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CHF move as a broker "Stress Test" - Which tried to honor SL's?

  • #161
  • Jan 19, 2015 2:31pm Jan 19, 2015 2:31pm
Quoting nkimandi
{quote} hi JW..Leverage is not bad its the HOW it is applied..throw in a black swan event such as this and inadequate offset of risk management by our brokers and it became catastrophic..say you even had 50:1 then it would not have been conservative enough to protect you from a total wipe off this Black Thursday..people got wiped off including hedge funds on even 20:1..yes you are reading correctly 20:1
It can even be worse than that. Assume you're playing the long-term game, with a $500 account. You setup a micro lot (1,000 units) long position on EUR/CHF. Assuming that's your only active position, that's 2:1 leverage, so not much. You place a stop-loss order 50 pips out, which should give you a risk of about $5, or 1% of your account size. For all intents and purposes using money management principles, this is a reasonable trade in regards to both position size and account risk. The problem occurs due to the artificial nature of the pegging, and what occurred when it was released. With a 4000 pip slippage of your stop-loss, you just went from a $5 loss to $400. So with that one trade, 80% of your account just got wiped out in a minute. So it turns out there's another risk factor to take into consideration, artificial changes to the free market, as in pegged currencies.
  • #162
  • Jan 19, 2015 2:41pm Jan 19, 2015 2:41pm
Quoting thang33
I am negative with IGMARKETS at about $280K AUD.... My stop was at 1.200 but IG closed me out at 0.925. Have spoken to someone at IG but he said he would get back to me as I have no way of paying this off... His first questions were do you have any assets to sell or how can you pay this off???? I am thinking about bankruptcy... I have no assets to sell to make way for this money. I am in Australia and was hoping someeone could share any news about IG and are in the same boat regards TT
Hi TT - I'm a journalist at the ABC and we're looking into this story for our television news. If you are interested in talking about this, could you please send me an email at woolrich-dot-neal-at-abc-dot-net-dot-au ?

Thanks very much,

Neal Woolrich
  • #163
  • Jan 19, 2015 3:46pm Jan 19, 2015 3:46pm
Dukascopy made this announcement on their website today:

DUKASCOPY: NO TRADE CANCELLATIONS, NO NEGATIVE BALANCES
Management of Dukascopy Group has decided to take an exceptional decision to cover negative balances on client accounts related to CHF move on SNB decision on 15.01.2015.
In spite of the fact that agreements and regulation allow Dukascopy to claim negative balances compensated by clients, it was decided to release customers from obligation to cover negative balance.
Dukascopy Bank has not canceled or negatively adjusted any trade concluded on 15.01.2015 with clients during the CHF move.

Dukascopy Bank and Dukascopy Europe invite all the industry to follow the same approach to build up customers trust in the industry.
  • #164
  • Jan 19, 2015 8:26pm Jan 19, 2015 8:26pm
Quoting Leomeister
{quote} Ahh, I understand, so perhaps you provide one of the trade signals listed under the MT4 Signals tab? What kind of detailed information can you share here? Do you have reports that include the brokers used and at what levels clients were able to have their SL/TP levels filled? Given that all your client traders receive your signals at the same time, they would provide an excellent test group. Could you provide some more information that anonymously compares their respective brokers and platforms with how they handled your TP and SL levels...
Unfortunately I don't have access to this information.

To clarify, I never trade the EURCHF, and haven't done so in 3 years, the trade that caused so much damage for my investors was a USDCHF trade, The master trade had the stoploss at BE +2, I can only assume the brokers in question closed the trades at approx 1000pips past this SL.
  • #165
  • Jan 20, 2015 2:09am Jan 20, 2015 2:09am
Quoting PixeLM
{quote} Unfortunately I don't have access to this information. To clarify, I never trade the EURCHF, and haven't done so in 3 years, the trade that caused so much damage for my investors was a USDCHF trade, The master trade had the stoploss at BE +2, I can only assume the brokers in question closed the trades at approx 1000pips past this SL.

Thanks for your reply. I was also long the USDCHF with Excel Mkt. broker. My SL was trailing at ~100 pips which should have been closed in profit. Instead I was filled at -1200 pips. Fortunately I was testing a new VPS and only had .03 pips in play. So got dinged but not a fatal wound. My impression of Excel was they had good fills, good customer support, and good intentions. But as an ECN broker they failed to adequately hedge their clients risk.

Excel has stated that they have segregated client accounts and are sending out regular updates as to progress on their wiring out of withdrawals. I should be receiving my balance back within a few days. You had good results with Globalprime and I would consider them, but unfortunately they don't accept U.S. citizens as clients. I've heard good things about them and in general have been impressed with what I've seen of the brokers located in Australia and New Zealand.
  • #166
  • Jan 20, 2015 2:23am Jan 20, 2015 2:23am
http://forexmagnates.com/banks-bucke...nc-volatility/

In a shift for the retail industry, the largest losses suffered by brokers after the SNB removed its 1.20 price floor on the EUR/CHF exchange rate were suffered by those using non-dealing desk agency models, as opposed to market makers. The most notable were FXCM and InteractiveBrokers, each announcing losses above $100 million. Their losses are notable as non-dealing desk brokers pass all client risk to liquidity providing counter-parties, as opposed to market makers who warehouse customer trades internally and minimize external hedging.

Affecting non-dealing desk operators this time around was the sharp CHF volatility, which triggered scores of clients to lose more money in their accounts than they had, and resulted in negative balances. For the most part, these negative balances are noncollectable from retail clients, even though brokers themselves are on the hook for similar sized deficits with their liquidity providers.

Non-dealing desk firms also suffered from poor executions from their bank liquidity partners during the move. This ultimately caused client losses and negative balances to be exacerbated compared to prices. As related last Thursday, client notes sent from UBS to their customers explained that pricing during the move wasn’t final and could be restated. This turned out to be the case as several technology providers told Forex Magnates that their execution monitoring software revealed numerous price corrections.

In an extreme example (that affected at least two brokers), Barclays had filled EUR/CHF sell orders at 0.065 (no extra zero) while at the same time EBS was quoting its session low of 0.85. Technology providers that Forex Magnates spoke to corroborated with similar examples of their clients. Firms did state that Barclays and other banks ultimately did provide some price improvement, but often to levels below that of EBS’s low of the day.

- See more at: http://forexmagnates.com/banks-bucke....5WMsAQbQ.dpuf

Market maker risks

Market makers, on the other hand, benefited as counter-parties to customers with Swiss franc short positions. Prior to Thursday’s news, many brokers reported trader short positions to be above 90%. Market makers suffered when the profits of their CHF traders (amounting to less-than-10% of traders) were greater than the client balances of the +90% of losers. As such, if losers lost $10 million with client balances of $500,000, and winners profited $750,000, a broker would come out with a net loss of $250,000.

Market makers were also vulnerable to customers executing Swiss franc buy orders as the currency rose following the SNB’s announcement. Unlike no-dealing desk brokers where client executions are dependent on orders being simultaneously transacted with liquidity providers, market makers are able to (not that all of them do) fill customer orders quicker. However, some brokers have also expressed that CHF executions aren’t final and can be altered after verifying rates with liquidity providers.

Lastly, market making brokers also absorbed losses on hedged positions they took on the Swiss franc. Due to the EUR/CHF holding above its 1.20 price floor for over three years, it attracted scores of traders who bought the forex pair near the floor and profited on small moves higher. As the trade had been performing well for many traders, it led to some brokers hedging a portion of their client’s exposure. While the hedge limited their risk to their customers’ short term profits against them, it ultimately led to losses as the EUR/CHF crashed.

Even attributing losses to internal hedges and customers that were on the right side of the franc’s move, on the whole, market makers performed better than their non-dealing desk brethren who absorbed client negative balances. Initial analysis also appears to show that losses were regional as brokers with higher APAC-region customer bases were less exposed to the franc. As mentioned above, among market makers, there was a variance of results that was dependent on various factors such as EUR/CHF hedging. As such, several large brokers that use market maker models like GAIN Capital and Plus500 reported profits from the move, while CMC Markets, OANDA and IG Group lost funds.

- See more at: http://forexmagnates.com/banks-bucke....5WMsAQbQ.dpuf
  • #167
  • Jan 20, 2015 3:58am Jan 20, 2015 3:58am
IC Markets Still Strong
Dear Trader,

The unexpected announcement by the Swiss National Bank (SNB) that it would withdraw the cap on the Swiss Franc’s value against the Euro took many in the industry by surprise and resulted in extreme volatility in the forex markets.

We were surprised by the extreme volatility after the announcement, however fortunately in December, 2014 we assessed the risks associated with this pair and reduced the leverage offered to clients. As a result of this pre-emptive measure we were able to minimise the impact of negative client equity and provide additional protection for our clients. Despite the significant volatility during the announcement we were able to maintain pricing during periods of low liquidity.

The new paradigm in the forex market could be characterized by periods of low volatility followed by extreme episodic volatility as we saw with the Russian Rouble in December and now the Swiss Franc last week. Two such events happening within a month of each other should be considered as a sign of the times. We are expecting more volatility like this although not of the same magnitude throughout 2015. We would like to assure you that we will continue to focus on pre-emptive risk management so that our clients remain unaffected by future volatility.

Our financial position remains strong and above our regulatory requirements with trading unaffected. As always client funds are held in segregated accounts with leading Australian banks NAB and Westpac.

If you have any questions or require any assistance, please contact one of our support team members via Live Chat, email: [email protected], or phone +61 (0)2 8014 4280.

Kind regards,
Andrew Budzinski
CEO
just do it
  • #168
  • Jan 20, 2015 4:38am Jan 20, 2015 4:38am
FXCM: At 11.16 am GMT I place a buy CADCHF at 8542 set trailing stop went back to place stop loss a few minutes later but the shock had already happened I could not access the deal on MT4 platform all CHF pairs seemed to be locked up by the time I could get in the loss was 1700 pips I need to know did anyone else experience this lock down the that time, any input would be greatly appreciated. I have made out a ticket trying to claim back my loss my account did not go negative.
  • #169
  • Jan 20, 2015 6:13am Jan 20, 2015 6:13am
Quoting jw1981
{quote} I know it can be frustrating. But two points: 1. You didn't take a -ve hit to your account, given the circumstances, so something to cheer about. 2. ETX sure must be busy as with other queries pouring in. Give them some time. If you still don't get an answer, try the FCA route (if you are a UK resident, i'm sure it will give you more weight).
Hi jw1981, etxcapital returned with this flimsy explanation below:

*etx capital: The SNB’s decision to cease to maintain the 1.20 level in EURCHF (announced at 09:30, 15th Jan) led to an unprecedented market dislocation in the Swiss currency market. We have been examining FX trades involving CHF executed electronically with us in the aftermath of the move and have found that a number have been conducted at levels or in amounts that were manifestly erroneous.
The client (myself - flame) had a stop entry order (12555256) to buy £2pp CHFJPY rolling daily @ 115.66, this order was incorrectly slipped and filled @ 115. 725. The correct level of the fill should have been 132.40, the rate that was deemed the first available price we could have traded in the underlying market in CHFJPY, and so we have amended the slippage on this order (12555256)
The result of this is there has been a reversal of the original open/closed trade nullifying the thousands £'s profit and trades re-input at the correct levels. In this case the client bought £2pp CHFJPY @ 132.40 and closed at the original closing rate @ 133.62. This has rather resulted in etx capital considering to issue profit of hundreds £'s.
I hope this explains the situation, If you have any further questions please do not hesitate to contact us.

*Me (flametrain): They shouldn't do that because everything was done within legal trading parameters. Order was placed to trigger buy £2pp CHFJPY rolling daily @ 115.66 which triggered next day as ordered as per price action. However bullishly spiked further due to SNB’s news. Hence prompting etx capital to penalise me as an investor? Any advice will be highly appreciated in advance. Thanks
  • #170
  • Jan 23, 2015 2:22am Jan 23, 2015 2:22am
just got another Tickmill announced about their readiness to buy client portfolios and assets of FX brokers who have run into difficulties due to recent market events related to record Swiss Franc volatility. I thought this could be another better solution for any traders who face difficulties,
official announcement on their website : http://www.tickmill.com/company-news...os-fx-brokers/.
how anyone see this, if there's any member had a plan to got this kindly share any experience, it may saves many fellow traders around.
  • #171
  • Jan 23, 2015 2:47am Jan 23, 2015 2:47am
Quoting fxindikator
just got another Tickmill announced about their readiness to buy client portfolios and assets of FX brokers who have run into difficulties due to recent market events related to record Swiss Franc volatility. I thought this could be another better solution for any traders who face difficulties, official announcement on their website : http://www.tickmill.com/company-news...os-fx-brokers/. how anyone see this, if there's any member had a plan to got this kindly share any experience, it may saves many...
Dude, are you working for them? you posted exactly the same thing on Trade2Win forum under the nickname BillyJean
  • #172
  • Jan 25, 2015 10:20pm Jan 25, 2015 10:20pm
Inserted Video


Global Shockwaves To Come From Swiss Currency Bombshell - Mike Maloney
It takes a lot for me to IGNORE you, but you can try.
  • #173
  • Jan 25, 2015 10:20pm Jan 25, 2015 10:20pm
Quoting flametrain
{quote} Hi jw1981, etxcapital returned with this flimsy explanation below: *etx capital: The SNB’s decision to cease to maintain the 1.20 level in EURCHF (announced at 09:30, 15th Jan) led to an unprecedented market dislocation in the Swiss currency market. We have been examining FX trades involving CHF executed electronically with us in the aftermath of the move and have found that a number have been conducted at levels or in amounts that were manifestly erroneous. The client (myself - flame) had a stop entry order (12555256) to buy £2pp CHFJPY...

Guys, just thought came into my mind... Was there any possibility to hedge that bad long EUR/CHF position? Maybe putting shorts on other CHF pairs where there were more liquidity? Or no ways to protect that problematic position??
  • #174
  • Jan 26, 2015 7:57pm Jan 26, 2015 7:57pm
Quoting Bedfellow
I use fxcm and had my SL at 1.1980 on EURCHF. I wasn't stopped out until 1.0236. Thats over 1700 pips. Got totally wiped out on the trade plus a lot more. I'm not sure what to do now since I'm so far in the negative. I submitted a ticket to them for auditing but am still waiting on a response.
They will definately want you to pay back the amount , that I can assure you .
  • #175
  • Jan 26, 2015 10:09pm Jan 26, 2015 10:09pm
Quoting Rylai
{quote} They will definately want you to pay back the amount , that I can assure you .
I believe they already rescued his account from negative equity. Btw check T&S of broker you trade with, particularly about SL and negative balance protection (if your broker take over losses in case they exceed margin)
  • #176
  • Jan 31, 2015 11:03am Jan 31, 2015 11:03am
Quoting coolsjc
Im using Oanda. I had my SL at 1.1748 and they have close my trade @ 1.17473. I hope that is a great job.
Hi

pls tell me, did the stop stayed on this level or Oanda changed it?

pls, can you tell what was your position size just to know how far they accept it. Was it less than 10k position or more than 50k position or some specifics which could give me additional information to hold account with them. this was live trades right.

thank you!
  • #177
  • Aug 27, 2015 4:31am Aug 27, 2015 4:31am
Quoting leebsurag
{quote} Guys, just thought came into my mind... Was there any possibility to hedge that bad long EUR/CHF position? Maybe putting shorts on other CHF pairs where there were more liquidity? Or no ways to protect that problematic position??
you name it
Long EURCHF, Short GBPCHF , Short EURGBP
Long EURCHF, Short EU,Short UCHF,,
i think we have a lot of CHF Combination if we talking about hedge, and might be in that move we have chance to make nice profit
but who knows will the same events will happen again in future
  • #178
  • Last Post: Aug 27, 2015 7:41am Aug 27, 2015 7:41am
Trading with Oanda, they honoured my stoploss and got me out with no slippage.

I haven't tried other brokers yet, did they do as well?
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