Price Tolerance provides an effective way to mitigate risk of unexpected volatility.
A Limit IOC (Immediate-or-Cancel) order will only be executed if a price can be obtained within your pre-defined price range, with any potential price improvements being passed on to you.
- When selling, Price Tolerance defines the minimum price differential that you are comfortable accepting. Price Tolerance is subtracted from the current Bid price, and is displayed as a limit price (Limit @ x.xxxxx) on the trade tile.
- When buying, Price Tolerance defines the maximum price differential that you are comfortable accepting. Price Tolerance is added to the current Ask price, and is displayed as a limit price (Limit @ x.xxxxx) on the trade tile.
For FX Spot and FX Forwards, the default Price Tolerance is 0.01% of the Spot price for all currency pairs, but it is configurable on an individual currency pair level. Price Tolerance is expressed in pips or percentage points.
Price Tolerance can also be applied when trading CFD Indices, Commodities, Interest Rates and Bonds. Price Tolerance is expressed in ticks or percentage points.
As seen below, by removing Price Tolerance the trade tile will convert the order type from a Limit IOC order to a Market IOC order for FX Spot and FX Forwards, and a Resting Market order for all other product types.