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Broker Price Manipulation?

  • #1
  • First Post: Aug 17, 2004 8:58am Aug 17, 2004 8:58am
Just wondering if anyone who trades with FXCM believes this could be a problem? I have recently begun placing straddle trades with them using entry orders and I have had no problem getting my orders filled correctly.

This morning, I placed a straddle trade with ENTRY ORDERS in the GBP/USD. I used FXTrek II Charts for this (these are the charts supplied by FXCM and have a direct feed from FXCM). I also have 2 other sets of charts, one from MetaTrader and another from CFG. According to my FXCM trading platform and FXTrek II charts, at about 08:31 (EDT) the market dipped about 47 pips to 1.8313 triggering my SELL order. Within about 30 seconds, it then spiked up nearly 100 pips, stopping out my SELL ORDER and triggering my BUY ORDER. According to my MetaTrader and CFG Charts, the initial dip to 1.8313 never happened, so my SELL ORDER should never have been triggered. This really bothers me. It makes me think that FXCM is manipulating the prices and deliberately running stops. Is there anyone else here that trades with FXCM, and in particular, traded a straddle this morning or in the past, who has had this problem? Any feedback would be greatly appreciated. Even if you trade with another broker other than FXCM, I would like to get your input also.

Thanks.

CA1961
  • #2
  • Aug 17, 2004 9:08am Aug 17, 2004 9:08am
My sell order was not hit, but my buy order was gapped over. Not recognized at all by the dealing desk. As I saw the price rise I kept thinking that my order would be placed at my entry price. Nothing happened. You know how your order changes color when it is recognized but not yet put into the Open Orders window. That didnt happen... on the way up. And I kept waiting for my order to be recognized.

Well it was recognized, but on the way down. I got out immediately with only -2 . I really have no ground to stand on since my order never existed in their records except when it was hit on the downside.

LOU
  • #3
  • Aug 17, 2004 9:11am Aug 17, 2004 9:11am
Quoting CA1962
Just wondering if anyone who trades with FXCM believes this could be a problem? I have recently begun placing straddle trades with them using entry orders and I have had no problem getting my orders filled correctly.

This morning, I placed a straddle trade with ENTRY ORDERS in the GBP/USD. I used FXTrek II Charts for this (these are the charts supplied by FXCM and have a direct feed from FXCM). I also have 2 other sets of charts, one from MetaTrader and another from CFG. According to my FXCM trading platform and FXTrek II charts, at about 08:31 (EDT) the market dipped about 47 pips to 1.8313 triggering my SELL order. Within about 30 seconds, it then spiked up nearly 100 pips, stopping out my SELL ORDER and triggering my BUY ORDER. According to my MetaTrader and CFG Charts, the initial dip to 1.8313 never happened, so my SELL ORDER should never have been triggered. This really bothers me. It makes me think that FXCM is manipulating the prices and deliberately running stops. Is there anyone else here that trades with FXCM, and in particular, traded a straddle this morning or in the past, who has had this problem? Any feedback would be greatly appreciated. Even if you trade with another broker other than FXCM, I would like to get your input also.

Thanks.

CA1961
Well, that's more confirmation that they DO manipulate prices. The same thing happened on August 6th during the non-farm payroll announcement. FXCM was the only broker I saw that showed a 30 pip spike DOWN before going 200 up. I assume they are doing that in order to discourage straddling before news.

Regards,
Bonete
  • #4
  • Aug 17, 2004 9:39am Aug 17, 2004 9:39am
Well, what can we do about it?

Put FXCM on demo? Transfer fund balance to another broker?
Have a news trading acct with a different broker? Keep FXCM for other types of trading?

I will have a 'chat' with them later.

LOU
  • #5
  • Aug 17, 2004 9:48am Aug 17, 2004 9:48am
For what it is worth

you: Hello, a number of traders noticed that on the FXCM charts this a.m for the GBP/USD there was a deep spike down. We also noticed that it did not appear on charts by other providers. Traders are talking about price manipulation.
(FXCM): yes, that was a misquote for the GBPUSD, the actaul low was 1.8370



LOU
  • #6
  • Aug 17, 2004 9:49am Aug 17, 2004 9:49am
yes, that's my case also on the gbp today I have mini account with REFCOFX which uses the FXCM platform

at 8:25 I placed 2 orders

buy at 1.8414 SL 1.8396

sell at 1.8761 SL 1.8376

and you know what happened????

well, the orders where executed at the same time and in the closed trades (never appeared on the open position window) it just reported the following:

GBP sold 1.8761 exit at 1.8414 for a loss of 53 pips.....

that's right, from the two entry orders it just came only one resulting trade with a loss. In the graph (fxtrek II using refcofx data feed) it didn't touch the 1.8761 level (at that moment when my orders where executed)

i'm truly disappointed with it!!

seems it's much more profitable for the broker to execute the orders incorrectly instead of not allowing us to place straddle trades!!!
  • #7
  • Aug 17, 2004 9:59am Aug 17, 2004 9:59am
Quoting Lou
For what it is worth

you: Hello, a number of traders noticed that on the FXCM charts this a.m for the GBP/USD there was a deep spike down. We also noticed that it did not appear on charts by other providers. Traders are talking about price manipulation.
(FXCM): yes, that was a misquote for the GBPUSD, the actaul low was 1.8370



LOU
LOU:

This might be good news. I've already called FXCM and disputed my trades. If this was a misquote , then I should currently have an open short position and be up about 80 pips per lot (I have 7 lots going). This could get interesting.

CA1962
  • #8
  • Aug 17, 2004 10:04am Aug 17, 2004 10:04am
please keep posting on this incident.
I've always used direct access brokerage (IB) for futures etc. as they are 100% transparent and instantaneous. You face the market directly.
Unless you fancy trading pro accounts with massive lots sizes you aren't going to get direct FX access at interbank rates. Maybe next year, eh ?
  • #9
  • Aug 17, 2004 10:17am Aug 17, 2004 10:17am
We had a thread along this idea during the payroll dip that friday. Basically what FXCM said was that they quote aggressively and because they recieve more accurate quotes even during volatile markets, they often show data that other brokers do not. It appears that this can be a bad thing pretty often.

The question now is, is it necessarily true what they say about the quoting, or are they just covering up a scam to make money?

If you do a little research into how these brokers make money from your transactions, you'd realize they don't make more money when someone loses out. You aren't getting your profit from the broker, you're getting it from other people that buy or sell in opposition to you when you buy/sell units of currency. The broker gets their money from the spread you pay when you enter/exit the market. They could care less wether you win or lose because that does not affect them, but since winning traders trade more and more often, why would they want you to lose?
~Will
  • #10
  • Aug 17, 2004 10:25am Aug 17, 2004 10:25am
The use of options avoids these spikes, broker or non broker caused. The way I do it is use options for big data and do as best I can with market orders for small things. Today I did nothing as I couldn't see for the life of me how cpi was going to be out of line in ppi was about in line but even if I had it clear there are two trendlines in place which are marking out the euro range so you could cover each part of the trade and make a profit of about 30%. This part takes experience and I've only had to do it once in my short time of options trading so I'm no pro but its a whole lot easier than worrying about dodgy fills. I always say I don't mind losing money if its my fault and my bad trade, but we shouldn't have to stand for manipulation so if I smell it Im out of there because its just not worth the hassle.
  • #11
  • Aug 17, 2004 10:46am Aug 17, 2004 10:46am
Quoting orbit500
please keep posting on this incident.
I've always used direct access brokerage (IB) for futures etc. as they are 100% transparent and instantaneous. You face the market directly.
Unless you fancy trading pro accounts with massive lots sizes you aren't going to get direct FX access at interbank rates. Maybe next year, eh ?
I have Direct Access account with IB and this is exactly the reason I was put off trading futures via spread betting.

As for FXCM, I have an account and asked about the GBP incident (I was stopped out too). In all honesty I felt like I was being accused of lying first off but then the rep said that the U.S confirmed the misquote.

If such matters are resolved then I guess long term this is fine, but I can't understand why this should be an issue as often as it is as they make money regardless, it's only clients who stand to loss.

If all of us were to make a top 5 of brokers who would come out as being the broker we could have the most confidence in?

Not sure FXCM would be one of them at the moment.
  • #12
  • Aug 17, 2004 11:14am Aug 17, 2004 11:14am
Actually after the farm reports last month I believe I started running OANDA and FXCM demos together. It was interesting. You should try it and see who follows who.
My 2 cents,
  • #13
  • Aug 17, 2004 11:39am Aug 17, 2004 11:39am
Quoting CA1962
LOU:
This might be good news. I've already called FXCM and disputed my trades. If this was a misquote , then I should currently have an open short position and be up about 80 pips per lot (I have 7 lots going). This could get interesting.
CA1962
I too got caught by that FXCM GBP phantom spike that does not show on the chart and want to know what is up with that.
  • #14
  • Aug 17, 2004 11:47am Aug 17, 2004 11:47am
Quoting CA1962
LOU:
This might be good news. I've already called FXCM and disputed my trades. If this was a misquote , then I should currently have an open short position and be up about 80 pips per lot (I have 7 lots going). This could get interesting.
CA1962
I too got caught by that FXCM GBP phantom spike that does not show on the chart and want to know what is up with that.
  • #15
  • Aug 17, 2004 12:41pm Aug 17, 2004 12:41pm
It does seem very suspicious that Refco/FXCM are the only broker who has a "policy" against straddling entry orders before news, and the only broker who shows these unexplained spikes (excuse me, a "misquote" yeah right) as news is released.

Has anybody heard of coesfx? (www.coesfx.com) they say they are not a market maker or trading desk but instead an ECN that gives direct anonymous acces to the best real time prices. They were showing 1-2 pip spread on the majors. I had not heard of them before and wonder maybe this is an alternative to the FXCM scammers.

According to their website:

"Because COES does not operate a trading desk, each participant on the network is provided the ability to post bids and offers through the COES Level 1 Trading Platform. The COES pricing is derived directly from a number of partners in our network such as banks,FCMs, IBs, fund managers and every trader on our ECN. Trading with COESfx provides traders with live and executable process. Each participant on the network is in fact a market maker, trading on direct prices.

By trading with COESfx, every participant can take advantage of the power of COES Level 1, a fully compliant non-matching
system that provides traders with features such as:


No Trading Desk Intervention
No Price Manipulation
Anonymous Trading
Continuous 24-Hour Liquidity"
  • #16
  • Aug 17, 2004 12:49pm Aug 17, 2004 12:49pm
Quoting SteamTrader
I too got caught by that FXCM GBP phantom spike that does not show on the chart and want to know what is up with that.

SteamTrader:

If this happened to you then you should definitely call them, tell them what happened, and dispute the trade.

I just talked to an FXCM Rep for the second time this morning, and he confirmed what Lou posted earlier -- that there was a "misquote" and the lowest price at 8:32 AM (EDT) was 1.8370 (not, 1.8313 as reported). I had an Entry Order to sell GBP/USD @ 1.8365, and if you look at your 1-minute chart, it should not have been triggered until between 8:41-8:42 AM. I should still be in the trade, and + 80 to 90 pips per lot. They told me that they would review my trade and call me back. I'll post the results here after they call.


CA1962
  • #17
  • Aug 17, 2004 1:13pm Aug 17, 2004 1:13pm
Quoting vdeluca
It does seem very suspicious that Refco/FXCM are the only broker who has a "policy" against straddling entry orders before news, and the only broker who shows these unexplained spikes (excuse me, a "misquote" yeah right) as news is released.
I talked to the customer service reps at FXCM, they don't have a policy against straddling news. Can't speak for Refco, but as closely affiliated as they are, they are still two seperate companies.
~Will
  • #18
  • Aug 17, 2004 1:45pm Aug 17, 2004 1:45pm
Quoting CA1962
SteamTrader:
If this happened to you then you should definitely call them, tell them what happened, and dispute the trade.
I just talked to an FXCM Rep for the second time this morning, and he confirmed what Lou posted earlier -- that there was a "misquote" and the lowest price at 8:32 AM (EDT) was 1.8370 (not, 1.8313 as reported). I had an Entry Order to sell GBP/USD @ 1.8365, and if you look at your 1-minute chart, it should not have been triggered until between 8:41-8:42 AM. I should still be in the trade, and + 80 to 90 pips per lot. They told me that they would review my trade and call me back. I'll post the results here after they call.
CA1962
Thank you. I called based on your advice and they will review/audit my order. I won't be able to find out anything until midnight because I will be out and away until then and not be able to check on the results.
  • #19
  • Edited 2:17pm Aug 17, 2004 2:06pm | Edited 2:17pm
Quoting vdeluca
It does seem very suspicious that Refco/FXCM are the only broker who has a "policy" against straddling entry orders before news, and the only broker who shows these unexplained spikes (excuse me, a "misquote" yeah right) as news is released.

Has anybody heard of coesfx? (www.coesfx.com) they say they are not a market maker or trading desk but instead an ECN that gives direct anonymous acces to the best real time prices. They were showing 1-2 pip spread on the majors. I had not heard of them before and wonder maybe this is an alternative to the FXCM scammers.

According to their website:

"Because COES does not operate a trading desk, each participant on the network is provided the ability to post bids and offers through the COES Level 1 Trading Platform. The COES pricing is derived directly from a number of partners in our network such as banks,FCMs, IBs, fund managers and every trader on our ECN. Trading with COESfx provides traders with live and executable process. Each participant on the network is in fact a market maker, trading on direct prices.

By trading with COESfx, every participant can take advantage of the power of COES Level 1, a fully compliant non-matching
system that provides traders with features such as:


No Trading Desk Intervention
No Price Manipulation
Anonymous Trading
Continuous 24-Hour Liquidity"

Vdeluca:


Good find.

Very interesting. I just called them and talked to the rep. They've been open to the public for about 1 year. Quotes are directly from the banks. Spreads are 1-2 pips (and according to the rep, sometimes there is no spread - bid and ask prices are the same). They make their money by charging a "round turn" commission of $20 per lot (equal to 2 pips).

According to the rep, "brokers" absolutely do manipulate their prices. I'm not saying any particular broker does this, but according to the COEfx rep, there is no doubt that this happens. Since COESfx is not a market maker and does not have a trading desk, there is no matching or manipulation. The price you get is the price quoted by the banks. Standard accounts take a minimum of $10,000 to open (no minis). They have no problem whatsoever with entry orders (straddles) around data release times. I plan on trying one of their demos.

If anyone has had any direct dealings with this company, please let us know.

CA1962
  • #20
  • Aug 17, 2004 2:18pm Aug 17, 2004 2:18pm
Quoting CA1962
SteamTrader:
If this happened to you then you should definitely call them, tell them what happened, and dispute the trade.
I just talked to an FXCM Rep for the second time this morning, and he confirmed what Lou posted earlier -- that there was a "misquote" and the lowest price at 8:32 AM (EDT) was 1.8370 (not, 1.8313 as reported). I had an Entry Order to sell GBP/USD @ 1.8365, and if you look at your 1-minute chart, it should not have been triggered until between 8:41-8:42 AM. I should still be in the trade, and + 80 to 90 pips per lot. They told me that they would review my trade and call me back. I'll post the results here after they call.
CA1962
Thank you. I called based on your advice and they will review/audit my order. I won't be able to find out anything until midnight because I will be out and away until then and not be able to check on the results.
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