Flash crash and which brokers had acceptable slippage on Stop Loss orders

So the flash crash happened yesterday and I see some reports that customers had massive slippage on their stop loss orders. I want to hear who’s brokers managed to get low slippage, so executing their stops (and take profits) with minimal slippage.

Basically I was looking to open an eToro account, but on their own website some members are saying their stops were executing way below their order prices. The two brokers I am trading with had very small slippage of around 15 ticks or 1.5 pips. If you are interested, they are Forextime and XM (dot) com.

I am curious who else had good or bad slippage from their orders from last night, particularly if you trade with eToro. Please share with us, as flash crashes are probably set to continue as more algorithmic trading takes place, set to wipe out peoples accounts annually.

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Hi, so glad I ran into this because I had the exact same question. I actually made a profit of near 200 pips during this event and my broker has spent their time trying to justify why my trade ended in a loss on one trade and a profit of only 8 pips on the other- trying to tell me it was still a profitable trading day!

The slippage this large broker had was about 180 pips and the spread was 25 pips according to the deal ticket. This is far from acceptable. They claim it was out of their hands, they were not responsible for the deal ticket not updating. The slippage they say was the same across the board with other brokers. The question then becomes “what are brokers responsible for?”

We base our decisions on the information provided by the broker. By their logic, it means they can do anything and we just have to accept whatever they do? This is truly something for retail traders to be concerned about.

This also tells you that the size of the broker does not guarantee they will take care of you.

Sorry to hear, hopefully my recommendations help others in the future. I did email eToro to ask what they had in place and they basically just said they have no protections in these cases as it is market forces, basically they don’t care!

Hey Quad,

In all honesty, any respectable broker is highly unlikely to be able to fill any position at the price point desired during a flash crash, it’s just impossible. The liquidity is thin with massive jumps between liquidity gaps. This doesn’t always mean that a broker is corrupt per se, it’s just a mechanic of the markets - unfortunately.

Moving on from the above, which is in this case gospel, it would not cross my mind that some “less than worthy” brokers will take advantage of this. However, trying to identify foul play during such a crisis is near to impossible using the information that retail traders have to hand.

It’s a tough old game, but we have to take our edge when we have it - during a flash crash is certainly not one of those moments if your on the wrong side.

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BaconSandwich out of curiosity who do you consider a respectable broker? Which broker do you work for?

Oh I don’t work for a broker, i’m on the other side of the fence!

I’m based in the UK - so my choice at the time was FXpro, however I’m partially in contact with Interactive Brokers (IB), who i’d like to be with - but even my bankroll is small for them, they seem to like clients with millions.

Yes, I understand. This is the problem, we can have a small edge but the odds can roll against us if these flash crashes start happening more often. Added to this my brokers were able to get really good order executions even in the tail end of the crash. I’m not saying there is foul play either, just that I’m looking out for the brokers that do take extra precautions, if they can. When I first started trading I went to a free training course set out by my broker, and I did remember them talking about how they took steps to guard against such events. Their concern was the crash in the swiss franc and then the pound brexit crash, but they did mention flash crashes. I don’t remember what the said about how they were protecting against such events as it was not in my realm of interest back then, but I do know they were taking steps. The results were apparent in my account, that is why I have no problems recommending them.

Another thing I did notice was a big discrepancy between the demo account and the real account. The prices in the demo account fell far more than in the real account. I have now noticed that they difference is gone. My guess is that they may have simply suspended trading, or created their own internal market to artificially cut the prices off from external influences, thereby allowing time for prices to normalise. An algorithm will easily identify algo created flash crash versus a human panic sell sell off due to time variable (micro second) volatility. So I am guessing they did something like this.

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Do you mean that unexpected drop on USDJPY? Actually I made money on this and I had positive slippage on take profit.

Yes, both USDJPY and AUDUSD. Yes, I made profits and losses on them, overall profits.

Great! how long have you been trading with them and which broker you used?

I use XM dot com and Forextime. I’ve used them for over 2 years now, forextime a little longer. I haven’t used any other brokers so I can’t say I have any major experience with others. I’ve realised one of the things we should be on the lookout for is something called ‘negative balance protection’. I’ve just read an article covering a broker that doesn’t provide this and it seems they have had around $8.6 million loss due to the flash crash on Yen positions: Exclusive: Japanese Brokers Face $8.6m Loss Due to January Flash Crash | Finance Magnates

Just proves the point! Both my brokers offer this protection. (I use the UK regulated sites)

It’s a good level of protection to have to offer, but even UK regulated brokers remove this when you go to pro level - so it’s at your own risk which they make very very clear. Then again you can also benefit from not being restricted to the 1:30 maximum leverage, upwards of 1:200, which again they make very very clear.

Very good perspective @BaconSandwich.

Whoosh over my head lol

Forextime is an entity founded by Russian criminals, they won’t stop on their way to rip off every client lured to their nets.

Whilst I’m very against the Russian mafia state, I like to see proof of claims. I did a little bit of research, and there is some evidence to support your claim, but not enough against the Forextime entity… yet. A starting point is on the wikipedia: Alpari Group - Wikipedia . Then there are the two main people involved, I can’t find too much information about them from good independent sources. Certainly the media does point to major problems for the Alpari brand (also highlighted in the wiki entry), but not much against the Forextime brand. Personally, when I withdraw money from my account I have experienced not problems.

I’m open to the sharing of more reliable information.

which broker are you referring to can you be elaborate

i am still trying to sort it out.

will update to see if they do the right thing when the case is resolved