Hi,
The other day i was trading the news and got it right. I went to close my position and it took at least 7-10 seconds to close out on MT4. All during that time, price was pumping between the 50% to 80% the big breakout bar. To give you an idea, it was the red news GBP news on Thursday on BOE inflation, Official bank rate votes, Monetary policy summary, Official bank rate all at one time 7:00 am NY. The spread went up to around 12 pips during that time and I chalked it up to extreme volatility. This was the on the GBP/CAD. My broker is usually really good for all currencies with the occasional slip and maybe 1 pip for GBP/CAD at normal times and 3-6 pips when action is heavy and on most news.
Then it dawned on me, what if I had gotten the direction wrong and it shot past my stoploss and it took that long (7-10 seconds) to close out my stoploss. I could have lost my whole account.
So my question is: Is it possible that I could have lost my whole account in extreme conditions like that even if I have my stoploss in place due to slippage / my stoploss not being filled? And if so, could I complain and take it up with my broker for a refund?
Thanks for any information. This puts a whole new spin on not trading the news. Or at least when there are multiple reds on inflation and interest rates.
In short, yes, you could lose your whole account and, secondly, no you won’t have a leg to stand on with your broker.
A stoploss is simply a stop order which is subject to latency and slippage. Remember that a stoploss doesn’t tell your broker to close the trade…it tells your broker to find someone to trade with in the opposite direction ie if you have a BUY and price drops to your stoploss, you are telling your broker to find someone to sell to. Just because you want to Sell, doesn’t mean someone else wants to buy.
There is a reason why news trading is considered dangerous.
If a missed stoploss could wipe you out, you also need to examine your risk levels.
thank you very much for that clear answer. Yes, i understand why examining my risk levels will/should allow me to take advantage of the opportunities presented by the news. Imagine successfully building an account only to lose a huge part of it or even all of it in some major event or news, because a stoploss order couldn’t be filled on time (no one wanting to take the opposite side of the trade). For now, that is the scariest thing about the news right now to me (i guess the term should be liquidity if i’m not mistaken).
On the other hand, wouldn’t every one including their grandmothers want to fill that stoploss order if I was wrong and price shot to the moon.
Until then, i will account for spread widening and appropriate size and level of stoploss, especially during the news. There, I have convinced myself into feeling secure again in the markets (and taking some risk) =P…overall, I am grateful…Thanks.
Lol…you got it the wrong way around. Looking at a BUY trade , for example…As crazy as it sounds, you are looking to pawn your bum trade off to another buyer. If you don’t want the goods why would anybody else want it…
To elaborate…Let’s say you made a BUY and you turned out to be wrong. Your StopLoss would, in fact, be a SELL Stop Order…which would have to be filled by somebody else’s BUY Limit Order. So the buyers are waiting for the price to fall far enough before they enter the market.
If you are interested, you can get some info off my blog about understanding order types here…
http://compu-forex.blogspot.it/2017/08/understanding-trade-orders.html
Some brokers offer guarenteed stop losses but not many. In most cases, yes, you can get smacked if slipped.
Confusing, i’d rather not try and figure out the buy/sell process here but i believe you guys. Thanks for the link.
I hope that with a little more experience you’ll change your mind about that.