Is this a common broker procedure??? (news slippage) | Forex Factory

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Is this a common broker procedure??? (news slippage)

  • #1
  • First Post: Jan 24, 2007 8:25am Jan 24, 2007 8:25am
I've been following things here and been trading for maybe 9 months now, so I still consider myself a newbie, so I have to ask if what happened to me early this morning is common.

I had placed a sell - entry stop on the gbp/usd last night before going to bed. It was set up with a small 15 pip limit. I guess that at 4:30am ET. this morning, some news came out that jumped the price - over both my entry and my limit. My broker (fxsol), filled the order about 15 pips lower then even what my limit was set at. Needless to say the price went right back up and I was stopped out. So, when I get up this morning and I check my account I see a nice big loss. I called the broker and argued that an order where the entry and limit was both jumped up by this supposed spike shouldn't have been opened in the first place. But to avail. The dealing desk guy, who must have graduated at the top of the 'how to be snotty' class, told me thats what I get for trading at news time.

I was just wondering if this is a common procedure or something specific to this broker.
  • #2
  • Jan 24, 2007 9:28am Jan 24, 2007 9:28am
Think of it this way. You've been looking at an Ipod at your local store. The price is $299. You decide to wait a bit to see if the price comes down. Two weeks later you decide you have to have it. The price is now $320. You can't argue that you should get it at $310 because that price never existed. The same is what just happened to you. With the price gap, your order price never existed.

However, you asked your broker to fill your order at a specific price. Because it never existed, they filled you at the next best thing which is the first price that existed past your order. Your broker was not at fault here. All brokers in all markets do this. There are some fx brokers that allow you to specify how much slippage you're willing to accept. You might want to look into them.

One thing you should do though is check at least two other data feeds to see if the gap existed. You'll need to check tick data to verify this, maybe the 1 minute chart will show it. It's always a good idea to have two different feeds. FX brokers are not the most ethical businesses in the world.

If you're going to be trading with 15 pip limits, you might want to be present when doing so. And he's right, that is what you get when trading news, it's part of the game so you have to learn to trade these things properly, and accept that this happens at times.
  • #3
  • Jan 24, 2007 10:36am Jan 24, 2007 10:36am
Quoting SpecialK
I've been following things here and been trading for maybe 9 months now, so I still consider myself a newbie, so I have to ask if what happened to me early this morning is common.

I had placed a sell - entry stop on the gbp/usd last night before going to bed. It was set up with a small 15 pip limit. I guess that at 4:30am ET. this morning, some news came out that jumped the price - over both my entry and my limit. My broker (fxsol), filled the order about 15 pips lower then even what my limit was set at. Needless to say the price went right back up and I was stopped out. So, when I get up this morning and I check my account I see a nice big loss. I called the broker and argued that an order where the entry and limit was both jumped up by this supposed spike shouldn't have been opened in the first place. But to avail. The dealing desk guy, who must have graduated at the top of the 'how to be snotty' class, told me thats what I get for trading at news time.

I was just wondering if this is a common procedure or something specific to this broker.
I'm not one to argue with people's trading strategies, and use what you are comfortable with, but I'm sure many people would probably agree with me that a 15 pip s/l is a very small margin of error to trade with. GBP/USD moves about twice as fast as say eur/usd or other cheaper pairs because GBP is worth so much more. 15 pips on GBP/USD is like 7 or 8 pips on eur/usd. Stop loss limits of 100 pips on cable would not be uncommon because of its huge moves. Cable can turn around on you in an instant and wipe you out for a 15 pip s/l. Think of it this way if you need to. If you lost X dollars for 15 pips and that is the most you want to risk for 15 pips, then reduce the size of your position so that your X dollars loss won't happen unless Cable moves 100 pips against you. Sure, you have to let Cable run a little longer to make the same amount of money, but with CABLE nothing is impossible.

I routinely use smaller positions on Cable allowing easily for -300 to -400 pip moves and often have to take advantage of that huge S/L margin before waiting to see it come back and hit my T/P levels. If your S/L this morning would have been greater, you would never have lost your position and would now be up close to +100 pips.

Another good example is for a trade I just did over the last day and a half. I felt gbp/usd was getting overvalued and ready to come back down soon after the run up from the interest rate announcement earlier this month. I bought into it around 1.98, saw it go all the way up 1.9910, then tumble. Earlier today my +100 T/P hit and wham, I'm up.

One final note, if your broker doesn't allow you to set your lot sizes down small enough to make 100 point S/L feasible, investigate other brokers because this is a subtle method of forcing you into bad money management. I had a broker in the beginning that the smallest lot size I could do was 1 lot, and only in increments of 1 lot. It was very limiting on my trades and I ended up never making money with that company. Turned around and went to Oanda where they let you trade as little as $1 (yes, thats one dollar) if you want and my success rate on my trades jumped dramatically because now I could afford to hold on to the proper S/L ranges.

Hope you find this helpful,
GirlFlyer
  • #4
  • Jan 24, 2007 3:20pm Jan 24, 2007 3:20pm
Quoting Dopey
However, you asked your broker to fill your order at a specific price. Because it never existed, they filled you at the next best thing which is the first price that existed past your order. Your broker was not at fault here. All brokers in all markets do this. There are some fx brokers that allow you to specify how much slippage you're willing to accept. You might want to look into them.
then brokers need to implement a rule to NOT carry out limit orders when it is not at that exact price the client had put in. then people would be grateful that their orders weren't executed
  • #5
  • Jan 24, 2007 3:25pm Jan 24, 2007 3:25pm
Quoting hilmy83
then brokers need to implement a rule to NOT carry out limit orders when it is not at that exact price
do you mean "stop" orders? no broker will fill you at a worse price if it is a limit order, that would be impossible and go against the very definition of a limit order.

btw, if you did mean stop order, there is an ordertype out there that will do this. its called a "fill or kill" meaning if your stop order cant get filled at your exact price, the order is cancelled. i havent seen this in forex but we have this in futures.
Relax and be happy.
  • #6
  • Jan 24, 2007 3:27pm Jan 24, 2007 3:27pm
oh and Special K, yes this is common in every market in the world. read the threads in the broker forum and you will see many bitching about this, but really it is just a lack of understanding for how financial markets work.
Relax and be happy.
  • #7
  • Jan 24, 2007 4:02pm Jan 24, 2007 4:02pm
  •  tesla
  • | Joined Oct 2006 | Status: Friendly Neighborhood Programmer | 533 Posts
Quoting SpecialK
sell - entry stop... with a small 15 pip limit.
I'm confused by this. Was it a stop limit sell order or was it a stop sell order with a stoploss? If it was the former, than you shouldn't have received a worse fill than the limit price. If it was the latter, you would have been filled at whatever price the dealing desk decided to let your order fill and then stopped out.
  • #8
  • Jan 24, 2007 4:09pm Jan 24, 2007 4:09pm
my understanding was that he meant he had a sell stop (to enter) with a contingent buy limit order (to exit profitably). i didnt see him mention his stoploss order, but i imagine he had one in there.
Relax and be happy.
  • #9
  • Jan 24, 2007 4:12pm Jan 24, 2007 4:12pm
Quoting merlin
btw, if you did mean stop order, there is an ordertype out there that will do this. its called a "fill or kill" meaning if your stop order cant get filled at your exact price, the order is cancelled. i havent seen this in forex but we have this in futures.
I have this on my Currenex platform.
  • #10
  • Jan 24, 2007 4:36pm Jan 24, 2007 4:36pm
  •  tesla
  • | Joined Oct 2006 | Status: Friendly Neighborhood Programmer | 533 Posts
Quoting merlin
my understanding was that he meant he had a sell stop (to enter) with a contingent buy limit order (to exit profitably). i didnt see him mention his stoploss order, but i imagine he had one in there.
I suppose I should wait for clarification before forming an opinion then. The first post mentioned getting stopped out... perhaps the 'limit' was really the stop?


I actually want to hold this up as an example... it's really, really important to understand what exactly you're asking/authorizing your broker to do with your money.
  • #11
  • Jan 24, 2007 8:26pm Jan 24, 2007 8:26pm
Quoting Darkstar
I have this on my Currenex platform.
man between you and turbo you guys are going to have me on currenex in no time
Relax and be happy.
  • #12
  • Jan 24, 2007 8:54pm Jan 24, 2007 8:54pm
Quoting merlin
man between you and turbo you guys are going to have me on currenex in no time
Well, I would be pushing even harder but the lack of oco and if-then orders is a bit of a hastle for most people. We should have them soon though...
  • #13
  • Jan 25, 2007 7:57am Jan 25, 2007 7:57am
Just to clarify, i had placed an entry stop to sell gbp/usd. I had placed a limit (take profit) of 15 pips. The price spike jumped over both my entry and take profit, and the order filled about 10 pips lower then my take profit limit was set at. I was using a stop loss of 30 pips.

I've just been trying out a little methed to take routinely take small bites out of the market. This was the first time something like this happened.
  • #14
  • Last Post: Jan 25, 2007 8:03am Jan 25, 2007 8:03am
Quoting Darkstar
Well, I would be pushing even harder but the lack of oco and if-then orders is a bit of a hastle for most people. We should have them soon though...
They have the OCO on the demo so it's coming soon
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