Im new to Forex trading and currently practicing with Dukascopys demo account. I decided to try news trading with AUD/NZD pair and something weird happened. I took both long and short positions well in advance, before the spread got too high and planned to close the other one after the news. Everything went fine until I closed my short position in order to cash in my winnings, to my suprise it actually closed many pips higher than it should have and left me loosing money. My first thought was that it could be slippage, but there wasn’t any heavy trading going on at the time, and i’m also using a demo account with fake money, so as far as I know, there even shouldn’t be any slippage, or atleast just minimal do to the net latency. I would appreciate if some one who know why this happens would explain it to me. Thanks.
Close at market will occasionally slip, especially on the less liquid crosses. You can avoid some of that using stops and limits. Market orders will tend to get second billing in the order flow. Think of market orders as the rogue car in high traffic on the freeway that nobody will let into the exit lane because they cheated by zooming up close to the exit in the fast lane, and not waiting in line like everyone else. If they get shut out, they have to go to the next exit.
And yes, slippage happens. Even on demo.
What you circled in your chart has nothing to do with slippage, if I remember correctly there were a set of economic reports released out of Australia and New Zealand. When it comes to slippage it also depends on your brokers liquidity and ability to fill your orders. The less liquid your broker and the currency pair the higher the slippage you may face.
The first 7 posts by Darkstar will give you a very good idea of what goes on around news events (and on how forex is structured in general)
The Structure of Forex Brokers @ Forex Factory
Cheers
Nothing to do with slippage?
If the order didn’t get filled at the desired number, it slips. Reasons don’t matter.
This is an unfortunate part for the traders I feel.Orders need to be filled! If you want to sell, there have to be buyers at that price and this is all in simple form to me!
Thanks everyone for your answers. If the slippage is this bad in demo account, im worried what it will be with real account. Will be staying away from trading news with the “exotic” currency pairs, and will see later, if ill have to abandon it all together when moving to real money account.
That’s a good thing to do.