- Jan. 15, 2015
Today's surprise drop in the value of the CHF Swissy is a good opportunity to "Stress Test" your broker and VPS if you use one. If your broker tried to honored your SL settings on a CHF pair with a fill to close close to your SL level, could you please post their name in this thread?
Despite what they state on their home page every FX broker will play this event differently. Let's use this opportunity to help each other by pointing out the best and worst brokers. Current FX volatility will only be increasing and knowing which brokers do best by their clients will be critical for our survival and success.
Example: My Excel Markets broker filled my SL on USDCHF at the lowest price about -1700 pips from my open price rather than near my SL of -135 pips. They supposedly use ECN/STP to provide them excellent liquidity. I had a live chat with them and they of course said "an SL is a Market Order...". I countered that I was hoping that their extreme ECN/STP liquidity might have gotten me out somewhere before the exact bottom. They will followup with me, and I will post their decision. Fortunately I was testing a new VPS so was only trading a .03 lot on USDCHF and lost $650. My sincere condolences to those of you who lost more.
There are many reasons why one broker might provide a better exit fill than another. One certainly is if they have substantial liquidity. But there could be others as well including the ethos of the company. If you feel your broker did good by you during this market move, please provide the details and post their name here or PM me.
Jan. 19, 2015
A few days have passed since the SNB dropped the bomb of disconnecting the Swiss Franc from the Euro. Many have posted their helpful anecdotes and analysis of their brokers response. The possible benefit of this thread can be to, as a group, to isolate which brokers are dependable going forward. The political/economic instability of the EU, the terrible money management of the U.S. Treasury, and the economic sanctions against Russia will guarantee that the currency markets will only be getting more turbulent in the future. There may in fact, be a flock of Black Swans heading our direction.
The broker shake-out to date has included one of the largest, FXCM, and one of the smallest, Excel Markets, so traders should be careful in drawing quick and simplistic conclusions as to what broker profile guarantees security in the future. I think it's safe to generalize that in recent years most Spot FX traders have concluded that market-maker type brokers are to be avoided, while brokers providing ECN/STP access to liquidity are guaranteed to be safer as they provide un-manipulated access to the market. As the outcome for brokers now begins to shape up, it seems to me that many ECN brokers were driven to huge debts as they were the debtor of last resort after all their Interbank trades were settled. So better in day to day trading, but not necessarily safer from CHF-NBS type events. In contrast many of the brokers that survived unscathed use a market-maker business structure which always has them hedged against their clients trades.
My guess is that after the dust settles, it will be clear that the two types of brokers that are best for the trader are, a.) brokers who provide straight-through access to deep liquidity pools but also have >>excellent practices for monitoring their clients trades and aggressively hedge their total risk to the market<<, and, b.) market-maker brokers who by nature hedge their risk to the market, and either by concern for reputation (ie, future business), or due to stringent outside oversight,are prevented from using predatory practices on their traders. Unfortunately one of the most important requirements, 'excellent practices for aggressively hedging their total market risk', is the most difficult to identify and list on a profile chart of "The top 25 FX Brokers". One way to gather this critical information will be to observe the carnage of the recent Black Swan event, and see which brokers are left standing, and determine, Why?.
Yunben on the CHF:Black Swan thread posted the chart below which was compiled at Forexmagnate-com. It shows the current scorecard for brokers.