Buy/sell STOP uses a normal or level2 quote on ECN/STP?

Does a BUY STOP execute when the ASK price is reached on a normal quote or does the BUY STOP also looks at level2 quotes on ECN/STP system?
This has been bothering me for many weeks now as I would like to understand this a bit more.

Eg.
BUY STOP: 1.00002
ASK: 1.00001
Level2 ASK quotes: 1.00002, 1.00003
Would the BUY STOP execute a buy in this case (on ECN/STP)?

All opinions, comments and insights will be highly appreciated.

---
Edit the example to be for 5-digit after decimal system, added a 0 on each line

if you have a buy stop, you are telling the system to buy at your price or better,
it will buy lower if it can.
but that is not sure it can all the times.
if the market is really fast and there is a lot of other buyers,
there is a possibility they could snatch the lower price before you can.

same thing goes for sell stops, buy limits, and sell limits.

a market order will just get you in at any price.
you are then guaranteed a fill, it will still try to get the lowest price.
but the same thing apply there. the market can outrun you.
and you can get a very bad fill because of it.

you will usually not get these bad fills with limits.

in your case if it is a ecn, if will fill you if there is someone willing to sell to you
at that time, if it's not a ecn, it will not fill you ,
if I am wrong then pls correct me

Roughtrader thank you for your reply.

>if you have a buy stop, you are telling the system to buy at your price or better,
>it will buy lower if it can.

I don't think this is accurate as per definition on investopedia.com

"An order to buy a security which is entered at a price above the current offering price. It is triggered when the market price touches or goes through the buy stop price."

So BUY STOP should execute a MARKET BUY (which might be lower or higher) when the ASK price touches the STOP price.
My understanding is that, FIRST, the MARKET ASK price has to touch the STOP price or be higher first then only the BUY would be executed.

So now the question is what constitutes a "Current offering price", is this the normal ASK price or does it include level2 prices.

Yes, I agree with you regarding the fill price. The fill price could be different.



However, my concern is on WHEN the BUY STOP should execute the BUY based on my example above.
Would the BUY STOP execute a buy?

thanks for correcting me,
a buy or sell stop, will trigger when price touch your price,
after that, it will look for the best available price,
and that might be higher than your price or better,
but usually within the spread.

a limit order will fill you at your price or better but never worse....

that would be the normal explanation or execution.
when it comes to ecn and level 2,
you can sometimes even buy at the bid and act as a market maker your self.
that is, if it is a true ecn

Again thanks, Roughtrader.

What puzzles me is why did my broker EXECUTES a BUY when the ASK price did not touch my BUY STOP price. (highest ASK price was 0.00001) lower.
I got ALL TICKS BID/ASK not in MT4 but via downloading ALL TICK price from their download server. After going through it line by line, in that minute, the highest ASK price was lower than my BUY STOP price.

> Dear Client,
>
> We have checked your Stop order execution as well as quoting provided by our Liquidity Providers (LP).
> Price was valid and order was executed properly by the terms of ECN/STP trading model.
>

Is this normal for other brokers or just this broker (in your opinion)?
If their internal TICK records are not accurate then I wonder how they are running their business.

The quotes do not have to match with the actual execution. For example, a MT4 Broker can display quotes from liquidity source A, but exectute trades on source B.

Same with institutional brokers, I heard that most instituional brokers simply take FXCM's prices as their quotes.

yes I am aware of this, in many cases it is nothing else but an illusion.
because you are watching a chart that is only bid prices. a bid chart.
there is no way you can watch a ask chart in mt4,
we can only add the ask line to better see when an order is touched.
without the line, it will look like the order never is touched and then gets filled anyway.
not saying this is your case, but it might. yes trader121 is right too,
unless you are on a ecn, that can happen, mm's sometimes have a lot of wierd fills

Thank you trader121 and roughtrader.

Here is the screenshot as well as the TICK log, please me know what your opinion is on this.
The MT4 "ASK" chart HIGH is exactly 10 points higher than the TICK log. All these data are from the same broker.

This is the BUY STOP execution: 2015.08.05 20:00:02.170 '880169': pending order #48881660 buy stop 0.96 EURUSD was modified -> price: 1.09328 sl: 0.00000 tp: 0.00000
2015.08.05 20:24:17.260 '880169': order #48881660 buy stop 0.96 EURUSD at 1.09328 activated at price 1.09316

The fill price is 1.09316, this is fine. I am not focusing on this point. I have no problem with this price.

Here is the log:
Tick data log:
2015.08.06 00:24:15.079 1.09241 500000 1.09248 220000
2015.08.06 00:24:15.252 1.09252 1000000 1.09251 1000000
2015.08.06 00:24:15.413 1.09268 1000000 1.09258 1902000
2015.08.06 00:24:15.638 1.09318 2400000 1.09308 500000
2015.08.06 00:24:15.909 1.0932 250000 1.09327 1500000
2015.08.06 00:24:16.119 1.09305 100000 1.09312 219000
2015.08.06 00:24:16.318 1.09291 100000 1.09294 2100000
2015.08.06 00:24:16.529 1.09276 2000000 1.09292 719000
2015.08.06 00:24:16.712 1.09273 100000 1.09281 500000
2015.08.06 00:24:16.868 1.09267 2000000 1.09281 500000
2015.08.06 00:24:17.019 1.09268 2395000 1.09282 2090000


Here part of the screen shot from MT4 EURUSD.ask:


Please note that this is from the EURUSD.ASK M1 chart.

My BUY STOP was at 1.09328 and the highest price from TICK log was at 1.09327 while MT4 ASK shows highest to be 1.09337

Strange? Please let me know your opinion.
Which data is correct? The TICK log? The MT4 chart or whatever the broker decides?

Edit: incorrect high ask price on MT4, should be 1.09337

it seem strange, it's only 1 tick's difference though. with market orders this could happen, they guaranties you a fill even if there are no sellers within the spread, if not , it has to go outside for the best available price., that is how market orders work, and buy and sell stops are basically market orders and works just about the same way, with the difference that price must first touch the price you set. in your case it didn't which is strange, unless those ticks are bid ticks, that would explain it, I don't have my mt4 now so I can check that. but also, let's face it, the quality on the feed from brokers aren’t very good sometimes.. maybe that’s the reason why pro traders use quality feeds like esignal etc?

Roughtrader, thank you very much! I am learning something here.

I find it STRANGE that the same broker is giving the TICK data and still have 10 points difference (on a 5-digit after decimal) from the MT4 data. Makes me wonder where they are getting the MT4 data from. (Did they simply add 10points to the TICK feed and use it in MT4?). If I am not mistaken, the TICK data I received is via FIX protocol as I think that TICK downloader is using FIX.


Few points which you could help me by correcting my understanding.

1) Where is the BUY STOP order actually stored? Is it on the brokers' MT4 server or is it actually at the LP? (I am not referring to BUY execution, I am refering to STOP placement only)

2) If I get a good TICK feed from major broker like FXCM/LMAX (or other sources which you could suggest) and I execute it from different ECN brokers, should I be able to get similar pricing? or would the price be based on each brokers' feed?

3) How does MM work? Do they honor the pricing from a good TICK feed or would the buy order be based on their own feed?



Again, thank you in advance for your insight.

Yes it is possible they can add pips to the feed, some brokers are market makers, they make their own market,
in those cases they often juice up the spread, and I am sure that if they can alter the data in one way, they can do it in other ways to.
I have seen a very calm market on one broker and the other have a 300 pip spike. probably the brokers stop run
so yes from broker to broker there can be a big difference.

I am not 100% sure, but I think that your stop orders are stored on your machine until they reached your price,
when it is touched, a market order are sent automatically to the broker and you get an instant fill, hopefully.
the same thing would go for stop losses, but if they still are able to see where you have your stop loss and orders, I can't say 100%,

but it is likely they can. MT4 are built for market makers and for retail traders,
when we found out about the infamous plugin, we can with certainty say that this is not a platform to trust.
I think you should always be suspicious about the brokers own tick feed. as he might not always work in your best interest.
they might use one feed for the clients and the real feed for them selves. some brokers are known to have several different data feeds.
one for the small account's and then it gets better and better the more cash you got.
but the real deal they probably wont show you.
I would not still trust their best feed. or any brokers best feed.

the more money you got on the line, the higher is the chance that someone is going to try and take advantage of it.
so if you are serious you should get your feed from esignal or simular which are compleatly independent from the broker.
it will cost you but in the end it can be worth it. especially if you have a large account.
and I think most of them throw in real time news too.
I hear esignals feed are great but there are also others.

if you have one of those data feeds, that is the real thing. the unaltered price from the market.
then you would work on that feed alone, and connect to your broker via fix protocol,
but you can't run those feeds on MT4. Mt4 is not built to handle that.

in that case you are going to have to get an independent professional trading platform such as esignal.
they have both data feed and a platform, but you can run other pro platforms on their feed as well.
these things are very expensive though. I am sure you would be able to get a much better pricing and a lightning fast execution.
you also need more capital to open such account with your broker because it have certain privileges.
yes you would get the same price as the real market, unaltered in any way and you could trade on the feed from anywhere,
on any broker you have a fix protocol account with, from the same platform and data feed.

the feed is the cheapest part, it will be on a monthly fee. but the pro platforms will be more expensive.
you are likely to have to buy a platform and they can sometimes cost several tousands depending wich one you get.
there are plenty to chose from, but I rate esignal the best, I think the last time I looked, the price was 4000.
but then you have the best a trader can get I wish some day I can get it my self.
but there are cheaper alternatives.

Thank you roughtrader. Your reply has been very helpful. I am quite new here and my trading did not go well in the beginning but perhaps that's what led me to investigate each and every transaction in detail and I am learning a lot from this forum as well as other forums. It was a small amount of fund which was lost for the transaction above, but it got me to learn many things. I am considering to file a case with the regulator (I am not sure how far I will get, but I just hope that some ruling will come out).

I am actually considering developing my own FIX client. However, as of now, I don't have short-term strategy, so I don't think I will need to use FIX for now. I am considering a few strategies where it'll be a very long hold like an investment. I don't think FIX would be needed in this case. (What's your opinion on this?)

Thank you for your recommendation of the signal provider. I will have to look into it.

BTW: The above transaction was done on FXOpen, and I am not getting a reply from them anymore (their last message was "executed properly by the terms of ECN/STP model"). FXOpen also offers access to FIX without any big deposits. I thought this was a very 'Open' broker. My opinion for them is starting to change.

Do you think I should post this under Broker discussion as well? Your opinion and others opinion will be highly appreciated.

Where does the PENDING orders get stored for MT4? LIMIT orders, STOP orders, etc.
According to the links below, they are stored on the MT4 server (except for Trailing stop).
From this I am inclined to think that my broker's MT4 feed is different on their TICKs log and on MT4 platform as the trade was executed by MT4 server.




Here it is from: http://www.fxsoftwaresolutions.com/c...nding-sl-tp-ts
The nice thing about the Pending Orders, Stop-Loss Orders and Take-Profit Orders is - they are placed through your trading platform but they are stored, monitored and executed on the broker's side. This way, even if you lose your internet connection or there is some other trouble with your computer, your broker's server will automatically execute the orders at the correct price.

http://www.forexltd.co.uk/trade/trad...rderprocessing
ORDERS
All trading operations are carried out by the Client independently with sole usage of MetaTrader 4 Forex Ltd trading platform. All market and pending orders of the Client are stored on the trading server and can be managed and tracked from the Client's trading terminal.
For more information on order placement and order types, please visit our Orders page of the website.
TRAILING STOP
The only order not stored on the server is Trailing Stop, which remains active till its cancellation by the user, closing of the trading terminal or activation of the Stop Loss order for which it was originally developed.
Trailing stop is rather a function, and not an order, that modifies a Stop Loss depending on the price movement. This order is set at certain distance from the current market price. In case when the price moves into the profitable direction the Stop Loss order will automatically follow it. However, if the price goes in the undesired direction, the stop Loss Order remains unchanged. Trailing Stop allows cutting losses and running profits. This tool is useful in case when the price moves intensively in the same direction or when a trader is not able to constantly watch the market.

Glad I could be at help, I don't want to slander any brokers here, but Fxopen does not exactly have a good reputation. there are too many red flags in my opinion.

thanks ram007 for clearfying the stop orders.

You are most welcome, and thank you too for sharing your view as well.
Thank you to other participants as well.

From my technical background, I am inclined to think that even FIX server could be modified to work just like MT4 / MT5 plugins which cheats the traders.
We might see FIX plugins available in the market in the near future. I would not be surprised.

I am starting to feel that picking a broker especially for short-term trading is almost a gamble nowadays.