Know the "acceptable deviation" and price re-presentation when an order does not go through
I placed the order in market, but it showed "requote." There is a field labeled "deviation" on the order screen, but I don’t know what to enter. When using MT5, you may encounter situations like this.
This time, I will整理 the basic concepts of allowable deviation and price re-quote.
What is allowable deviation
Allowable deviation is a setting that decides how far the price can drift from the price at the time the order is placed and still be filled. In MT5, it is sometimes specified in points.
As a hypothetical example, if you set allowable deviation to "30" for USD/JPY (30 points = 3 pips in a 3-digit quote), it means that as long as the price is within 3 pips of the order price, it may still be filled even if it drifts.
- If you make it smaller, the deviation in the execution price is kept small. However, it becomes harder to get filled when prices are moving
- If you make it larger, it becomes easier to get filled. However, there is a risk of being filled at a price less favorable than you expected
Price re-quote (requote)
Price re-quote is a mechanism where, after you place an order and before it is filled, the broker shows a new price asking, "How about this price?"
This can occur depending on the order fill method (Instant Execution, Request Execution, etc.). On the other hand, some methods may not display the allowable deviation field, or may fill without a re-quote. Which method is used varies by broker and instrument.
Different by fill method
- Depending on the fill method, the allowable deviation setting may be used or may not be used
- Some accounts may reject the order rather than re-quote
The screen display may differ depending on the account and instrument.
Order not going through: the confirmation order
- Check whether trading is possible in the time window and whether the instrument’s specifications allow it
- Check whether the specified price and quantity (lot) are within the instrument’s specifications
- Check whether the market is not in a sharp move and whether the spread has not widened
- Try changing the allowable deviation. However, note that the deviation in the execution price may become larger
Cautions
Even if you increase the allowable deviation, it does not guarantee an execution. In cases of extremely low liquidity or when there is an order rejection setting, it may not go through.
Summary
Allowable deviation is the setting for "how much drift is tolerated," and price re-quote is the mechanism to "confirm the execution at a new price." Assuming that the displayed content varies by account, it is reassuring to try it in a demo to see how it behaves for your own account.