What is a worked example of Last Look in Forex?

Direct answer

Last Look in Forex is a mechanism where a liquidity provider receives an incoming trade request but may later accept or reject that request using provider-defined rules. A “worked example” shows what acceptance vs rejection could mean for the executed price, while clearly separating fixed mechanics from variable market conditions.

Because the rules and outcomes are provider- and policy-dependent, any example must state assumptions explicitly and should not be treated as a prediction of real trades.

Mechanism or definition

A common way to describe Last Look is in two steps:

1. Request comes in: A client/order is routed to a liquidity provider (often through a trading platform). The provider can perform an immediate risk or sanity check.
2. Late decision window: The provider then applies Last Look rules during a short timing window. If the request is acceptable, the provider accepts and the trade proceeds (typically at the price/terms the provider makes available). If not, the provider may reject, slip the price, or offer a different fill, depending on the provider’s implementation.

Key point for the worked example: the mechanism is the same conceptually (accept/reject after receipt), but the exact behavior depends on details you can only verify in a provider’s execution policy and the platform’s terms.

Evidence or example

Below is a purely illustrative numerical scenario. It is not based on live prices.

Assumptions (state them up front)

• The client submits one buy order for 100,000 units (1 lot is a unit convention; the arithmetic here focuses on price differences).
• The platform sends a trade request to the provider.
• The provider has a Last Look window where it may accept or reject.
• Assume the provider will quote and fill using the following simplified convention:
  • If accepted, the fill occurs at Provider price A = 1.1000.
  • If rejected, no fill occurs, and the order is treated as not executed (a “no fill” outcome). Some providers instead reprice; here we choose “no fill” to keep the comparison clear.
• Assume a standard FX “pip” size where 0.0001 equals one pip in the quoted price.
• Assume we measure impact as the difference between accepted fill and “would-have-been” fill at the originally referenced price.

Scenario

• At the moment the client’s request is created, the referenced price is 1.0998.
• Just before the provider’s Last Look decision, market moves in a way that triggers the provider’s internal threshold (details are policy-specific).

We evaluate two cases.

Case 1: Last Look accepts

• Accepted fill price: 1.1000
• Difference vs referenced price: 1.1000 − 1.0998 = 0.0002 = 2 pips
• In this illustrative model, the client ends up 2 pips worse than the referenced price.

Case 2: Last Look rejects

• Rejection outcome: no fill
• In this illustrative model, the client gets 0 pips of P&L from the trade because it does not execute.
• But the client still faces the practical effect that they remain unfilled while the market may continue moving.

What the example demonstrates

• Last Look changes the mapping from “request received” to “execution occurs.”
• The same incoming request can lead to different outcomes (accepted fill vs rejection/no fill) based on Last Look rules.
• A worked example remains valid only under the stated assumptions; if your provider’s policy uses repricing instead of no-fill rejection, the numerical conclusion changes.

Limitations and risks

1. Provider policy is variable: The accept/reject logic and what “rejection” means (no fill vs repricing vs partial behavior) are determined by the provider’s own documented rules. Without that, you cannot verify which failure mode applies.
2. Timing is critical: Last Look typically involves a short decision window. Market movement during that window can change the outcome, even if the client’s intent is identical.
3. Costs and execution environment: Real results also depend on spread, commissions, and any slippage handling. These costs are not included in the simplified example.
4. Over-generalization risk: Historical relationships between quote changes and Last Look behavior do not establish how a provider will treat future orders.

A material failure mode to consider in any check is: the order appears to be actionable, but execution may not happen (rejection) or happens at different terms (repricing/slippage).