Broker that triggers buy stop at bid price & fills at ask? | Forex Factory

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Broker that triggers buy stop at bid price & fills at ask?

  • #1
  • First Post: Oct 8, 2013 5:07am Oct 8, 2013 5:07am
Hi
I have a professional background in FX and after opening a tiny private account with Oanda I was gobsmacked to learn how they trigger stop orders.
For me the "normal" way to place a BUY stop-order is to input a STOP-IF-BID. This way your order will be triggered when the BID price reaches the price you specified, afterwhich the order is filled at market on the ASK price.
Now, Oanda by default triggers a buystop when the ASK price reaches the trigger price, which means that your order will be triggered even if just the BID/ASK spread widens.
My question to you is the following:
Is there any FX broker that triggers stoporders the "normal" way which also offers MT4?
Thanks
Andy
  • #2
  • Oct 8, 2013 5:28am Oct 8, 2013 5:28am
Wow, just got off the chat with a rep for forex.com asking if theu execute stop-orders the same way as Oanda, and he confirmed this. What a joke!
Again, if anyone knows a broker that does it differently, please tell!
  • #3
  • Oct 8, 2013 5:35am Oct 8, 2013 5:35am
Quoting andy4444
Wow, just got off the chat with a rep for forex.com asking if theu execute stop-orders the same way as Oanda, and he confirmed this. What a joke! Again, if anyone knows a broker that does it differently, please tell!
BUy stop trigger when ASK his reach your level , not BID you can just download Dome and test it , it's same on all broker i have used maybe 10+ broker

only sell stop trigger @ BID

Edit : if it get trigger @ BID , @ that time best available price on market is BID + Spread + Slip
Mohan
  • #4
  • Oct 8, 2013 6:18am Oct 8, 2013 6:18am
Just got off chat with FXCM, and they also do it the way Oanda does it.

mohan76, thanks for you reply. Please allow me to tell you my experience.
If I call up the dealing desk at UBS or Deutsche to place a stop order to buy, they will assume that I want to place a BUY-STOP-IF-BID. (they will still ask to be sure, but 99,9% of clients will opt for this option).
Such an order is triggered if the BID price in the market goes above the trigger price, and is then filled at market, i.e. at the ASK price at that time.

As far as I can remember Interactive Brokers does it the "normal" way as well (in FX) but don't rely on that as it's just based on my observation of their dome some years back.
  • #5
  • Oct 8, 2013 7:45pm Oct 8, 2013 7:45pm
This was my experience when dealing with UBS, Barclays, Citi, and RBS.... I will place a buy stop and will always state it's "buy at market if bid" to save time because if I didn't state it, the sales dealer will ask me specifics regardless. I agree with you 99.9% of clients will opt for this... but I also don't think this is the "normal" way for institutionals i.e. the order-taking bank will usually make sure the intent of the order-placing client is correct.

(These days, of course, I don't have to deal with sales traders... the Banks have their own proprietary trading portals and/or they have trading platforms on Bloomberg.)

Anyways, I think special stop conditions are only available to institutionals and not to retail traders. My two cents.
I'm not trying to convince anyone. I'm not in the &quot;convincing&quot; business.
  • #6
  • Oct 9, 2013 7:26am Oct 9, 2013 7:26am
Thanks skenobi

Just had a friend confirm that Interactive Brokers also does it in what I call the "normal" way. (the way that 99.9% of any institutional client would do it, and the way that scenobi confirms he is used to do it.)

However, I would love to hear of any other retail broker that does it this way. Espcially one that also offers MT4.

On a sidenote, anyone who is reading this and undestanding the issue, would close their accounts with the likes of Oanda, Forex.com, FXCM immediately...

Thanks
  • #7
  • Oct 9, 2013 9:32am Oct 9, 2013 9:32am
Quoting andy4444
Thanks skenobi Just had a friend confirm that Interactive Brokers also does it in what I call the "normal" way. (the way that 99.9% of any institutional client would do it, and the way that scenobi confirms he is used to do it.) However, I would love to hear of any other retail broker that does it this way. Espcially one that also offers MT4.
Hmm.. it's only "normal" to institutionals, hedge funders and probably HNWIs. It's not normal to retail traders. Also, AFAIK, MT4 is not built for these extra order conditions. Coders out there please correct me if I'm wrong.

Quoting andy4444
On a sidenote, anyone who is reading this and undestanding the issue, would close their accounts with the likes of Oanda, Forex.com, FXCM immediately... Thanks
I'm not sure why you would advise this. Not everyone has access to the Big Banks. I use retail brokers as well and I think I've coped well with the basic order types.

Also, I'm pretty sure there are plenty of other successful retail traders who have never even seen a Big Bank trading portal and still make money regardless of the "handicap".
I'm not trying to convince anyone. I'm not in the &quot;convincing&quot; business.
  • #8
  • Oct 9, 2013 9:52am Oct 9, 2013 9:52am
Some brokers like fxcm (on the trading station, not mt4) have both bid and ask charts, this way you can use the ask chart when looking for the correct price to place a buy stop.
I remember also oanda have something like that in their java platform.

Or you can just take in consideration the spread when placing a buystop, and add it to the original bid price you would look for.

It would be interesting instead to have a broker that let you buy at bid and sell at ask (but usually you have to pay a commission), this can be done in the futures markets but seems like hard to find on forex.
  • #9
  • Oct 11, 2013 11:10am Oct 11, 2013 11:10am
Quoting andy4444
Hi I have a professional background in FX and after opening a tiny private account with Oanda I was gobsmacked to learn how they trigger stop orders. For me the "normal" way to place a BUY stop-order is to input a STOP-IF-BID. This way your order will be triggered when the BID price reaches the price you specified, afterwhich the order is filled at market on the ASK price. Now, Oanda by default triggers a buystop when the ASK price reaches the trigger price, which means that your order will be triggered even if just the BID/ASK spread widens....

Saxo has stop if bid orders. I would go with IB for obvious reasons.
  • #10
  • Edited 9:49pm Oct 14, 2013 3:12am | Edited 9:49pm
Hi andy4444,

We have developed the custom strategy which can help you to achieve your goal with ask and bid. This strategy is for FXCM Trading Station II. Please note that there can be delays in the work of the strategy due to the connection and server side.

In the parameters of the strategy you should choose:
- the trade for which you want to set the stop;
- bid or ask price of stop;
- the stop price.

Attached File(s)
File Type: zip opposite_stop.zip   < 1 KB | 492 downloads
  • #11
  • Oct 16, 2013 2:58am Oct 16, 2013 2:58am
Notes regarding the "opposite stop" strategy:

1. The strategy does not open a stop order. A trader should choose the trade and then the strategy will close it when the "stop" price is reached.

2. This strategy does not work with FIFO accounts, because FIFO policy forbids closing particular positions.
We will develop the strategy which works with FIFO accounts and post it later.
  • #12
  • Oct 16, 2013 5:16am Oct 16, 2013 5:16am
Here is the version of "opposite stop" strategy which supports FIFO accounts.
It closes the value which has the chosen position.
Also this version can be used by not FIFO accounts. In this case the old logic will be triggered.

Attached File(s)
File Type: zip opposite_stop.zip   < 1 KB | 456 downloads
  • #13
  • Oct 16, 2013 6:23am Oct 16, 2013 6:23am
Quoting andy4444
Hi I have a professional background in FX and after opening a tiny private account with Oanda I was gobsmacked to learn how they trigger stop orders. For me the "normal" way to place a BUY stop-order is to input a STOP-IF-BID. This way your order will be triggered when the BID price reaches the price you specified, afterwhich the order is filled at market on the ASK price. Now, Oanda by default triggers a buystop when the ASK price reaches the trigger price, which means that your order will be triggered even if just the BID/ASK spread widens....

Just curios, is there any advantages to use bid as trigger event for buy stop order and ask for sell stop order?
  • #14
  • Oct 17, 2013 5:37pm Oct 17, 2013 5:37pm
Yes, definately.
If you are short and want to place a stop-loss, you have 2 options:

1. Buy Stop if Bid. If market maker wants to stop-hunt your stop-order he needs to raise his BID to your trigger price, thereby also (at least in theory) being obliged to fill any limit sell orders (of all the brokers others clients) that have limit price below your trigger price. (Brokers will find a way around this as well (there are soo many ways...), but if found out and reported they would have some explaining to do to regulators...)

2. Buy Stop if Ask. Free money for Market Maker. He just widens his bid/ask spread for a millisecond (not visible on charts, not even bid-ask chart(at least not the ones published to client...)), and immediately cashes in lets say 10 pips through simultaneously triggering all buy and sell stop orders placed within a 10 pip radius.
Oanda has done this to me twice today. They only offer buy stop if offer. While showing a bid/ask spread of 2 pips or less, they have triggered buy stop orders placed 5.2 pips and 4 pips above where their chart bar highs are (chart is based on BID) (during liquid markets with no volatility inducing news)
They (and the other bucket shops) do this day in and day out. I'm surprised that people on this forum are so unaware of this.
  • #15
  • Oct 17, 2013 5:41pm Oct 17, 2013 5:41pm
Oh, and Valeria, thank you so much. That was soo kind of you! Hope not to sound ungrateful, but I will not use this as I need my stops to sit on the brokers servers so that they are active even if my platform or internetconnection fails. Having it on your platform would also produce greater slippage in a fast market becasue of internet latency... But again, thanks for the thought, very kind of you.
  • #16
  • Oct 17, 2013 7:28pm Oct 17, 2013 7:28pm
Quoting andy4444
Oh, and Valeria, thank you so much. That was soo kind of you! Hope not to sound ungrateful, but I will not use this as I need my stops to sit on the brokers servers so that they are active even if my platform or internetconnection fails. Having it on your platform would also produce greater slippage in a fast market becasue of internet latency... But again, thanks for the thought, very kind of you.
Have you considered using a colocated VPS? That should address the concerns you mentioned regarding disconnects and latency.
  • #17
  • Oct 18, 2013 3:00am Oct 18, 2013 3:00am
Quoting andy4444
Yes, definately. If you are short and want to place a stop-loss, you have 2 options: 1. Buy Stop if Bid. If market maker wants to stop-hunt your stop-order he needs to raise his BID to your trigger price, thereby also (at least in theory) being obliged to fill any limit sell orders (of all the brokers others clients) that have limit price below your trigger price. (Brokers will find a way around this as well (there are soo many ways...), but if found out and reported they would have some explaining to do to regulators...) 2. Buy Stop if Ask. Free...
You know that your thinking has a huge flaw? You consider that you are right and that spread widening will be just like you described it, but it is not always the case on the market! Price can easely go with spread 30 or 50 upwards, without intention to come back, in this case you would lose 30 or 50 more than you could have, had you been stoped out by ask trigger event not by bid one.

There are literally 100s of possible scenarious on the market, your approach hedges your against one of them, but right away it makes you weak in another one.

If your broker plays durty tricks with you, why not to file a complaint to broker itself, and if its adamant to resolve the issue, file a complaint to respective athoritative body. Oanda is US based, so it should not be an issue, it is highly regulated there, right?
  • #18
  • Oct 23, 2013 9:44am Oct 23, 2013 9:44am
Hi dns
In such a scenario (30-50 pip instantaneous move), you would 9 times out of 10 (at least) NOT be filled more favorably with a buy stop if ask, than with a buy stop if bid, EVEN if you trade in a an EXCHANGE traded market. The reason for the slippage is the same for both scenarios. Liquidity dissapears immediately, i.e. there are no offers before 30-50 pips higher. The trigger method (bid or ask) is irrelevant in such a case.

HOWEVER, we are not talking about an exchange here. We qare talking about a market MAKER at a small broker. That means a 20 year old something clicking his mouse (or their market making algorith doing it) and takes the market away 30-50 pips as becasue they see the bigger banks maving price. Threre is no way that kid or the algorithm is going to fill your order at a favorable price when they are seeing the market moving against them.

As for complaining to authorities, this is not illegal! It's an OTC market...meaning the market maker can give you whatever price he wants...
THE differrence between these bucketshops, and the bigger banks, is that the bigger banks have some clients that actually understand the difference, and who are big enough for the bank not to want to loose them, so those banks do not play this particular game (i.e. making clients placing buy stop if ask orders)...

Anyone know any other brokers offering buy stop if bid orders (i.e. the way that is less disadvantageous to clients)?
  • #19
  • Edited 10:30am Nov 3, 2013 9:33am | Edited 10:30am
Hey Andy,

I am curious if you have found any brokers who do this?

Thanks

Edit:
I think MB Trading allows you to do this, they also pay you commission for Limit Orders that have been executed.

"Stop method: Default means that for a sell stop, the bid must hit the stop price and for a buy stop, the ask must hit the stop price. Trade through is the opposite, for a sell stop the ask must hit the stop price and for a buy stop, the bid must hit the stop price."

I am not sure if I can post links, but here is the URL where I got the information from.

mbtrading.com/help/navpro/Order_Entry.htm

Good Luck and let me know if you found anyone else
  • #20
  • Nov 3, 2013 11:04am Nov 3, 2013 11:04am
Quoting dns_di
{quote} You know that your thinking has a huge flaw? You consider that you are right and that spread widening will be just like you described it, but it is not always the case on the market! Price can easely go with spread 30 or 50 upwards, without intention to come back, in this case you would lose 30 or 50 more than you could have, had you been stoped out by ask trigger event not by bid one. There are literally 100s of possible scenarious on the market, your approach hedges your against one of them, but right away it makes you weak in another...
What?!?

Can you please read his post again, your thinking has a massive flaw. When these guys spike the spreads you will not see the bid and ask moving together. One will remain around the area price spiked while the other is taking free money that you supposedly think is a great deal. When market makers pushing 50-100 pip spreads during spikes, I can't believe you would even make this sort of comment. Andy has a great point, and I have been noticing these supposedly regulated brokers are pushing new limits with these dynamic spreads.
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