You know how we always hear horror stories about the brokers and how sometimes pending orders are not executed blah blah blah.
Personally I didn’t have any set up last week and hence I didn’t trade.
But it seems to me like last week’s market conditions were a perfect example of a situation in which your stop losses could have not been respected at all, keeping you on the wrong side of the road much more than you would’ve expected.
I’m talking particularly about the yen pairs, which seem to be the ones with the worst impact.
Were you long positioned when the crash happend?
Did you have any problem with the execution of your stop loss? If so how far did it go and who’s your broker.
I’d like to hear first hand experiences if possible.
I’d be interested to hear any stories about this as well.
I was in a trade in 2008 when the US government bailout announcements were made. The drop was nothing near what happened last week, but it was an unexpected fast drop none-the-less. I was on the wrong side of a trade and Oanda executed my SL perfectly, even though it dropped a couple hundred pips below my SL in about 15 seconds!
I was trading gold with Oanda I got hit with a margin call. (inexperience with the pip value and movement of gold) The price was moving fast, when all was said and done my account balance was about 1/2 the margin call level. This didn’t happen last week. I have never had a problem with a stop. I am not complaining about the broker I screwed up! I am thinking a margin call must be handled differently than a stop by Oanda and probably most brokers. It made me realize a negative balance is a real possibility!
No problem with my Forex broker. The worst slippage I’ve had was only a couple pips, and that has happened very rarely. Happened to me way too often in other markets though.
I havent been in trade for 2 weeks because I am working on an EA and I am sick because I went through last weeks EUR/USD to see what my EA would have done had it been finished.
It would have opened sells last monday followed up by multiple subsequent sell positions which all would have recieved the close signal on wednesday to the tune of around 15,000 pips
That certainly is good execution! And even though the drop wasn’t as dramatic as last week’s, I think your example certainly qualifies as an extreme market condition.
Friend of mine works for a CFD provider. A client of theirs was long eur/jpy in size, position close to stop when market let go, gapped lower, margin call and bam, you owe us 300k. Needless to say they are having trouble tracking him down haha.
First think I did friday morning was withdraw 95% of my funds from my rokerage account.
BIG ouch there haha. Feel bad for the guy though. No matter how well you controlled emotions through trading, I’d lose it completely being in a hole like that.
Now if he had margin call, he loses his account at the worst, can’t owe any more to a broker am I right?
Now if he had margin call, he loses his account at the worst, can’t owe any more to a broker am I right?
Actually not true i.e. that’s why you’ll find that most disclaimers note that you CAN lose more money than your initial deposit and this is normally ‘glossed over’. While it is true that this scenario is the exception rather than the rule it is possible to owe your broker money.
What many people don’t understand (or have not had explained to them correctly) is this: a stop order BECOMES a market order (I’ve posted links here at least twice to the SEC’s website on this subject). In the scenario described: the stop order, which is now a market order, can only be executed at the first available price which, in the case of a gap, may be well above or below the stop order price that was originally set by the client. This is why SOME brokers (beware: not ALL brokers) will not allow an account to go below a certain free margin percentage e.g. 30% before asking the client to deposit more funds or close some open positions i.e. a sort of ‘cushion’ is created. Some brokers will, however, let an account fall until there is ZERO margin available and, again, in the scenario described, it’s easy to see how it’s then possible for the account balance to fall to LESS than ZERO.
Also: sometimes brokers get a ‘bum rap’ because of slippage. It’s just ‘part of the game’ is all i.e. in a very fast moving market it may be impossible for a broker to execute an order at a given price and this is when a requote is given. I’m not saying that there are brokers that don’t use this to their advantage i.e. I’m sure there are but under ‘normal’ circumstances slippage and requotes are, as I said, ‘part of the game’ is all. Most stock traders will be familiar with the concept of placing an order at ‘X’ and being ‘filled’ at ‘Y’. Nothing ‘sinister’ about this at all.
I’ll try and look up the link to the SEC’s website that I’ve posted before and post it here if anyone is interested.
A close out orders script could help with this scenario to some extent, it wouldnt prevent the gap from hurting your account but at least it would close out orders that have had their stop loss orders “jumped” by the gap, to prevent the loss getting any worse than it already has.
The way that script would work is, you would run it all the time, it would read your open orders from the order pool and their stop losses, then if any order is still open after its stop loss has been passed by say 2 pips or more, it will send close order to the broker, so on Monday morning after its stop loss has been breached by the weekend gap it would send the close order to the broker after the market open on Monday.
The market was very close to his stop before the sudden fall, so he just got enourmous slippage. He was willing to lose X, but ended up losing X+heaps because price jumped his stop and the next print was way below. Must have has all his margin on the position which is really dumb, but you still have to feel for the guy. I think he had like 100k in his account and now is -200k. I know this sounds outlandish, but I have no reason to believe my friend was lying. Even if he embellished somewhat i am certain that his client got burnt big time.
As for the gaps, I don’t see them either, but my broker doesn’t show weekend gaps either, they just kinda connect the dots haha. But even without gaps I doubt there were many bids below, a lot of people wanting to leave with very few doors. Although you may see prints at certain levels, that is no guarantee you would be getting filled, would depend on your queue position. Also, given his size he (or his broker at least) may be getting filled at lots of differnet levels (and you can rest assured his broker did not give him the best fills). Course of sales data would be interesting.
I withdrew my money from another broker because volatility like that makes me nervous about my brokers position. I asked my same friend about that and he said their hedges were fine, yet at the same time admitted they were having trouble tracking down this guy for the 200k so…? My understanding is that with a lot of providers you are exposed to the losses of other clients, so if someone blows up bigtime (and defaults), you are exposed to their losses and it just takes one bad egg to ruin it for everybody (somebody please correct me if i’m wrong on this). Either way, I think it is good policy to leave the bare minimum in your trading account because it is simply not safe.
I got hit… when i first traded was on a tuesday aud/usd when i woke up it was 100 pips below so i decided let me buy. went up 11 pips then bammm the doors of hell opened up. it was sinking fast, real fast, i sold at -60 pips on 40:1 . then by thursday i saw that it went down even more i say 200+ pips below. i closed the trading software and took a vacation since then i still havent looked at it, im waiting till everything gets better then i return.:rolleyes: new experiance for me
I was in USDJPY at the time and had no problem with my stop being triggered and filled. I don’t believe FX pairs on UK brokers should have had a massive problem…in fact any broker for that matter unless their system simply isn’t up to scratch.
Now equities, that’s a different matter, the issue was mainly with stocks in this case as liquidity was removed from the market when the NYSE shut down their system including the market makers who are supposed to provide the liquidity.
I was in a long GBP/USD trade 8 months ago in the full knowledge that news (red on Forex Factory) was about to effect the market, i was about 20 pips away from my stoploss when price went against me, it flew past my stop and as the loss was getting bigger by the second i tried to manually exit but needless to say i got ‘this position is being filled’ from my broker so i had to await the outcome whilst seeing my account dwindle. Around 30 seconds later the position was indeed filled nearly 60 pips away from my original stop which was almost the very bottom of the spike! This was a relatively small trade but i now know that IG Index care not atall about slipping people’s account to the maximum.
