Is This Kind of Thing Typical at Oanda?

I know that Oanda is notorious about widening spreads at news times, but this particular case seems strangely egregious (or is it just me?)...

My strategy consists of placing buy limit orders at around 20 pips above major resistance lines and sell limit orders below major support lines. I recently had a sell limit order in place at the price of 1.4253 on GBP/CHF. The order got filled at 8:30 a.m. EST, 4/17/15. I just so happened to be looking at the recent activity page of my trading app the exact moment that the order filled, and I immediately switched to my portfolio page to find that the trade was instantaneously at -52 pips. I then immediately looked at the rates, but the bid/ask spread was 1.4298/1.4305....

How in the hell did it get triggered when the bid wasn't that low and there was no news event relating to GBP or CHF that could've spiked the spread at 8:30 am EST?

I emailed support and this is the response I got: "Due to the news event, the spread widened to 40 pips (see attached diagrams)."

I emailed back explaining that there was no news event besides from news relating to the USD and the CAD.

Oanda's response back: "There was CHF retail sales and GBP related news earlier in the day, which resulted in the increase in volatility for the next few hours."

Looking at the attached chart, it just seems fishy to me. How can there be an instantaneous 40 pip drop on the bid to 1.4253, to trigger my sell order, and then an instantaneous reversion back to 1.4298/1.4305... 4 hours after the news event that was supposedly to blame?

I have good experience with Oanda. Have you checked some other broker's mt4 - you can apply for a demo at some other broker, for example fxcm, and check whether there was a compatible spike? If there is none, you have a good argument on your side. If yes, somebody possibly targeted stops below the support at that time and overshot - stop orders accelerate the movement of price.

Cheers,
k

oanda is the worst for spread widenenin. best just to stick to your long term 50000pip sl system

This is what I believe happened: You placed order to sell (limit) at low then Oanda decided that if some news comes around, they'd have the risk of losing money as they'd have to hedge with bank and that could take some time to do in which time price could shoot way low (surprise interest rate change). The bigger the size you have the more likely it is they will decide to hedge, especially if your order is still around during volatile morning hour where sometimes news comes and market is illiquid due to london closing.

I don't know if the banks have any rules how their books should work and there's various market makers at play once the orders are hedged public but the following is how I *think* it works in currency futures which track the spot price. If you want to verify this you need to dig out documents from cme site.

So the bank/mm oanda hedge with sees historically the liquidity has been very low or news has been released at that time so they want to get paid more just incase and widen spread. As the spread widens, the order matching engine is going to try to fill any orders in the book and limit stop is turned into a market order that will seek out buyers (eg. if you had sell stop at 100.00 and I had buy limit at 0.01, then you'd sell to me at 0.01 - the exchanges have some rules in place but I don't think they slowed down that CHF move much, so I have personally adjusted my strategy research to assume there's one such event per year).

Besides spread widening, this can also be initiated by someone saying they want to sell at the lowest price the exchange allows. If that is executed in futures, I believe the seller will get filled by all the buyers up to their set limit price and then stop limits get turned into sell at market.

To get better understanding of this book action, there's youtube videos or you could open a demo account with a futures broker.

On my chart the low is 1.42685 - but this just means that there was enough buyers in the books and not enough sellers to push lower.
On GBP futures the price where it bounced back up was slightly near 1.4987 - just slightly through the 1.5 key number, so you could interpret that there was buyers at 1.5 but as it was slightly penetrated, those probably weren't there no longer and thus price soon went to make lower lows in the hours after. More cynical interpretation could be that smart traders had estimated that over leveraged traders had stops below certain number and pulled bids below that number and then hit sell limits below their bids on another account. This practise is illegal if done intentionally, however since proving intent is hard, this is probably still taking place and can be thought as "stop hunting" and I suspect could be also thought as "momentum ignition" but in this case perhaps they wanted to first attempt to "ignite" the momentum down so they could buy low over next few hours... Often you see price break some short term lows before going to resume the bigger trend, if there has been ranging going on.

Thanks for your analysis fxjesus. I'm thinking I may want to ditch the idea of trading with a MM altogether. There's just not a lot of alternatives for US traders.

This is on a demo account btw. And if this kind of thing is happening to me on demo, it will surely happen when real money is on the line.

If it's financially possible, I'd recommend having atleast 3 brokers. I don't want to name names but lets say that if you have a futures, MM (bucket shop) and ecn and have lot of money to throw away, you'd probably be able to notice statistically significant differences in how the market responds to the orders. My broker has several banks and will report which bank was the order matched against (too bad it's not doing that in realtime/show in the book, in this game you really want to analyze your counterparty if possible - that's good part of MM's edge) - so after doing a whole lot of daytrading and losing a ton of money I'm quite sure having certain banks as your counterparty is increasing odds that your trade will go immediately to loss. By accident, I found also other traders mentioning same broker AND same bank with similar result! If I could choose to always trade with that bank it would be perfect to test some arb shenanigans.

lol, trading oanda so mid 2000,s

Oanda is IMHO great because you can specify arbitrary trade sizes, you can for example play with well calibrated baskets (which is cool for martingale buffs, which may want to be very close to the perfect triangular hedge), and you don't need a lot of money to start with, which for a hobbyist like me means a lot. I have for example recently argued a simple strategy to go against the majority of traders (long EURUSD), uploaded some ice-cream money, and am testing my words live.
Additionally, you cannot spend more money than you have. Even if your account is negative, it will be set to zero. After Jan 15, this means a lot...
They also have an api for testing automated strategies outside of MT4 crapware. Also, they are reliable: They're regulated and I get my money quickly when requested, and that is the most important for me.

Cheers,
K

It wasn't OANDA. There was a spike all across the board. Here's a screenshot from Tradingview (2 minute chart at 8:30am on April 17):

https://www.tradingview.com/x/xVIeVWAK/

Good points, Kprsa

And thanks, Eno... That makes me feel somewhat better

The spreads from Oanda, especially during news, are ridiculous. If you compare crosses such as GBP/AUD, with other brokers at these times it will be evident. That is why I had to close to close my account with them. Use another broker, especially if you trade crosses during news volatility times.