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What is an error quote or spike on Forex?

What is an error quote or spike on Forex?

Although brokers try their best to make sure that quotes are updated timely in trading terminals, sometimes errors occur in the operation of the terminal. During such errors, price quotes may not display correctly.

Usually, errors take the form of a very large candlestick or bar. The candlestick can be either bullish or bearish. After a price gap in the chart, the price returns to its previous value.

This is an error quote or non-market spike – a price level that formed by itself as a result of a price gap, rather than was caused by any political or economic events.

An error quotation must satisfy each of the following conditions:

  • there is a significant price gap;
  • the price returns to the initial level within a short period of time with the formation of a price gap;
  • there was no rapid price dynamics before the appearance of this quote;
  • at the time of its occurrence there are no macroeconomic events and/or corporate news that might have a significant impact on the price of the instrument.

Brokers usually correct the charts when such quotes occur and remove information about the error quote from the server's quote database. An error quote is not necessarily a sign of a bad broker. Such a quote usually occurs as a result of a connection failure in the trading terminal, which can happen to any broker.

An error quote can bring either profit or loss from open trades. Brokers usually make every effort to eliminate the consequences of such errors. The resulting profit will be deducted, and the funds lost will be returned to the account. Brokers also restore stop orders closed as a result of an error quote, if any. To speed up the refund process due to an error quote, traders may need to contact the client support of the broker.

Article last updated: 2022-05-11

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