I would like to share my experience today on trading on news and i am interesting to know if this happened to me today is common.
My broker is XM.com and i was trading OIL Futures. Today was the weekly release of the oil inventories.
So i put a BUY STOP order around 20pips from the current price minutes before the news release and a SELL STOP around 15pips from the current price. I was planning to close the one order before triggered and leave only my positive one running.
When the news released announced my BUY STOP order triggered with slippage 61pips!! Also the price hit the STOP LOSS and instead of losing only 20pips from my order i lost 81pips!!
Please explain me if this is common and what are my solutions.
This is very common, especially around news events, and is a good reason not to trade news.
Wild whipsaws can trigger trade entries only for price to about turn and fly past your stop in a spilt second
I trade news and also trade the Crude oil inventories as you.I usually use options trading when trading oil esp Brent oil.The inventories effect lasts more than an hour when it comes to oil.Thus much easier than spot trading.Furthermore XM is the best broker.
Another reason for avoiding this kind of trading is that sudden spikes in [I]both[/I] directions are common enough for it to be realtively easy to predict the overall direction [U]correctly[/U] [I]and still lose money[/I], unless one uses such wide stop-losses that the overall risks become huge.
Thank you all for your answers. I think is totally understandable.
The main reason that i wrote this post is not the price movement in the two directions during news events but because i put a BUY STOP order at 46.30 and finally opened at 46.91. So i had 61pips slippage this is insane! I had another 3 questions if you can help me
Also this is applicable to STOP LOSS orders during trading the news or they close normally at their time with no slippage? If for example the same time i had a STOP LOSS order at 46.00 maybe the system can close my order at 45.50 and have slippage 50 pips?
I tested this system in DEMO accounts with success that’s why i tried it in a REAL account. All my BUY STOP and SELL STOP orders opened normally at their prices during trading the news. In REAL accounts is different?
It there any other good strategy to trading the news?
Whilst slippage is a common problem during expected news events, it can be a problem at any time as unexpected news is, by definition, unexpected.
There is a thread here about a massive black swan event on Jan 15th 2015 that surprised everyone and resulted in traders losing their entire account and brokers going out of business.
That is an extreme exampke but other events, such as Brexit, also caused massive slippage.
Slippage occurs when your broker cant close your trade at the price you ask, so it closes at the nearest price he can achieve.
The best strategy for Trading news, IMHO, is not to trade it
I agree, you have to be very lucky to get profit while trading the news. I decided to make lots of money on some news in 2014 or even earlier, to be honest, I won’t call to mind the certain date and all the news, but it wasn’t success. That’s why it’s always better to look for a certain trend and adhere to it.
You have a lot of way to trade WTI on fundamental and highly profitable. But if you are short term trader and trade on such high impact news, 80 pips slippage is pretty luck.
Understand the difference between STOP and LIMIT orders:
STOP order activates as soon as prices reaches your desired set level and then it converts into a MARKET order - which means you can be filled at any price that is available after your STOP order is triggered, usually resulting in slippage. This results in guaranteed fill at your price or worse.
LIMIT order activates as soon as price reaches your desired set level and it can only be filled at your desired level or a better price than your desired level - there is no slippage because the order will either be filled at your set price/better price or it will stay unfilled if price goes past your desired set level.
STOP orders can be set as STOP MARKET or STOP LIMIT.
In your case if you had used STOP LIMIT orders, you would not have been filled at all due to slippage.
That’s normal in many cases, but when it’s xm, I am suspicious! Man! XM is a pure market maker! I had to suffer a lot for one years trading with them! So many times, my winning trades ended up losing ones. I dont believe them!
It is really nice for a trading platform especially your MT4 to be smooth irrespective of market volatility. Slippages are not really a nice experience; especially negative slippages.
It is absolutely normal to have high slippage during News release or wider spreads or even spikes which of course ruins the good trades. It would be better to avoid trading in such cases unless of course you have some good strategy as there are many traders who prefer to be more active during News release. Events such as Brexit and the upcoming US Elections also increase the risk. The broker has a significant role as well and it is more helpful if it’s not a Market Maker as we all know that these guys usually hold the positions against you. Now we`ll see how the Market will react to the US Elections.
News trading was pretty rewarding few years go, even with simple pending orders buy stop/sell stop with tight SL. Now it’s almost impossible to make any money this way, huge slippage, platform freeze ect.