Broker's Feed Manipulation???

One striking occurrence that I have personally observed on at least two different broker's price quotes, about 2-3 minutes prior to a major announcement, their prices oscillate back and forth between two quotes that are 10-14 pips apart Example, price quote will rapidly flash between two values, such as 1.8144/48 and 1.8156/60, back and forth repeatedly, just prior to the announcement. How can this be anything other than an attempt to wipe out all straddles prior to the breakout?

I've seen it On the AU/USD from CMS (the one with the visual charts and all the neat customizable indicators) stabby broomstick shafts leaping up or thrusting down 10-20 or so pips for no apparent reason whereas NetDania did not show any of that...

I didn't notice anything like this yet...but i will watch it closely, especially before data release...

Here is something:

AUD/USD 5min

1.) My broker's chart (fxnews)

2.) SaxoBank

3.) netdania

4.) VisualTrading (cms demo)
spike!!

5.) and FXtrek

Orion,

As you know a similar occurance developed last Friday with the Aud/Usd

Lou

PS I plan on questioning them. I hope someone else does as well.

I will share the reply on the forum.

yes. on Friday it was even more significant then this spike to 39.It was something like 50+ pips down on last 5 min bar just before the close.My broker closed earlier on friday so i cannot compare.But yesterday i had same spike on my charts (see picture 1.) as was on VT.
This is confusing me.
is this example of stophunting by brokers? Or was it just some big player closing big position?and why some charts have the spike and some don't?

I have not had the privilege or disadvantage of dealing with other brokers but have made six months of price comparisions between four data sources that may be of interest.

1. FXCM dealing station.
2. Charts that offer no dealing but use a data feed that is the avearage of the 400 primary forex banks.
3. VT
4. Metatrader

First I had some assumptions:

1. I expected the data feed from the 400 bank average to be the most stable in price fluctuations.
2. I expected the directional bias of the 400 bank feed to have the primary influence on the market direction and mm's to follow.

I was proven wrong on both accounts.

1. The 400 bank average data feed is the most active of the feeds in both directions.
2. FXCM exerted overall the strongest market price leadership. This is not true all the time but it is true a surprisingly large amount of the time.

I first noticed these phenomena without having any explanation and the only preconceived hypothesis' were the above two -- which I knew were unproven.

As time advanced and I looked for my data feed to give me clues about market moves I noticed that if prices pulsed a few pips in a direction I'd immediately check the fxcm dealing station, superimposing a reduced chart over the dealing station to watch the behavior differential. What I noticed was that many times prices would break 5 to 10 pips in a direction on the chart but would generally be sucked back into the middle of the fxcm bid/ask spread. This became far too common to be coincidental and remains that way every trading day. Sometimes I get clues about impending moves where the 400 bank avearge clearly precedes fxcm's bid/ask but that is the exception.

Since I already know that fxcm's volume is much larger than anybody else out there and since I know that their volume is much larger than most individual banks and since FXCM claims to (under cftc scrutiny) mantain a neutral position at all times -- continually offsetting in the IB market.. then it makes sense that in most trading hours fxcm is very likely to be offsetting their trades against all these little blips I see on the 400 bank avearge and therefore flattening them. Let's say for example that buying is generated among a certain banking sector and the market moves 5 pips north. FXCM is sitting there taking the best bid and ask of the 12 or so main banks they deal with. (well known fact that they have 12 primary banks they choose their bid/asks from) Now that 5 pip jump immediately produces the best bid and FXCM immediately funnels their orders to that bank driving the price back. The price moves back into line with fxcm's bid/ask range. I've watched this 10,000 times. Hopefully you can extrapolate the scenario where a big player like fxcm stablizes the market by offsetting it's positions with the best prices in a 12 or so major bank market.

Now for the exceptions: For example: I see a currency erupt in a direction quite rapidly and notice that fxcm is running away from the 400 bank average as much as 20 to 30 pips creating a spike. What caused it? The banks average is lagging but pretty much catches up with that spike but the IB market doens't go as far as the spike at fxcm. Watching the price action and notcing that it did not occur as significantly on the other two platforms either it made me suspicious. Were they stop running? Maybe but another explanation is that a major client of fxcm's was the biggest seller in the market at that time. That would naturally drive the local (internal to fxcm) pricing down much faster and further than it would the rest of the IB market. So my conclusion is that even with reputable firms the possibility of spikes being greater the the IB average can be generated by local selling/buying. The computer algorithms mm's use to keep their position neutral also are keeping track of the bid/ask of their offsetting buyers/sellers and they automatically respond to heavy directional volumes to protect the mm. So I suspect that some spikes, perhaps many, are actually due to local activity -- especially during quieter market times when spreads are not as attractive on the IB market.

Further comments on VT and Metatrader are that they appear to get out of line with general bank liquidity more often than fxcm but I suspect that is more due to smaller volumes. If they have little local volume and their spread is covering the bid/ask options they have on the IB, or especially if they are leaning net short or net long then their prices will lag the market at times. It is impossible for them to ever remain absolutely neutral as long as there is trading activity. I seldom see the 400 bank average outside of their bid/ask and when that happens it is often too short a time to trade the slight advantage.

Also to the trader who indicated with his fxcm dealing station that when he clicks to buy or sell and waits a few seconds or minutes and notices the price he is quoted freezes and then if he accepts the trade the market has moved... maybe you are not aware but when you click to buy or sell the market price you clicked on is frozen for a few seconds. You are guaranteed that price for a few seconds before it times out. Just as frequently I have it work in my favor. I click into a trade and it has already gone a couple pips in my favor by the time it shows up confirmed. It all depends on whether you anticipate the direction or click in when the market is going the other way. Unless you have a significant trade size (over say 20m) it is unlikely that they are going to pay a lot of attention to your trade. Also if this is happening on a demo account I can assure you that nobody is sitting there trading against you. If so they are truly stupid and probably the mistakes they make will ultimately net in your favor. Of course they are likely to be out of business soon so there is a down side.

FT

thanks for the info figitrader.

doesn't anyone have any idea what causes spikes like these (restarting or reinstalling doesn't make them go away):
http://joe.luckylackey.com/money/CMCchartglitches.JPG

I've noticed this sort of thing crops up quite a bit on CMC charts. Tech support says they wont effect my positions, but I'm not convinced. Can anyone confirm this?

cheers!

I've got both cmc forex and spreadbet and those spikes don't affect your positions. The spikes that do affect them come sometimes on spreadbet some minutes before big data. Not always but sometimes you get a stop sweep. It doesn't affect me as I don't straddle but it seems a lot of people do. More generally, cmc forex tends to overshoot by 2 or 3 pips the high/low during fast moves, so you should watch out for that if placing stops into the system.

Hi slick.
Being from Canada (Toronto) and a noob (paper trading only), I'm looking for a "reputable" broker as well .
I found these brokers http://www.cambridgefx.com and http://www.refco.ca/
doing some quick searches.
Have you heard of these brokers? I'm going to investigate these brokers and any others I find further. The Cambridge broker has it's main office in downtown Toronto, about 10 minutes from where I live, so maybe I can pay them a visit.

japlha
As far as paper trading goes the Refco platform is a pretty good one to work. I am looking to set up a second account (with most of my money in it) and was considering Refco. NO WAY. Too much negative press about them lately together with FXCM (I believe their parent). The Cambridge company that you mention does not look to fit the bill for forex day to day trading. Let me know how you make out as to what it is. I really have no reco's as have not found any broker that I wish to place money with at this time. I am with FX Solutions and they are as big a thief as the rest of them. They will all take you to the cleaners. Look for a broker who is not supplying you the signal that you are trading on. There is no doubt in my mind there is no end of broker manipulation taking place and anyone who cannot see that has been counting too many sheep.
Humble opinion as always.

slick 60

I have a report about my first company ACM. www.ac-markets.com. Bad news - they manipulate their feed by 5 pips. This company is not even sneaky about it. for EUR/USD The quote says 20/23 you sell at 20 and boom the quote moves to 25/28 instantly. Also their demo quotes are attached to a fast moving charts prices. Nothing like the real deal where quotes move very slowly with 5 pips manipulation + a 3 pip spread. They dont even provide a chart with their real quotes (probably to cover up their manipulation).

I sent and email to them acusing them of price manipulation and here is the reply:

--START--

Thank you for your interest in our company.
I am sorry that you are dissatisfied with our service, obviously something on your PC may have caused delays which may have caused difficulties with our platform. If you experience anything unusual, the best thing to do usually, is to call a trader immediately as some settings on some PC's may interfere with Flash, such as firewalls, popup blockers etc.

We are experiencing rapid growth due to our competitive position within this market and we most certainly would not be able to attract and keep the volume growth that we are experiencing. ACM provides direct access to our retail clients with our liquidity providers, but we depend on the data feed from these banks as much as you the client. We have no influencing possibilities on the pricing as we use straight through processing. It is the banks policy not to provide the price feed unless the account is funded. The demo is designed to show our one click dealing execution methodology without RFQ and runs on a price feed from Reuters.

Again ACM provides the best execution possible. I regret that you experienced anything different and whish you would have contacted a trader immediately for assistance.

To close your account simply fax in the withdrawal of funds form available on our website, requesting all funds.

Should you require any further assistance please do not hesitate to contact us at customer support +41 22 319 22 03.

--END--

I am looking to move to a new company. Two I like are OANDA and AFXI. Has anyone used them? If so did you experience any quote shifts like I described? Do they provide a chart with their quotes?

ACM is also a refco company

this is a very intresting thread

my experience is that the brokers will hunt your stops!!!

my solution has been very simple

1.Find a good working system.
2.no stops just emergency stops eg 100 pips from the market or mental stops.If your broker hunts that you can claim your money back.
3.open smaller accounts at different brokerages.

discipline is what kills traders and they know that.Most newbies aren't disciplined enough to follow thier trading plans and would probably start freaking out when a position suddenly goes against them.Notice that every time the market moves a quick 5-10 pips your tendency to add a position or close your position.What do you get?SLIPPAGE

even a 100 pips move will have a retrace,close your position during a retrace or using your mental stop.Once your broker notices that you don't place stops they won't bug you.How do i know this? Ask them.

Being in business yourself ,how many people do you know who would leave a stop open if it is only 5 pips away? After all they know your position and believe me they will take it.At times i've seen even the profits being cut.eg buy at 1.2000 and want to close position at 1.2020..Your broker price will get to 1.1198 and reverse. i have 4 brokers ,i see it all the time.if you want to avoid these scenarios do the above 3 and always watch your positions.otherwise stop complaining.

Also be careful when choosing a broker that advertises very tight fixed spreads and "guarantees" no slippage. This can be an indication that they are slowing down the price feed and shifting prices in their favor. The "tight spread" and slippage "guarantee" are frequently marketing gimmicks for their business model. True interbank spreads vary throughout the day as a function of liquidity. Try to find a broker who has stated spread "targets" instead of fixed spreads. This is a good indicator that they are clearing through interbank and not taking opposite positions to their customers.

Well I've just closed my accounts with ACM and just opened accounts with Saxo Bank and CBFX .No particular reason other than I don't trust any brokers anymore and feel better going through a bank that display the interbank spread as they receive it.Stop hunting ,brokers trading against you and price manipulation are hopefully things I do not have to worry about anymore .I just want to trade on an as level playing field as possible.

Regards