Hold time in forex refers to the amount of time an order stays pending before being executed or canceled. When traders place an order, it may not be executed immediately due to market conditions, broker processing delays, or other technical factors. During this period, the order is considered to be on hold.
Hold time is the term used to describe discretionary latency, which occurs when a trader’s inbound order is purposefully delayed until the liquidity provider’s systems have decided whether to accept or reject it.
The interval between sending an order from the trader’s system and receiving a response is known as execution latency.
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Why Does Hold Time Matter?
Understanding hold time is essential for traders because it impacts:
Trading Strategy: Certain strategies, like scalping, rely on instant order execution. Delays caused by hold times can reduce strategy effectiveness.
Order Execution Speed: Fast execution is critical for capturing favourable market prices, especially in volatile markets. A longer hold time may result in missed trading opportunities.
Market Conditions: During high-volatility events, such as news releases, orders often experience longer hold times due to rapid price changes.
Common Causes of Hold Time
In forex trading, a number of factors can affect this, and below are some of them:
Slippage: If the market price moves rapidly, the order may not execute until the broker finds a matching price.
Liquidity Issues: During low-liquidity periods, such as holidays or after-hours trading, orders may take longer to execute.
Broker Processing: Different brokers have varying speeds for processing orders, which can affect hold times.
Order Type: Market orders typically have shorter hold times compared to pending orders like limit or stop-loss orders.
How to Minimize Hold Time
To reduce hold time, this are some of the effective ways traders can apply, and they included:
Choose a Reliable Broker: Select brokers with advanced trading infrastructure and fast execution speeds. You can read our comprehensive broker review on best broker with low slippage https://www.beoforexacademy.com/5-brokers-with-low-slippage/
Trade During High-Liquidity Hours: Focus on major trading sessions, such as the London or New York session, to ensure quicker execution.
Use a VPS for Trading: Virtual Private Servers (VPS) reduce latency and improve order processing times for online traders.
Avoid Overloaded Markets: Try to avoid placing trades during extreme volatility, like during major news events, if your strategy does not depend on such conditions.
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