Hi Traders,
I had an incident on my live account yesterday due to to strong gapping on GBBJPY and would appreciate your feedback to better understand what happen in a live environment.
On friday night, I had one open sell order at 139.5 with TP at 138.5 and one pending sell order set at 138.5. On Sunday open, GBPJPY opened at 137.17. As a result, my broker closed my open order at TP (138.5) and opened my pending at 137.17. Following discussion with my broker, I have been granted a rebate to cover the difference between TP and opening Price. Their explanations were as such:
"
We have finished our investigation, please see below for details and outcome:
When a client requests a trade, the price gets sent to "BROKER" and "BROKER" sends this price to the LP (this is seamless). This is done as BROKER is the counterparty for the LP and is then forwarded to the client. The time it takes the client to send a trade, be confirmed by BROKER and then BROKER to match off with an LP can be in the milliseconds. However in this period of time (the time the client clicks, and the price that is actually received can differ positive or negative) especially if the market is moving fast. This difference in price is rare and is an average of +-0.1 pip and can be negative to BROKER as well. It generally averages out to be break even.
This is different to slippage - slippage occurs when markets are moving fast, or for example there is a VWAP of pricing. As an example the client sends a trade on MT4 for 2 million of a price 1.3031. At that point in time, the top of book is 1million at price of 1.3031 and another 1million at 1.30313. The client would then get a VWAP price of 1.3032 which would look like slippage of 0.1 pip. During a fast moving market, if a client requests a price of 1.3031 and the next available price is 1.3035 due to high volatility this will be executed at the next best available price which would essentially be a negative slip of 0.4 pips. This works the other way as well if you request a price of 1.3031 and get filled at the next best available price at 1.3027 would be a positive slip of 0.4 pips
We keep price improvements but also take the hit when there is a negative price ‘improvement’. At the end of the month it’s practically flat but if we chose to give positive and negative price improvements +/- to all MT4 clients they would never complain on the positive improvement but there would be heaps of complaints on the negative ‘improvement’ which can be quite bad in cases. When we take both negative and positive on all trades It generally averages out to be break even for us.
However, you trade xxxxxxx is quite an extreme case and so we are happy to setup a rebate in order to pass on the improvement."
I' m not fully convinced by their explanations. If the gap would have been on the other side, I'm sure that the order would have been closed at the opening Price and not at SL. What are your experience with your broker. Is this normal practice ?
Thanks for your feedback, fellow traders.
I had an incident on my live account yesterday due to to strong gapping on GBBJPY and would appreciate your feedback to better understand what happen in a live environment.
On friday night, I had one open sell order at 139.5 with TP at 138.5 and one pending sell order set at 138.5. On Sunday open, GBPJPY opened at 137.17. As a result, my broker closed my open order at TP (138.5) and opened my pending at 137.17. Following discussion with my broker, I have been granted a rebate to cover the difference between TP and opening Price. Their explanations were as such:
"
We have finished our investigation, please see below for details and outcome:
When a client requests a trade, the price gets sent to "BROKER" and "BROKER" sends this price to the LP (this is seamless). This is done as BROKER is the counterparty for the LP and is then forwarded to the client. The time it takes the client to send a trade, be confirmed by BROKER and then BROKER to match off with an LP can be in the milliseconds. However in this period of time (the time the client clicks, and the price that is actually received can differ positive or negative) especially if the market is moving fast. This difference in price is rare and is an average of +-0.1 pip and can be negative to BROKER as well. It generally averages out to be break even.
This is different to slippage - slippage occurs when markets are moving fast, or for example there is a VWAP of pricing. As an example the client sends a trade on MT4 for 2 million of a price 1.3031. At that point in time, the top of book is 1million at price of 1.3031 and another 1million at 1.30313. The client would then get a VWAP price of 1.3032 which would look like slippage of 0.1 pip. During a fast moving market, if a client requests a price of 1.3031 and the next available price is 1.3035 due to high volatility this will be executed at the next best available price which would essentially be a negative slip of 0.4 pips. This works the other way as well if you request a price of 1.3031 and get filled at the next best available price at 1.3027 would be a positive slip of 0.4 pips
We keep price improvements but also take the hit when there is a negative price ‘improvement’. At the end of the month it’s practically flat but if we chose to give positive and negative price improvements +/- to all MT4 clients they would never complain on the positive improvement but there would be heaps of complaints on the negative ‘improvement’ which can be quite bad in cases. When we take both negative and positive on all trades It generally averages out to be break even for us.
However, you trade xxxxxxx is quite an extreme case and so we are happy to setup a rebate in order to pass on the improvement."
I' m not fully convinced by their explanations. If the gap would have been on the other side, I'm sure that the order would have been closed at the opening Price and not at SL. What are your experience with your broker. Is this normal practice ?
Thanks for your feedback, fellow traders.