Slippage Question?

Hello everyone,

So lately I have been playing around with FXCM’s demo account and I guess that I am experiencing “slippage”.
I currently been trading breakouts caused by news events. I have been doing very well and getting into a trades very quickly and getting out very fast. (going short right when the news comes out, then going long in a few seconds)

Now that I have my “plan” down I started to play around with my position sizes. (I used less standard lots than I normaly would.) In the past I consistently made 30-60 pips, but for some reason the last two trades did not go as I planned. I would be up about $100 then when I close it would go down to -11. This happened two times at 4:30 and 8:30 (EST) I lost $72 in my demo account.

Am I doing something wrong? Should I change to a different strategy? Or should I alter this strategy?
I know that I am trading during the most volatile time and forex and should I change that?? This way of trading to me I enjoy the most. Is there a way that I will not experience “slippage” while doing this?

Thanks,
Andrew

In my opinion, yes.

In my opinion, yes.

No. Brokers can’t undertake to take to close your positions at your selected levels during those times, because they can’t be confident of being able to close [I]their own[/I] positions in those circumstances. Its fraught with dangers.

It’s not impossible to profit from “trading the news”, of course, but it’s a [U]very[/U] high-risk approach, and for anyone not [I]very[/I] experienced at trading live markets, in the long run it’s probably a way of stacking the deck against yourself.

It may be possible to circumvent those problems by using “guaranteed stop-losses” but these can be so expensive (for understandable reasons) that they may make overall, long-term profit extremely difficult! :eek:

Hi Andrew,

I agree with Lexys. During news events, prices can be extremely volatile. No doubt that’s what attracted you to news trading in the first place, but the volatility is a double-edged sword. The rewards may not be worth the risk, because slippage is more likely with rapidly changing prices.

As an alternative to trading during the news event, you may want to consider trading after it. My colleague Tyler Yell discusses a couple of approaches in his article on DailyFX.com: How to Trade Forex after a Major News Release

PS: Your FXCM Trading Station lets you to limit how much slippage you can get on an order.

Note the Market Range feature for market orders (and the equivalent Range Entry feature for entry orders) only limits your negative slippage, not your positive slippage.

I think there is no slippage on demo accounts (most brokers offer instant execution on them), but maybe FXCM demo mirrors live trading conditions what’s not a common practice among forex brokers.
The slippage is really a pain in the ass during trading news you can watch a couple of my videos like this or this to see how it works on real account but I try to use only high-impact news where good broker fills your order with 10-20 (max) pip slippage with a news movement up to 100 pips (like NFP or CB decisions).