade is executed at a different price than requested. It happens during the market micro-seconds between when your trading platform sends an order and when a liquidity provider matches that order.
SLIPPAGE EXECUTION TIMELINE
Trader Clicks "Buy" Broker Matches Order
at 1.0850 (Requested) at 1.0852 (Actual Fill)
│ │
└─────────── Execution Latency ────┘
(10-50ms)
Price shifts in-flight
Result: Negative Slippage (-2 pips)
Why Slippage Happens
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High Volatility: Rapid price movements caused by high-impact economic events (e.g., NFP, CPI releases, central bank rate announcements).
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Low Liquidity / Market Gaps: Sudden drops in available market volume (e.g., weekend market opens, rollover at 5:00 PM EST, or trading exotic pairs).
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Execution Latency: The physical distance (delay in milliseconds) between your computer, your broker’s server, and the liquidity pool.
Positive vs. Negative Slippage
| Slippage Type | Trigger Condition | Market Outcome |
| Negative Slippage | Price moves against your order direction while in-flight. | Buy filled higher / Sell filled lower (Hurts profit potential). |
| Positive Slippage | Price moves in your favor while the order routes. | Buy filled lower / Sell filled higher (Increases profit margin). |
2. Re-Quotes: Dealing Desk Execution Limits
A Re-Quote occurs when your broker rejects your order at the requested price and asks you to accept a new, updated market price before entering the trade.
Unlike slippage (where an order is filled automatically at the next available market price), a re-quote forces a manual pause.
RE-QUOTE LOGIC
[ Trader Sends Buy Order @ 1.2500 ] ──> [ Broker Rejects Price ]
│
▼
[ Broker Prompt: "Price Changed.
Accept new fill at 1.2503?" ]
Direct Market Access vs. Dealing Desk Handling
| Feature | Direct Market Access (ECN / STP) | Dealing Desk (Market Maker) |
| Re-Quotes Status | Never occurs. Orders route directly to interbank pools. | Common. Broker absorbs trade risk internally. |
| Execution Model | Slippage occurs naturally (both positive and negative). | Re-quotes or order rejections occur if market shifts fast. |
| Price Transparency | High; matches true market order book depth. | Variable; broker quotes internal bid/ask prices. |
3. Comparing Market Orders vs. Pending Orders Execution
The order type you select directly impacts how slippage and re-quotes affect your trading account:
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Market Orders: High risk of slippage or re-quotes. Market orders instruct the broker to fill immediately at whatever price liquidity exists.
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Stop Orders (Stop-Loss / Buy Stop / Sell Stop): Converted into market orders once triggered, meaning they are vulnerable to negative slippage during news spikes or overnight price gaps.
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Limit Orders (Take-Profit / Buy Limit / Sell Limit): Designed to fill at your requested price or better. Limit orders experience positive slippage or no fill, protecting you from negative price jumps.
4. Practical Framework: How to Minimize Execution Drag
To protect your trade execution quality and prevent slippage from eroding your strategy’s Risk-to-Reward ratio, apply this four-step execution protocol: