Insufficient liquidity on a major? | Forex Factory

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Insufficient liquidity on a major?

  • #1
  • First Post: Mar 6, 2009 8:41am Mar 6, 2009 8:41am
Hi,

thought I'd share this as its a first for me - specifically a small order I had (4 minilots) on GBP USD hit the take profit but did not get filled due to:
Quote
the limit price was reached and the order went into process. The limit order was unable to be filled at the price requested so it went back to waiting. The limit price was not reached again, so the order did not go into process again.

Limit orders are often filled at the requested price. In cases where the liquidity pool is not large enough to fill a limit order, the order will be rejected and reset until the order can be filled. We will be unable to make an adjustment on the position since the limit order was unable to be filled due to insufficient liquidity.
NOW...given the size of the order,asserting that on a major there was insufficient liquidity is, to me, absurd - beyond that I knew that brokers have a specific duty to make sure that the system run smoothly - specifically ensuring that all positions be filled if at all possible even holding them inhouse until a counterparty is made available....


Am I totally off base on this or not?


It is a major broker.


Thanks.
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #2
  • Mar 6, 2009 10:24am Mar 6, 2009 10:24am
Was your order price only quickly touched? Or did price exceed your order by a measurable margin and stay there for a while?

Did it happen during a news announcement? Sometimes there are so many orders on one side of the market and none or not enough on the other that your limit order will not get filled, no matter how small. And entering a market order is like playing ring toss at the carnival.

If you can post a chart and describe your order it would be helpful.
  • #3
  • Mar 6, 2009 10:35am Mar 6, 2009 10:35am
Hi,

I had 2 orders at the same level - one got filled the other did not - no news - not sure how long price stayed there as I wasn't here when it happened...nonetheless am I wrong in understanding one of the most important tasks the brokers' have is to ensure that the system flow as smoothly as possible - filling and if necessary, keeping orders inhouse that didnt find a counterparty at that particular moment until the counterparty is available?
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #4
  • Mar 6, 2009 7:18pm Mar 6, 2009 7:18pm
Quoting coscorp
Hi,

thought I'd share this as its a first for me - specifically a small order I had (4 minilots) on GBP USD hit the take profit but did not get filled due to:

NOW...given the size of the order,asserting that on a major there was insufficient liquidity is, to me, absurd - beyond that I knew that brokers have a specific duty to make sure that the system run smoothly - specifically ensuring that all positions be filled if at all possible even holding them inhouse until a counterparty is made available....


Am I totally off base on this or not?


It...
This is something that you get with retail brokers (fixed spread or commission built into spread) who are also small. Retail brokers always trade funds from within their own money supply only. Hence they might only have access to a couple of million dollars to try to fulfill orders. Little money to access equals less chance for orders to be fulfilled.

While a large retail broker like IBFX or Oanda, might have 20 million to a couple hundred million to try to fulfil orders with. In this case this is a good argument for trading with the big retail forex companies. (This is where most of the big brokers are). But still they are retail brokers and again they always trade funds from within their own money pool only. Medium to large amount of money to access equals medium to large chance for orders to be fulfilled.

While ECN brokers rarely trade with you at all. They give you direct access to the banks and other financial institutions. Hence their pool of money that they can fulfill your orders with is at least in the millions if not billions or trillions of dollars. Large or huge amount of money to accessequals large or huge chance for orders to be fulfilled.


There are brokers that call themselves ECN but really aren't, they only give you an ECN feed. Two brokers that I think are true ECNs are MBTrading and ATCbrokers, both small in comparison to IBFX and Oanda, but both massive in comparison IBFX and Oanda for the funds you get access to in order to fulfill your orders. True ECN's will have feed where USDJPY, EURUSD is between 0 and 1 pip all the time, and other YYYJPY pairs will be between 1 and 3 pip all the time (except GBPJPY 2-4).

As ECNs do not make money by charging you a massive spread, the ECNs will charge commission, usually somewhere between $2 and $10 per 100000 traded. The more money you have in your account the more money they can make out of you being successful because you trade larger amounts. Hence the ECN broker may have an incentive for you to succeed in each trade. Generally the bigger the ECN the tighter the spreads, because they give you access to more bank offers, to the point where I have VERY RARELY seen the bid and ask price actually reversed.
  • #5
  • Mar 6, 2009 11:03pm Mar 6, 2009 11:03pm
Quoting coscorp
Hi,

I had 2 orders at the same level - one got filled the other did not - no news - not sure how long price stayed there as I wasn't here when it happened...nonetheless am I wrong in understanding one of the most important tasks the brokers' have is to ensure that the system flow as smoothly as possible - filling and if necessary, keeping orders inhouse that didnt find a counterparty at that particular moment until the counterparty is available?
I agree it's odd that one filled and one didn't. I asked about news announcements because your post showed up shortly after the NFP and I thought you might have been trapped in a position during the announcement.

Were your orders placed at the same time? If not, possibly your broker was able to fill your first one, but couldn't fill enough successive orders to reach your second one. If they were placed at the same time, and at the same price, it would seem unlikely that their liquidity would dry up at that very point, especially on minilots. They should have been bucketed in the same bucket and handled the same way. Not saying your broker is bad. I only use the term bucket to illustrate the way orders are gathered and grouped.

If you haven't read it yet, you should read the thread at the top of this forum, The Structure of Forex Brokers by DarkStar. His first seven or eight consecutive posts should answer any questions about brokers and what actually happens to you order once it's placed. I reread it every once in a while. It's possibly the best written series of posts I've seen on FF.

Hope it helps.
  • #6
  • Mar 7, 2009 3:58am Mar 7, 2009 3:58am
Hi,

orders were placed at the same time. The firm in question is FXCM - which, to my knowledge, is very well capitalized and according to what they state is an NDD broker with at least 9 major liquidity providers. So again...the issue is as strange as it is scary...a firm the size of FXCM not being able to fill a 40 K USD contract on G/U? Makes you think a bit....


I've started an application for IB ...less leverage but I think the quality and capacity of the firm far surpass FXCM at this point - to whom I've been with for nearly 2 years now...but this is just over the top...
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #7
  • Mar 7, 2009 5:03am Mar 7, 2009 5:03am
Its time to leave FXCM.

DO you honestly think someone stealing from you will explain why they are doing so?

Just send your fund request and go to another broker.
  • #8
  • Mar 7, 2009 6:50am Mar 7, 2009 6:50am
Most Market maker broker see some if not all of you deposit as theirs, why trade with a Market Maker? It makes no sense to me. Large ECN or Big Bank is the way to go for me - no question.
GBP/USD - 1.48 March
  • #9
  • Mar 7, 2009 11:16pm Mar 7, 2009 11:16pm
FXCM actually close your position without you knowing....they keep doing it repeatedly for every trades that i make. Stay away from them
  • #10
  • Mar 7, 2009 11:24pm Mar 7, 2009 11:24pm
Quoting PipHunter33
Most Market maker broker see some if not all of you deposit as theirs, why trade with a Market Maker? It makes no sense to me. Large ECN or Big Bank is the way to go for me - no question.
Which is your preferred ECN and why?
  • #11
  • Mar 8, 2009 5:32am Mar 8, 2009 5:32am
Quoting billflet
Which is your preferred ECN and why?
There are ECN feeds and then there are multi-ECN feeds, to the one broker. ATC have a single ECN, but if you are an institution (rep) they have dual ECN feed to offer you even better price quotes.

However to me I'm waiting for MBTrading to come online with MT4. I've seen their ECN quotes and they tend to be better than ATC. MBTrading also charge less per lot traded. However, at present, I tried to use their own platform and it was rubbish. So when they get MT4 ECN feed running it will be great only a couple months away and unlike ATC they won't be having any down time to switch data providers etc... once running.... cause they already have the feed.
  • #12
  • Mar 8, 2009 5:54am Mar 8, 2009 5:54am
Quoting coscorp
Hi,

thought I'd share this as its a first for me - specifically a small order I had (4 minilots) on GBP USD hit the take profit but did not get filled due to:

NOW...given the size of the order,asserting that on a major there was insufficient liquidity is, to me, absurd - beyond that I knew that brokers have a specific duty to make sure that the system run smoothly - specifically ensuring that all positions be filled if at all possible even holding them inhouse until a counterparty is made available....


Am I totally off base on this or...

EVen on ebs and reuters the liquidity in cable is not what it used to be a year ago. the spreads may sometimes seem reasonable until you realise the 45/48 spread you're seeing is only available in 1/1 or sometimes even less. If you had two bids at 45 each of 1m, and the offer went to 45 but only in 1m, then of course only one of your bids would be filled
  • #13
  • Mar 8, 2009 6:13am Mar 8, 2009 6:13am
As a new member i cannot express my preference regarding brokers as it is against rules until i have 100 posts in case i have an agenda (which i dont).
I will say that my preferred broker is not strictly an ECN as they get pricing and liquidity from one source, but that source is an interbank and one of the largest participants in the FX Market. They hedge all positions ans so they profit only by volumes so they want you trading more and larger - they have no interest in you loosing or stop hunting or any underhand behaviour. They are also a large UK bank who are regulated by the FSA.
GBP/USD - 1.48 March
  • #14
  • Mar 8, 2009 7:15am Mar 8, 2009 7:15am
Quoting shadowman
FXCM actually close your position without you knowing....they keep doing it repeatedly for every trades that i make. Stay away from them
that hasn't happened to me...yet..though I have had orders open and close 30 pips away on a spike in less than 1 second on a cross...but that can happen...so no issue for me there...

I'm not saying fxcm is good or bad (I love their platform for example)...just an experience I had which I can't really justify...
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #15
  • Mar 8, 2009 2:51pm Mar 8, 2009 2:51pm
Quoting aquaart
MBTrading also charge less per lot traded.
MBT charges one of the highest commission in the land.
1.3 pips round trip for a EURUSD
Most others charges a much lower 0.4 pip round trip. I dont know about ATC though.

Quote
However, at present, I tried to use their own platform and it was rubbish. So when they get MT4 ECN feed running it will be great only a couple months away and unlike ATC they won't be having any down time to switch data providers etc... once running.... cause they already have the feed.

MBT's current Navigator suck if you are more familiar with MT4 platforms.
Its a matter of getting used to.

MT4 is easy to use and userfriendly no doubt. But its got some nasty behind.
  • #16
  • Last Post: Mar 8, 2009 3:20pm Mar 8, 2009 3:20pm
Yeah I don't trust them (FXCM) at all even though I have an account there. If I wanted to trade 40K there I would enter 4 separate 10K market orders and use mental stops only. I have seen too many phantom price spikes and other weird things. One time when price started going against me and I was scaling out of a large position they sent me a popup for some B/S trading seminar that locked up my screen and could not be closed without shutting down my computer. Needless to say it cost me quite a bit, coincidence? Don't think so. Use them with caution.
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