The Fisherman Who Trusted the Painted Price: A Lesson in Forex Trading

Every morning, fishermen gathered at a busy harbor where merchants displayed wooden boards showing the prices they would pay for fish.

Among them was Noah, a young fisherman who always watched the boards carefully.

One merchant displayed the highest price in the harbor.

“Ten silver coins per basket,” the board announced.

Noah quickly sailed back to sea. If he could return with fifty baskets before the price changed, he calculated, he would receive five hundred silver coins.

By afternoon, dark clouds had gathered.

Most fishing boats returned early, while several merchants packed their stalls and left the harbor.

But the wooden board still showed:

10 silver coins.

Noah smiled and unloaded his first basket.

“I'll pay ten,” the merchant said.

Then Noah brought another.

“Nine and a half.”

The next basket received an offer of nine.

Confused, Noah pointed toward the board.

“It still says ten.”

The merchant nodded.

“That was the price for the amount I was willing to buy at ten. I cannot buy fifty baskets at the same price today.”

Noah looked around.

With fewer merchants in the harbor, there were fewer buyers for his fish. If he wanted to sell everything immediately, he would have to accept progressively lower prices.

So he had a choice.

He could wait and risk the fish losing their freshness, or accept the prices available now.

Noah sold the remaining baskets.

That evening, he counted far fewer coins than he had expected.

The next morning, he returned to the harbor—but this time he did not look only at the number painted on the board.

He looked at how many merchants were standing behind it, how much they were willing to buy, and how quickly those prices could disappear.

Only then did Noah understand:

A visible price is not always the price available for the entire journey.

Hidden Financial Concept

Forex Liquidity and Slippage

A quoted market price does not necessarily guarantee that an entire order can be executed at exactly that price.

In forex and CFD markets, available liquidity, order size, market volatility and execution conditions can affect the price at which an order is filled.

During fast-moving or less liquid market conditions, the execution price may differ from the price visible when an order is submitted. This difference is commonly known as slippage.

Slippage can be negative or positive depending on market movement and execution conditions.

Industry Mapping

Investor Warning

Forex and CFD orders may not always be executed at the price displayed when an investor submits an order. Liquidity, volatility, order size, execution model and rapidly changing market conditions can affect the final execution price.

Investors should understand a broker's order execution policy, pricing model, spread, slippage practices and order types before trading. A displayed price should not be interpreted as a guarantee of execution at that exact level.

Want to learn more about how forex trades are executed? Follow BrokersView and use our [Brokers] page to review a broker’s regulatory information before making a decision.

Related Reading

• The Forex Broker’s Seal
• The Lantern Keeper’s Rule
• The House With Two Doors