A Broker Like FXCM but not exactly!

Broker Discussion Forex Brokers
1

Good day everyone,

I’m trying to find a broker that offers the same type of way an order can be placed from its platform as FXCM OCO orders but one that slippage does not affect the requested price. What is killing me with FXCM is that I set my order that I should not lose more than say 30 pips but because of sudden market movements my orders closed out much more costly than I had expected. Sometimes I lose 30-50 pips more than I bargained for.
Can someone assist me with finding a different broker?

2

I think you should find a very reputable offshore brokers. I say this because I have come to notice that the big and regulated brokers often use Slippage as a way to take clients money. Slippages occur to often there. I don’t know why it it is like that. many of them have been fined for slippage manipulation. I think offshore brokers or smaller brokers are better in this regard. Thanks

3

I almost agree with you. Forex trading in the US is not really easy with the regulated brokers. Due to these complications, I decided to use Profiforex and this slippage issue is very rare here.

4

Thank you Isrealz.

7

Hi Starlo,

It’s important to understand why slippage occurs in the first place.

If your stop loss order price is reached, then it is executed as a market order. You may want to sell at a certain price, but there has to be a buyer on the other side to complete that transaction. If there is no seller at your stop price, then the order will be filled at the best available price. If the market gaps through your order price during an illiquid market period such as the weekend open or NFP, then you will likely experience slippage.

Anyone trading in the forex, stock, or futures market, has to be willing to accept the risk that goes along with having orders executed during illiquid market conditions. There’s no sugar coating this. Slippage is one of the risks you assume when trading.

The risk of slippage is greatest during volatile markets such as around a news announcement like NFP, or when holding trades open over the weekend. Speaking of NFP, take a look at the below chart which shows the GBP/USD tick chart right at 8:30am ET during the March 8, 2013 NFP release.

[B]GBP/USD dropped from 1.50361 to 1.49972 in one tick. Yes one tick![/B] That means there were no quotes quoted by the liquidity providers in between those prices. If you had an order to sell GBP/USD at 1.5020, your order would not have been filled at 1.5020 because there was no quote at that price from a liquidity provider offering to buy when you wanted to sell. You likely would have been filled at the next available price around 1.49972. FXCM isn’t deciding to fill or not fill at certain prices, your orders are filled based on liquidity and where there is liquidity on the other side of the transaction to fill your order.

Also, keep in mind that slippage works both ways. If you have a limit or take profit order, and the price gaps in favor of your trade, then you will get filled at the more favorable price which is trading in the market. This is called positive slippage or price improvement. The stats below show that FXCM clients receive price improvements on limit orders just as frequently as they receive negative slippage on stop orders. In fact, we even provide tips on our website to help clients minimize negative slippage and maximize price improvements.

Another thing you can do to minimize negative slippage is to note the times when majors news events are scheduled. These are times when the likelihood slippage is greatest. That and weekends, which is the reason why some shorter term traders also like to go flat before trading closes on Fridays.

In regards to the comments about unregulated brokers, the biggest concern with an unregulated broker is the lack of accountability and financial transparency. If an unregulated broker fails to live up to its promises, what recourse would you have as their client? In order for a broker to fill your stop price without any slippage when the market is actually trading 30 pips lower, they would have to take the loss themselves (because even their own liquidity providers would only trade with them at a price that’s currently available). How many times could they do that before going out of business?

Below are just some recent examples:

[B]Crown Forex[/B]
“Although some people with accounts were still able to get their money out at this early stage, many accounts were not refunded… [I]the company had no authorization from the SFBC for any activity in the financial sector in Switzerland.[/I]”

Unfortunately, that wasn’t the end of the story. A couple of years after going bankrupt, the people from Crown Forex were at it again, this time helping others become unregulated brokers.

[B]JadeFX[/B]
“fraudulently solicited and misappropriated more than $3.2 million from more than 500 customers in the United States and throughout the world to trade forex… [I]None of the defendants has ever been registered with the CFTC.[/I]”

At FXCM, our goal is to provide you with excellent trade execution and a safe place to keep your money. That is why FXCM is regulated in major financial centers in the US, Europe, Asia and Australia. In addition, we are one of the only retail brokers that is also a publicly-traded company (NYSE ticker: FXCM). That is why traders have entrusted us with $1.171 billion in client funds.

Jason