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Reality of FOREX: my experience with brokers + share yours

  • #201
  • Aug 31, 2016 2:12am Aug 31, 2016 2:12am
Quoting merrygold
{quote} 0.10 pips was the slippage. When us overlaps london, then there is more liquidity and slips rarely happens, but on major exotic its possible. I think many traders get slipped 0.10 pips without noticed it. Before trading the active traders program, is was using their standard account, only minor problems, that could happen everywhere. Their liquidity pool is the same no matter what type of account you trade with pepperstone, the real difference is in spread and commision, wich is much lower. - But i also need to keep a certain amount of cash...
Thanks for explaining further, I definitely agree that there are many shady brokers, but also some good ones. The fact is that at FF is already one thread here where someone gets 30 pips slippage with Pepperstone - but as far as I know he traded during news. Below I am copying some other thread from other forum about slippage experience with Pepperstone:

Ive been trading for about 5 years - algo trading on the majors, doing 5 to 50 intraday trades per day per symbol, flat at the end of each session.

Ive been analyzing my trades - profits and losses, and recently I have figured out the exact impact of slippage on my trading results. Below is the explanation of my measurements and calculations. Pretty substantially not in my favor I must say.

I built a script to calculate the differences between the prices my algo sees when sending trades and actual execution prices. My algo is hosted on a VPS CNS and I’m trading on a Pepperstone Razor account, so the latency to broker’s server is not more than 1 ms.

I’ve collected data for more than 1.5 months and now I have stats on 4621 trades and got following results:

This means on average I lose about 1.71 pips (4th decimal) on slippage each trade .
Having 10 trades a day means that I lose on slippage 17.1 pips a day -> 376.2 pips per month -> 4,514.4 pips a year.

When I calculate the sum in USD the figure really scares me - it’s 4 times more than I have in my account!!! If I could keep this money I’d be way closer to retiring.
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  • #202
  • Aug 31, 2016 2:20am Aug 31, 2016 2:20am
Quoting Vanderheyden
Hello, don't know where to drop this post since i can't make new threats as a junior member. I have been researchring forex for a few weeks now. One of the problems i need to solve is finding my first broker. Long story short. Whats up with all these regulators? Can someone explain me the big differences between them? I ask this because many times i read threats where there is stated that. "brokers under FCA UK is the best" "brokers under CySec is for the majority a scam" "brokers under FSPR regulation are a joke" ... Since i havent read many threats...
Hi Vanderheyden, I am happy that you have posted here - simply ask anytime you need here. The fact is that there are a lot of scamming brokers around the world as well as great and highly professional brokerage and their regulation doesn't matter that much (as long as they are regulated - I would definitely not recommend you to choose a broker without any regulation). UK traders will always tell you that their FCA regulation is the best, for Australian traders ASIC is the best - because it's their local and most trustworthy regulator. But it's always about the specific company / broker and their approach.. I've seen so many traders achieving great profits with CySEC regulated brokers and also a lot of traders with stuck deposits with their FCA regulated brokers. I personally trade with Axiory - CySEC regulated - and Swissquote - FINMA regulated, without any issues and I get there great trading conditions / orders execution and withdrawals are always fast.
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  • #203
  • Aug 31, 2016 3:30am Aug 31, 2016 3:30am
Hi Guys,

I guess as a trader what everyone should know first and foremost is what type of broker are you trading with.

Generally there are 3 types:
1.Market Maker
2. ECN
3. STP

The main difference of these brokers are how they execute your trades and how they make profit.

Market Makers, from the term itself means that they have their own dealing desk and all the trades and money is within the same institution. It doesn't get traded in the REAL market. It gives them an opportunity to manipulate and get the opposite trade of the client, hence, they make money by the traders loss, and they lose money from the traders profit.

ECN, is the direct route between the traders and the liquidity providers. It means that they make money by commission. Spreads are paid to the liquidity providers while the commission is there fee for executing the transaction. You'll often observe that ECN brokers have the tightest spread but they always charge commission.

*Liquidity providers are mostly banks and financial institutions. The biggest liquidity provider as of to date is Deutsche Bank, along with Goldman Sachs and JP Morgan.
It's impossible to have another broker as a liquidity provider, that's what you call a fake ECN/STP.

STP or straight through processing almost have the same set up with ECN brokers, the difference is that they are taking liberties where to process the trades. They can route it to another Market Maker or to a liquidity provider.

There are some STP brokers that don't charge commission but their spreads are already mark up.

Hope these helps.

Nadine
  • #204
  • Aug 31, 2016 5:46am Aug 31, 2016 5:46am
Quoting TradingLife
{quote} Thanks for explaining further, I definitely agree that there are many shady brokers, but also some good ones. The fact is that at FF is already one thread here where someone gets 30 pips slippage with Pepperstone - but as far as I know he traded during news. Below I am copying some other thread from other forum about slippage experience with Pepperstone: Ive been trading for about 5 years - algo trading on the majors, doing 5 to 50 intraday trades per day per symbol, flat at...
The pleasure is on my side! - I was not aware of that thread, but i cant comment much on that, as i didnt had a problem like he did. But one thing is for sure, if i get slipped 30 pips outside of the news, then i will find another broker. But so far so good.
MY SITTING, NEVER MY THINKING!
  • #205
  • Edited 7:08am Aug 31, 2016 6:54am | Edited 7:08am
Quoting TradingLife
{quote} Thanks for explaining further, I definitely agree that there are many shady brokers, but also some good ones. The fact is that at FF is already one thread here where someone gets 30 pips slippage with Pepperstone - but as far as I know he traded during news. Below I am copying some other thread from other forum about slippage experience with Pepperstone: Ive been trading for about 5 years - algo trading on the majors, doing 5 to 50 intraday trades per day per symbol, flat at...

How many standard lots do you trade on average at Pepperstone? 1,71 pips average slippage can be acceptable over 100 lots. By 1,71 pips slippage do you mean slippage on entry + slippage on closure? It's strange that you trade with Swissquote, because they have terrible spreads...

About this 30 pips slippage, I'm sure that somebody entered market just before NFP and of course it's broker fault... People don't understand that when 100 pips move take place in one tick, there's no possibility that trade can be executed without 100 pips slippage...
  • #206
  • Aug 31, 2016 7:13am Aug 31, 2016 7:13am
Quoting TradingLife
{quote} OK - no problem, understood. Why do you think that ATC is shady?
All of the recent press releases on the mishandling of an account, filing for BK, being dropped as an IB of FXCM, recent NFA investigation, etc. I don't think they even have a fx feed in the US anymore, which sucks because for a long time they allowed hedging and non-FIFO.
  • #207
  • Aug 31, 2016 3:58pm Aug 31, 2016 3:58pm
Do you provide any trade management EA or tool ? I use a few EAs that perform trade management and alert in mt4. Is there any way to use those or port them to ctrader ?




Quoting cTrader
{quote} Hello TradingLife, Just to step in and correct you a little bit. With cTrader, plug-ins, price delays and price tweaks are impossible, that was our business decision from the very beginning and will never change. Just to let you know; Spotware host all brokers solutions and Spotware are the only party with root access servers and database. This means brokers have no opportunity to modify any server/system behavior. There is no dealing desk for brokers to use and literally nothing they can do to interrupt your trading via our technology....
Live life king size !
  • #208
  • Aug 31, 2016 10:54pm Aug 31, 2016 10:54pm
Quoting TradingLife
{quote} Could you please clarify more your experience with them? Are they doing some dirty practices while executing your orders? If so, I would like to put the warning on the first page.
Main thing is I cannot trade because of huge spreads in most of the crosses.
I have limited myself to a handful that move between 2 and 3. None below 2.
Charts do seem to lag but that may be the different server time on the brokers I have been comparing against.
Live life king size !
  • #209
  • Sep 1, 2016 6:32am Sep 1, 2016 6:32am
Quoting nadzforex
Hi Guys, I guess as a trader what everyone should know first and foremost is what type of broker are you trading with. Generally there are 3 types: 1.Market Maker 2. ECN 3. STP The main difference of these brokers are how they execute your trades and how they make profit. Market Makers, from the term itself means that they have their own dealing desk and all the trades and money is within the same institution. It doesn't get traded in the REAL market. It gives them an opportunity to manipulate and get the opposite trade of the client, hence, they...
Hello and welcome here! Very nice overview! The very important thing to highlight is the fake ECN / STP brokers - as most of today's ECN / STP brokers are fake - they simply route all your orders to the only one liquidity provider / market maker and that's how fake ECN / STP brokers can cheat traders / manipulate prices / do interventions in your trading etc. If ECN / STP broker is offering huge leverage, fixed spreads, % deposit bonuses, huge competitions etc. - you can be sure that you are dealing with fake ECN / STP. In a better case, a broker can be hybrid - like both routing your orders to other liquidity providers (a-book) and doing the market making (b-book). It's pretty questionable if those brokers are worth trying and trading with. Definitely the best option is to trade with true ECN / STP, but there are only a few of them - that's also why I decided to open the thread
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  • #210
  • Sep 1, 2016 6:41am Sep 1, 2016 6:41am
Quoting merrygold
{quote} The pleasure is on my side! - I was not aware of that thread, but i cant comment much on that, as i didnt had a problem like he did. But one thing is for sure, if i get slipped 30 pips outside of the news, then i will find another broker. But so far so good.
Yep, I understand and agree. It would be interesting to compare results of the same trading strategy that you would achieve with Pepperstone vs. Axiory vs. Swissquote.
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  • #211
  • Sep 1, 2016 6:58am Sep 1, 2016 6:58am
Quoting insomniawawa
{quote} How many standard lots do you trade on average at Pepperstone? 1,71 pips average slippage can be acceptable over 100 lots. By 1,71 pips slippage do you mean slippage on entry + slippage on closure? It's strange that you trade with Swissquote, because they have terrible spreads... About this 30 pips slippage, I'm sure that somebody entered market just before NFP and of course it's broker fault... People don't understand that when 100 pips move take place in one tick, there's no possibility that trade can be executed without 100 pips slippage...
I personally don't trade with Pepperstone - as I wrote previously, I just copy & paste it from the other forum (not FF). I agree that we would need more data to analyze, but I really doubt that he is trading over 100 lots 5 - 50 times a day I think that he can trade in standard lots at maximum - then the negative 1,71 pips slippage on average after his 4621 trades is huge and alerting! Slippage should be neutral in the long-term (in case of not trading news), sometimes little bit negative and sometimes little bit positive, but definitely not negative like that.

Regarding the second part of your post, I definitely agree that during the heaviest news - significantly negative slippage can be expected - still it highly depends on choosing the right broker as the slippage can differ in tens of pips when trading news.

Regarding Swissquote spreads - I don't trade with their basic spreads, still I agree that their spreads are little bit higher, but I am pretty satisfied with their execution which saves me much more than trading with lower spreads, but with terrible execution (so I get better overall costs). Also I like the security and FINMA regulation of Swissquote Bank.
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  • #212
  • Sep 1, 2016 7:03am Sep 1, 2016 7:03am
Quoting nonlinear
{quote} All of the recent press releases on the mishandling of an account, filing for BK, being dropped as an IB of FXCM, recent NFA investigation, etc. I don't think they even have a fx feed in the US anymore, which sucks because for a long time they allowed hedging and non-FIFO.
I think that dropping FXCM as a liquidity provider could be a good sign and move forward. Based on my information their new liquidity provider should be Intercative Brokers. I've just heard a lot of good experience with ATC from other traders. Is here anyone who has real experience with ATC?
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  • #213
  • Sep 1, 2016 7:07am Sep 1, 2016 7:07am
Quoting foxtrader16
{quote} Main thing is I cannot trade because of huge spreads in most of the crosses. I have limited myself to a handful that move between 2 and 3. None below 2. Charts do seem to lag but that may be the different server time on the brokers I have been comparing against.
Yep, different server times can cause different shapes of candles / bars. And were their real spreads the same like they stated at their website or are they widening their spreads during trading / executing orders. Also are they delaying orders execution or did you experience significantly negative slippage with them? I am sorry for more questions, but I would like to collect as much information as possible before deciding if they should be placed at the first post or not
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  • #214
  • Sep 1, 2016 7:21am Sep 1, 2016 7:21am
Quoting TradingLife
{quote} You can find more information regarding the futures available for example here.
Thanks. There are much more futures available than I thought.

Wonder now why I came to spot Forex....!
Don't give up on your dreams. Keep sleeping.
  • #215
  • Sep 1, 2016 8:58am Sep 1, 2016 8:58am
Quoting Artcool
{quote} Thanks. There are much more futures available than I thought. Wonder now why I came to spot Forex....!
Well, if you trade anything but USD crosses, there is absolutely no volume. You cannot scalp, not even sure what the shortest time you may be in a trade is. I prefer the flexibility of many instruments and moving in and out however I wish, whether it be minutes, hours, days, weeks, etc. Spot forex became so popular for these reasons and now the regulators (who actually run the futures) have put all these restrictions on spot (which they are calling regulations) to bring people back to futures as almost everyone prefers spot. They are simply attempting to make futures the more attractive option again, but it is not.
  • #216
  • Sep 1, 2016 9:59am Sep 1, 2016 9:59am
Quoting TradingLife
{quote} I personally don't trade with Pepperstone - as I wrote previously, I just copy & paste it from the other forum (not FF). I agree that we would need more data to analyze, but I really doubt that he is trading over 100 lots 5 - 50 times a day I think that he can trade in standard lots at maximum - then the negative 1,71 pips slippage on average after his 4621 trades is huge and alerting!
I haven't traded more than 20 lots in one trade at Pepperstone, but I haven't had so ugly slippages, just normal 0-0,5 pip most of the time.
  • #217
  • Sep 2, 2016 3:09am Sep 2, 2016 3:09am
Quoting insomniawawa
{quote} I haven't traded more than 20 lots in one trade at Pepperstone, but I haven't had so ugly slippages, just normal 0-0,5 pip most of the time.
Even on the flat market?
I had same problem with them and mentioned that in one of FF threads.
  • #218
  • Sep 2, 2016 6:05am Sep 2, 2016 6:05am
Quoting Artcool
{quote} Thanks. There are much more futures available than I thought. Wonder now why I came to spot Forex....!
Well futures have some significant disadvantages too - like a central regulated exchange where all the trading happens, lack of liquidity etc. Below I found a nice chart from BIS where you can see daily FX market turnover by instrument (futures are among others - having a very small share). Unfortunately, I didn't find any newer data than from 2013.

Attached Image (click to enlarge)
Click to Enlarge Name: forex-maturities-bis.jpg Size: 103 KB


I hope that US will allow more competition / serious brokers for US traders soon. But as I am from EU, I personally prefer classical spot FX trading for sure - it's just about choosing the right broker and hopefully for EU traders there are a few of them. Then of course you have to build your own trading plan and have a strict money management system.
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  • #219
  • Sep 2, 2016 6:13am Sep 2, 2016 6:13am
Quoting pipmaster77
{quote} Well, if you trade anything but USD crosses, there is absolutely no volume. You cannot scalp, not even sure what the shortest time you may be in a trade is. I prefer the flexibility of many instruments and moving in and out however I wish, whether it be minutes, hours, days, weeks, etc. Spot forex became so popular for these reasons and now the regulators (who actually run the futures) have put all these restrictions on spot (which they are calling regulations) to bring people back to futures as almost everyone prefers spot. They are simply...
I definitely agree, the spot FX has its own advantages - especially the liquidity advantage as you mentioned. For EU traders I don't see many reasons why to trade futures rather than the spot FX. For US traders, I hope that it's just a matter of time when the US gov will be more opened to FX market - it's probably the decentralization of FX which US gov doesn't like. Or maybe trading options especially for US traders can be a way to consider, but the options trading is slightly different than spot FX. In options trading it's important to stay with standard option contracts and to avoid trading the binary options that don't exist on real market and brokers offer them only to scam traders.
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  • #220
  • Sep 2, 2016 6:16am Sep 2, 2016 6:16am
Quoting insomniawawa
{quote} I haven't traded more than 20 lots in one trade at Pepperstone, but I haven't had so ugly slippages, just normal 0-0,5 pip most of the time.
Do you trade by placing pending orders only (like buy / sell stop / limit orders + S/L and P/T) or do you place market orders too (like opening / closing trades manually)?
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