Okay, sorry if this is a dumb question, but I’m still learning here. I was just reading through the customer agreement of a broker I’m researching and came across this little diddy:
“Due to market conditions or other circumstances (broker) may be unable to close out Customer’s position at the level specified by Customer, and Customer agrees (broker) will bear no liability for failure to do so.”
Is this something that’s standard in all customer agreements or should I run screaming from this broker? May not be able to close open positions? Are we talking about a couple of pips or something that could potentially drain my account and then some?
They’re talking slippage I think. So think black swan events, or even low liquidity, fast, moving markets.
You’re just executing a market order. So you fall in line behind the next guy. I don’t see a broker doing that for you, as it would be a cost to them, if there wasn’t another trader or trade available on the other side of your trade?
Maybe @FOREX.com can chime in. He/she is very active here and could at least talk about Gain’s terms and conditions.
Well, if a company with a normal reputation, it’s not a big deal, it really happens sometimes, if the price goes up, and if you’ve had some doubts before, they can really manipulate it and take your capital down.
I see this as a standard clause, I have something similar in my broker’s T&C’s. I suppose the most common scenario would be if the price gapped beyond your stop-loss order - the broker would close the position at the next price available to them after price has moved past your stop: this is less common in forex than in stocks as we have 24-hr trading 5 days a week. Naturally, as the gap would not be their fault, they won’t take liability for the costs.
Perfectly standard clause. Most regulated brokers have nearly the same condition just to protect themselves from incurring loss if the market doesn’t go in your favor.
We are talking about slippage, if the terminal is of high quality and the company is engaged in technical support of the platform all the time, then it really should be a rare thing…
In general, such point is in the agreement of any brokerage company.
But the whole thing is that in some companies it really happens sometimes, while in others it is a sad pattern.
As far as I know, this is often pointed out, because such situations can happen if the market presents some strong, manipulative surprise. I don’t see anything illogical or dangerous about it at all. And all other clauses of the agreement do not contain any such information?
Oh, well, I am always amazed by such moments in the agreement, because it immediately causes me some distrust and I immediately understand that in the process of trading I will be worried about it and nervous, not engaged in direct trading. So, I would look for something else.