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How to explain this characteristic of a Broker?

  • #1
  • First Post: Apr 20, 2014 10:33am Apr 20, 2014 10:33am
I have been trading with a broker for quite a good time. Initially I haven't noticed but gradually I started to observe some things:
When I try to open an order, if the market is moving Fast or Volatile, then if my order is to the moving direction,
the order doesn't get opened due to Slippage and I have to reroute.

But if that trade is in Opposite direction of the Market, it got opened Instantly! No Slippage even though the Market as Volatile as the Previous case.

Sometime the Order Execution time is normal but sometime it becomes very Lengthy and if in the mean time the market moves towards the trade's direction,
then it doesn't get opened.

So how to explain this? Is this Normal and Valid behavior?
Is this Broker working against traders?
  • #2
  • Apr 20, 2014 12:28pm Apr 20, 2014 12:28pm
Quoting Arav007
I have been trading with a broker for quite a good time. Initially I haven't noticed but gradually I started to observe some things: When I try to open an order, if the market is moving Fast or Volatile, then if my order is to the moving direction, the order doesn't get opened due to Slippage and I have to reroute. But if that trade is in Opposite direction of the Market, it got opened Instantly! No Slippage even though the Market as Volatile as the Previous case. Sometime the Order Execution time is normal but sometime it becomes very Lengthy and...
Well, if everyone is buying and you want to sell, it should be more easy to sell! You know... In a market there are always sellers and buyers!


For every trade there must be someone who take the opposite direction, it's very simple.

In a market where there are a lot of buyers and you want to sell, find a price is much more simple... Essentially you are selling to the buyers.

In other words, there are too many buyers and too little sellers, so your sell order will be immediately filled!

It is normal market behavior.
Buy at the Low, Sell at the High You make money by waiting not by trading.
  • #3
  • Apr 22, 2014 5:26am Apr 22, 2014 5:26am
It sounds like you are using a dealing desk broker. They make money on giving you the worst deal possible, and then trading against you. So, if you are joining the market direction, they want your entry as far away as possible. If you are going against the market direction, then they execute as soon as possible to gain distance on your entry and thus make more money on your loss. This is all part of a software code too, for the most part. There is not a person standing there saying yes or no like in the old days. But they do manipulate the computer programming.

It is just my opinion, but I prefer ECN brokers over dealing desk. When I want to enter the market, the last thing I want to see is my order blocked and be told to try to enter again at a different price.
You cannot be extraordinary by being normal
  • #4
  • Apr 22, 2014 11:32am Apr 22, 2014 11:32am
Quoting dkrock
It sounds like you are using a dealing desk broker. They make money on giving you the worst deal possible, and then trading against you. So, if you are joining the market direction, they want your entry as far away as possible. If you are going against the market direction, then they execute as soon as possible to gain distance on your entry and thus make more money on your loss. This is all part of a software code too, for the most part. There is not a person standing there saying yes or no like in the old days. But they do manipulate the computer...
Probably you are right. I heard about such Manipulation but never thought about it deeply.
Another scenario is, when I try to close a Running trade, it takes quite a few time to be closed.
Meanwhile, if the market moves back i.e. backwards of my trade's direction, the trade doesn't
get closed and requote occurs. But if the market was going towards more profit, that trade got
closed Instantly! I find it very Cheap and Unethical!
  • #5
  • Apr 22, 2014 6:12pm Apr 22, 2014 6:12pm
Quoting Arav007
{quote} Probably you are right. I heard about such Manipulation but never thought about it deeply. Another scenario is, when I try to close a Running trade, it takes quite a few time to be closed. Meanwhile, if the market moves back i.e. backwards of my trade's direction, the trade doesn't get closed and requote occurs. But if the market was going towards more profit, that trade got closed Instantly! I find it very Cheap and Unethical!
When operating a dealing desk, a firm may actively be taking a position in the market, which exposes the firm to market risk. When you are long, the dealing desk may be short. When you are short, the dealing desk may be long. So your losses can equate to the dealing desk's profit. Alternatively, your profits can equate to the dealing desk's loss. Certain strategies expose Dealing Desks to more risk, such as automated strategies, scalping strategies and news trading strategies. That's the reason why you can encounter re-quotes with a dealing desk broker in fast markets when prices are volatile.

Unfortunately, as you've noted, these re-quotes are often applied asymmetrically. If you place an order to buy and the price is rising, you're likely to get re-quoted a higher buy price. On the other hand, if you place an order to buy and the price is falling, you're likely to get filled at your exact price missing out on the positive slippage that might have been available. An alternative is to trade with a No Dealing Desk (NDD) broker that allows you to benefit from price improvements on your orders.

Note that with NDD execution, it's also possible to have negative slippage where your order gets filled at a worse price, but there are tools such as the Maximum Deviation feature on MT4 that allow you limit the amount of negative slippage you're willing to tolerate. For example, if you set your Max Dev at 2 pips (or 20 pipettes, if your broker quotes prices to 5 decimals) then your market order will only be filled if the maximum negative slippage is within your 2 pip tolerance. Otherwise, the order will get cancelled. That allows you limit your negative slippage and still benefit from positive slippage.
  • #6
  • Apr 23, 2014 9:13pm Apr 23, 2014 9:13pm
These days, given the availability of STP brokers (if not true ECNs) there is absolutely no reason to trade with a broker where requotes would occur. Obviously you can and will get slippage with an STP or ECN broker but an order will never be requoted.

What Lacunoide said is definitely true even for STP/ECN brokers that don't take the other side of your trade. Also, as I believe Jason_Rogers pointed out in another thread, you are more likely to get favorable slippage on limit orders and adverse slippage on stop orders, which makes perfect sense and ties in with what Lacunoide stated.
  • #7
  • Apr 24, 2014 8:35am Apr 24, 2014 8:35am
Quoting AimHigher
What Lacunoide said is definitely true even for STP/ECN brokers that don't take the other side of your trade. Also, as I believe Jason_Rogers pointed out in another thread, you are more likely to get favorable slippage on limit orders and adverse slippage on stop orders, which makes perfect sense and ties in with what Lacunoide stated.
What Lacunoide said is such scenario when the market is moving towards 'Buying' direction and I'm taking the opposite. But I didn't refer to such situations.
Yes, in such situations it happens and I can understand.
But what seemed to me unnatural is that for example when the market is going to the 'Selling' direction and I try to open sell order. So if the market keeps going to sell direction, the order doesn't get opened. I have to re-enter. But after pressing the 'Sell', if the market bounced back even 1 pips to opposite direction, that trade gets opened immediately. Then the market again continues towards selling direction.
So what is happening, while I had to start with a Spread of say 3 pips, now it has become 4 pips indeed. [Though the spread remains at 3 pips and 1 pip more in the negative direction].
That is why I suspect these are all pre-programmed.
  • #8
  • Apr 24, 2014 8:59am Apr 24, 2014 8:59am
Arav007,

First of all, if you get requotes at all, change broker ASAP. It is very unlikely that such a broker offers the best, i.e. most fair, trading environment. IMO, if for whatever reason you don't have access to STP/ECN brokers where you reside, you are better off not trading forex at all.

I might have misunderstood what you said, but Lacunoide was referring to both scenarios, e.g. you want to sell when the market is moving higher (you will easily get filled without a requote) and the other scenario when you want to sell when the market is moving lower (you are likely to get a requote error with certain brokers). I sincerely hope you understand why that is the case.
  • #9
  • Last Post: Jun 3, 2014 4:54am Jun 3, 2014 4:54am
Arav007, and what broker you trade with? I think it's time 4 u to change a broker. For example, I have no such problems. Sometimes I have requotes (If i'm not mistaken, the last were 2 months ago), but that what you said makes me think that your broker is scam.
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