What is a Requote in Forex? A Complete Guide for Japan Traders

What Exactly is a Requote?

A requote occurs when you place a market order but the broker's price moves before execution. The broker sends you a new quote, asking you to accept or reject it. This is common with instant execution brokers, which are popular among Japan retail traders. For example, if you try to buy USD/JPY at 150.00, but the market moves to 150.05, the broker may requote you at 150.05.

How Requotes Work for Japan Traders

When you trade forex in Japan, your order goes through your broker's dealing desk. If the broker uses instant execution, they check available liquidity at your requested price. If that price is no longer available, they requote you. This process can delay your trade and potentially cost you pips. For USD-denominated accounts, a requote on a 1 lot USD/JPY trade could mean a difference of $50 or more per pip.

Why Requotes Matter for Japan Retail Traders

Japan has strict forex regulations, but requotes are still a reality for many retail traders. The local financial authority requires brokers to be transparent, but requotes can still happen during news events or low liquidity. Many Japan traders use leverage up to 25:1, which amplifies the impact of requotes. A small price change due to a requote can significantly affect your margin and P&L.

For Japan traders, requotes are particularly relevant due to the popularity of USD/JPY and other yen pairs. Most retail brokers in Japan offer instant execution, which increases requote risk. When using local payment methods like Bank Transfer, Skrill, or USDT to fund your account, you should check the broker's requote policy before depositing. The local financial authority (Japan's financial regulator) mandates that brokers disclose execution policies, but requotes remain a common issue. Japan traders often prefer brokers with no requote policies, such as ECN or STP accounts, to avoid delays. However, these accounts may have higher spreads or commissions. Understanding requotes helps you choose the right account type and trading strategy for your needs.

1. Check Broker Execution Type
   Before opening an account, confirm if your broker uses instant execution or market execution. Instant execution leads to requotes, while market execution uses slippage.
2. Choose No Requote Brokers
   Select brokers that advertise 'no requote' policies. Many ECN and STP brokers in Japan offer this, though they may charge commissions.
3. Avoid High Volatility Times
   Refrain from trading during major news events like Bank of Japan announcements or US NFP releases. Requotes are more common then.
4. Use Limit Orders
   Place limit orders instead of market orders. Limit orders specify your desired price, reducing requote risk.

Requotes are often compared to slippage. For Japan traders, slippage is more common with ECN/STP brokers, while requotes occur with market makers. Requotes give you control (you can reject), but slippage is automatic. Both can affect your USD-denominated trades. Many Japan traders prefer ECN accounts to avoid requotes, but they may face higher slippage during news. Understanding your broker's execution model helps you choose the right approach for your trading strategy.

When you place a market order in forex, your broker sends your request to their liquidity providers. If the price you requested is no longer available, the broker returns a new quote to you. This is a requote. For Japan traders using USD accounts, this often happens with USD/JPY during Asian session volatility. The broker's dealing desk may also requote if they cannot fill your order at the requested size. This process can take milliseconds to seconds, during which the market can move further against you.

Example 1: You want to buy 1 lot of USD/JPY at 150.00. Your broker's price moves to 150.03 before execution. You receive a requote at 150.03. If you accept, you pay 3 pips more. For 1 lot, that's $30 (since 1 pip = $10 for USD/JPY). Example 2: During the Bank of Japan rate decision, you try to sell USD/JPY at 149.50. The market drops to 149.45, and you get a requote at 149.45. Accepting gives you a better price, but the delay may cost you if the market reverses.

The local financial authority in Japan oversees forex brokers and requires them to follow strict rules. Brokers must disclose their execution policies, including requote practices. The regulator also sets leverage limits (up to 25:1 for retail traders) and mandates client fund segregation. Japan traders should always check that their broker is licensed by the local financial authority. This ensures that requote policies are transparent and that you have recourse if issues arise. Unregulated brokers may not follow these rules, increasing your risk of requote abuse.

• Test with a Demo Account: Before depositing real money, test the broker's execution speed and requote frequency using a demo account with USD/JPY trading.
• Monitor Spreads During News: Requotes often happen when spreads widen. Use a spread monitoring tool or avoid trading 30 minutes before and after major news.
• Use VPS for Faster Execution: A Virtual Private Server (VPS) can reduce latency and requote risk. Many Japan brokers offer VPS for active traders.
• Check Broker Reviews: Read reviews from other Japan traders on forums or social media. Look for complaints about requotes or execution delays.
• Set Slippage Tolerance: Some platforms allow you to set slippage tolerance. Use this to avoid requotes by accepting small price deviations.

Requotes are a common part of forex trading for Japan retail traders, especially when trading USD/JPY. By understanding what they are and how to avoid them, you can improve your trading experience. Choose brokers with no requote policies, use limit orders, and avoid high volatility periods. Always verify your broker's regulation with the local financial authority. For more educational content on forex trading in Japan, explore our other guides at comparebroker.io. Start your journey with a demo account today to practice requote-free trading.