Chart and price discrepancies

Beginner Questions
1

Hi,

I guess this post is directed to someone like ‘rhodytrader’ (John) but anyone else that could shed some light on this subject is more than welcome (obviously) to give their input.

As you (probably) all know: I personally believe that trading forex pairs is ‘for the birds’ and the only reliable way of making a living out of this business is to trade equities etc. One of the MAIN reasons I’ve always given for my saying that trading forex pairs is ‘for the birds’ is because of the fact that forex is traded 24/7 and there are as many daily closing prices and daily highs and lows are there are brokers in different timezones. HOWEVER: I’ve spent a good deal of time these past two weeks comparing equity charts from a variety of different brokers and I’m seeing the same thing which is now really starting to ‘pis*’ me off. Below are one or two examples.

Take the S&P 500 Futures Contracts as but one example:

Yes: they are traded 24/5 (notwithstanding the usual daily breaks in trading). HOWEVER: they CLOSE at EXACTLY the same time on a Friday no matter WHERE in the world you may be. So one would expect that no matter WHAT chart of an S&P 500 Futures Contract you look at (assuming of course it’s the same contract) the CLOSING price on a Friday SHOULD be EXACTLY the same not so??? I’ve compared charts of at least 5 different brokers for two weeks now and guess what: I see 5 different closing prices for the same contract. In one case: the difference was 2 WHOLE POINTS (not ticks but S&P POINTS)!!! I mean: some people use 2 points as a stop loss for crying out aloud!!! That’s a HUGE discrepancy.

Now let’s take an individual stock:

Barclays PLC (for example). I’ve compared (again) 5 different charts from 5 different brokers and ONCE AGAIN I’m seeing NOT ONLY different CLOSING prices but also different daily highs and lows. Now bear in mind that trading on this stock opens and closes at EXACTLY the same time EVERY SINGLE DAY so it does not matter (once again) WHERE in the world you may be: one would figure that no matter what chart you’re looking at (given that it’s the same timeframe of course) the daily opening, high, low, and close should be the same ‘across the board’ not so??? In this particular instance: I’m EVEN seeing opening gaps SOMETIMES being shown at ONE broker and NOT being shown at ANOTHER broker and then OTHER times the opening gaps ARE being shown at ONE broker but are not being shown at the OTHER broker.

Any ideas???

I mean: how in the ‘hel*’ are you supposed to trade like this??? To make matters worse: I’ve absolutely NO idea how forex traders manage i.e. if individual brokers cannot get their ‘sht’ together on an instrument that has fixed opening and closing trading times then I’ve no idea how forex brokers can have THEIR 'sht’ together where the charts are essentially a ‘free for all’.

This is of great concern to me (unless I’m simply not understanding the reason for these discrepancies). I mean to say: if you’re going to subscribe to a data feed then which is the most reliable or ‘correct’??? At the moment: I have a trial subscription to the CME data feeds. Could one assume that the feeds that come direct from the exchanges themselves are the ONLY reliable data feeds??? And even if this WERE the case: the high price from a direct data feed from an exchange does not necessarily mean that it’s going to be the high price at the broker that you’re trading with. And in addition to all of this: EVEN IF the live data feeds from the exchanges themselves are the most reliable or ‘correct’ they ‘cost’. I mean: to have live data feeds direct from the exchanges could cost you anything from $300 per month and upwards and AGAIN these feeds are useless if your broker is giving different price quotes.

Yet ANOTHER ‘minefield’ uncovered ‘ladies and gentlemen, boys and girls’!!!

I just don’t get it. If the Dow cash index (pit traded) CLOSES at 10 000 on a given day then it CLOSES (settles) at 10 000!!! Why am I able to find 5 different CLOSING (settlement) prices for the same index at 5 different brokers!!!

The only POSSIBLE explanation that I myself can ‘come up with’ is the fact that some of these brokers are ‘market makers’ while others are not. But I’ve a feeling there’s ‘more to it’ than that. Oh and it’s not because of the spreads either i.e. I’ve checked that already. Yes: they do differ but by marginal amounts (certainly not by 2 S&P points or 20 Dow points)!!!

PUH-LEASE help before I go ‘off my rocker’!!! LOL!!!

Regards,

Dale.

2

That’s a strange thing to say on a Forex trading forum :confused:

you should read some of the quotes printed on every babypips page :wink:

3

Don’t most FX traders take the new york closing time as the reference point for open and close price?

4

Hello again,

akeakamai:

I suppose you’re right. I didn’t mean any harm by that statement. Let’s put it another way: for ME PERSONALLY trading forex pairs has not been ‘the way to go’. I’ve looked at my trading statements (some are more detailed than others) for the past three ‘and a bit’ years on many occasions and at least as much as 90% of my losses can be attributed to trading forex pairs. Most of my profitable trades have been on the major indices, commodities, and individual stocks. The exception to this rule was trading the Brasilian Bovespa which I had ‘no business’ trading at the time and contributed greatly to my ‘spectacular’ blowout which you know about. So why have I been ‘bothering’ with trading forex pairs given my ‘take’ on things. Simply put: no money and LOADS of leverage (which I have noted before is the reason that I personally think that most people ‘flock’ to forex trading). So far as I’m concerned: it’s taken me a very long time and a lot of money to realise that most indicators and trading systems and trading methodologies (at least the ones that I have ‘studied’ and tested ‘ad infinitum’) are not designed for and do not apply to the trading of forex pairs. I’ve proved this to myself now far too many times in the past few months. But as I said: no offense was meant by my statement. I guess I’m just NOW trying to ‘stick’ with what works FOR ME. That being said: I’d still like SOME type of explanation for the price quote and chart discrepancies.

And by the way (I state this again): I’ve asked more than once if we could not possibly have a forum for ‘people like me’ so I can stop ‘pis*ing’ on the forex threads but nobody ‘hears’ me!!! LOL!!!

MedicalChew:

For what MY opinion is worth on the (forex) subject: that’s what I was ‘taught’ too. But I’ll tell you that you can ask any broker you like and they will tell you that THEIR charts are the ‘correct’ ones!!! LOL!!! APPARANTELY: a lot of forex traders use GMT as the ‘cutoff point’ and given that there is only an hour or two difference between GMT and the New York close and given that not too much happens in that hour or two you’re ‘good to go’ using either ‘cutoff point’. The SCARY part though: just how many new traders do you think actually even KNOW this and cannot understand why, for example, their own pivot points / pivot levels are meaningless!!! And that’s just ONE example. Anybody using indicators (let’s take RSI as an example) will quickly find that between 5 or so different brokers in different timezones there will be 5 different values / plots. And we wont even START talking about candlestick and chart patterns!!!

Edit:

And actually even here there is something to be careful of: for the ‘cutoff time’ for forex should one be using the closing price at the times when the New York banks stop trading or should one be using the closing price at the close of the NYSE (not the same thing) or should one be using the closing price of a daily chart of a New York broker. That’s no less than three possible options for forex trading in the SAME timezone!!!

And my personal feelings aside: I can guarantee you that if you take the closing price of a forex pair on a Friday and compare that among a few brokers you’ll find discrepancies as well and the same would apply to the opening price on a Sunday night and I’m not (in some cases) talking about just 1 or 2 pips here!!! THIS I do believe, however, CAN be because most forex brokers are ‘market makers’ and their quotes will differ. This does not and should not explain MY ‘issue’ with equities charts and quotes.

Regards,

Dale.

5

I think your success as a trader will come from how well you can adapt and react to the market you’re trading. I would agree that adapting to FX is quite the challenge. People need sleep and the FX doesn’t sleep! That’s a huge challenge, so if you like the structure of trading indeces, equities, then that’s understandable.

I’ve found that the definition of open/close is annoyingly ambiguous in the FX market, so I understand your frustration. My solution has been to focus on the open/close of major trading session. ie. Asian session, European session, American session. Then there’s the weekly open/close. That is my one beacon of certainty in this market, and I treasure it. I KNOW the market will close Friday afternoon and open again Sunday afternoon, so I KNOW that these opens and closes will be watched by EVERYONE.

Does that help any? Assuming you might wanna get back into FX :wink:

6

Hey!!1 very informative article thank for sharing it here with us

7

Hello again,

annoyingly ambiguous

That’s EXACTLY what I was trying to say (in my ‘as usual long winded way’)!!! LOL!!! MY problem is that I’m finding the same thing in my markets of choice and that is ANNOYING me!!! LOL!!!

But no: once I have made back some capital (you know me: ‘forever the optimist’) there is no way I’d touch forex again. As I said: I’ve a two week trial of live data feeds from the CME (and, for a price of course, one can subscribe to live data feeds from all of the other exchanges e.g. the NASDAQ, the NYSE, the CBOT, the list is ‘never ending’) and you cannot (I could not) believe the amount of information that is available to you as a trader. A fine example is the information that is available to a commodities trader e.g. you can get live data on the ‘soil conditions’ and projected rainfall and weather patterns and a whole host of other information. Of course: the ‘trick’ is to KNOW what to DO with this information (which I sure don’t at this stage) but the point is that this is the type of information that the ‘professionals’ are privy to and that is not available for forex pairs. At best (for forex pairs): you can subscribe to ‘market depth’ live data feeds but then you’re only seeing the ‘market depth’ of that pair at that particular exchange which may or may not be useful.

Anyway (and for a start): I’d just be very happy if all the brokers could JUST REFLECT THE ‘CORRECT’ DAILY CLOSING / SETTLEMENT PRICE of the S&P!!! That would be nice ‘touch’!!! LOL!!!

Regards,

Dale.

8

I have seen price discrepencies too I asked my broker about this he explained to me that there are several banks providing forex price quotes which differ slightly at any one time, my broker claimes they use price quotes from I think he said six different banks and their software attempts to use the best quotes they can get. These are what I see in my price feed.
A different broker may not be using the same banks quote as they use at any one time which is why you see slightly different price closes and opens.
An example of this can also often be seen in price spikes I see on forex websites where they talk about the previous months high of say 1.3578 but when I look on my charts the high might be 1.3574, a 3 pip difference, I see this most often on spike candles with a sudden large spike that lasted only a few minutes.
I dont know that my broker was being 100% honest when he explained it to me that way but it sounds reasonable expecialy when you consider forex does not have a centralized exchange to control price quotes.

9

Hi SDC,

Thanks for the response and information. That’s just my point though (regarding my ‘issues’) i.e. the instruments that I’m talking about are INDEED traded on centralised exchanges so ‘in my book’ there should BE no differences at all (let’s be fair and say a few ticks here and there would be acceptable and MAYBE a SLIGHT difference in spreads but as per one of my examples a few S&P POINTS is a whole different ‘kettle of fish’ so far as I’m concerned). This worries me. I know that some may say I’m being ‘pedantic’ about this but if you want my opinion: this entire business needs a good ‘overhaul’ (or at least a decent explanation for these discrepancies if there IS one).

Regards,

Dale.

10

It sounds like the brokers are doing something they don’t admit to publicly, if theyre quotes show discrepencies on commodities linked to a centralized exchange they must be creaming something off the top.
A few points here and there from all their clients during the day would add up to a huge amount of money.