I have tried to make contact with FXCM regarding the near 100 pip extra loss incurred by myself during the UK election.
I was more than disappointed that the SL I had used was breached by so much which I think is excessive.
And after a very long and one sided (while i waited for the agent who kept putting me on hold - often for 10 minutes at a time!) conversation I was quoted the slippage disclaimer. I was told I could open a ticket to raise the issue which I did and have not heard anything back for one week now almost.
Not good enough in my opinion. I get that Forex is risky but such a huge jump past my SL even at a big event was frustrating for me.
I understand there have been changes at the company but sure customers are what make a company and therefore should be helped a little more than this?
You mentioned that you filed a trade inquiry. Please send me a private message with your name and email. I’ll follow up with the Trade Services Team for you. If there was an error in our execution, they will make the appropriate correction to your account.
That said, it’s important to consider the following.
Anyone trading in the forex, stock, or futures markets, 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. Please keep in mind that due to the UK elections, similar gaps on GBP crosses have been recorded across multiple brokers.
It helps 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 buyer 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.
The risk of slippage is greatest during volatile markets such as around a news announcement like the UK election, or 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 unlike with some other brokers, slippage at FXCM 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.
A study of over 43 million orders executed through FXCM over a 12-month period from September 2013 through August 2014 found that 53.32% of all stop and stop entry orders received negative slippage. However, the same study showed that over 60% of all limit and limit entry orders received positive slippage.
That’s due to the momentum of price movement when such order types are triggered. Stop orders are triggered when the price is moving against your trade, while limit orders are triggered when the price is moving in favor of your trade.
The year-long study of trades executed through FXCM also revealed the following:
[ul]
[li]73% of all orders had no slippage.
[/li][li]15% of all orders received positive slippage.
[/li][li]12% of all orders received negative slippage.
[/li][/ul]
Over the course of that year, FXCM clients benefited from over $21 million in positive slippage.
It’s worth noting that the Market Range feature on our Trading Station platform and the Enhanced* Maximum Deviation feature on our MT4 platform allow FXCM clients to limit the amount of negative slippage they receive, while still enjoying the full benefits of any positive slippage that’s available.
[I]
On the MT4 platforms of some other brokers, the Max Dev feature is unavailable, or if it is available, then it will limit both your negative slippage and your positive slippage equally. By contrast, FXCM enhanced how Max Dev works on our MT4 platform allowing you to limit your negative slippage while still enjoying the full benefits of any positive slippage.[/I]
