I was wonder if you can give me feedback on what is a reasonable slippage.
On the 27/02/2015 I placed a pending long order USDNOK with entry of 7.7391. It was on the weekend and apparently 1.5 mins before closing time my order was filled due to the widening of the spreads. I contacted my broker’s service team and below was their response. They said there was a 64.3 pip slippage… seriously? I asked my colleague who had the same trade on as me and they said their order wasn’t filled… Is my broker taking me for a ride?
Hi,
Thank you very much for providing your journals.
At the time your pending orders were opened it was roughly a minute and a half prior to market close on Friday evening. Due to the nature of the market, there tends to be less liquidity around these times which results in the spread widening as well as limited pricing available from our liquidity providers. As USDNOK is an FX minor pair, the spread will definitely be wider than the majors as there is less prices available within the interbank market.
I have checked the tick data and the reason your pending orders were executed is that the price jumped 64.3pips in 27 seconds with no price available during that time period. As the price prior to execution was 7.6748 the next available price went through your desired entry price and was 7.7391 which is why your pending buy stops were executed.
AxiTrader receives its spreads from 14 different major banks and financial institutions. We take the best bid and ask then offer that directly to the client, which lets us act as a non-dealing desk broker with no intervention in client’s trades. As such, we are only able to offer the prices we are receiving from our liquidity providers to our clients.
Negative slippage is not something that we would like to see on our clients but this is a part of Forex trading. Unfortunately we are not able to improve this trade for you.
We are a very transparent broker as we educate our clients regarding slippage. Please kindly refer to our slippage policy on our website
If you have any other questions, please do not hesitate to contact us.
Hi there.
First to mention I am not familiar with that broker and its business model. Anyway the explanation they gave you is correct – trading a minor pair close to market closing is always risky. IMO reasonable slippage by the major pairs during news, rollover, market closing/opining would be max 15-20 pips but when we are talking about less traded currencies I believe there is no limit. As for the case with your colleague if it was by the same broker and the trade was with the same parameters then it is strange and you could argue. If he is using different broker, then your complaint is irrelevant because different brokers have different liquidity providers = the pricing may be different. Additionally, I know that some brokers stop their pricing short before market closing and rollover so this might be another reason for not filling of your colleague’s trade.
PS: I can’t see your picture clear to see how much is your loss but it should be significant as you still remember the case almost 2 years later, lol. Only joking! I know it is a matter of principle. Nobody likes getting huge slippage.
Cheers
Asides from the original post being over 11/2 years ago, 28 pips or thereabouts seems to be the typical spread for this pair ( Spread Costs - FXCM Markets ), so 60+ pips sounds about right for volatile/ low liquidity times like the OP is talking about.
Guess its ok for EURNOK (not major) and the time (Friday close). Liquidity drops dramatically that’s why moving order over weekend especially on such pairs is a risky job, not talking about opening during this time.
