IG Index huge GBPUSD slippage > > >

[gle101]

Stops are to help people to trade with better discipline but if you have what it takes, just 'pull the trigger' when your trade has gone against you. Of course, this is provided that you keep watching your trades and do not carry positions overnight.

Then, you sure are one of a kind.

 

[Trader333]

It was less than £10 per pip. I know someone else who was effectively in the same trade and they got stopped out at the correct level. How can they apply one set of rules to one client and a different set to another? Seems unfair at best.

Very interesting Steve as there cannot be a justifiable reason for this in my view. Do you know the size of the bet that was stopped out at the correct level ?



Paul

 

[gle101]

It was less than £10 per pip. I know someone else who was effectively in the same trade and they got stopped out at the correct level. How can they apply one set of rules to one client and a different set to another? Seems unfair at best.

Compliance are now looking into the matter. I can't see that there is much for them to look into since the T&Cs appear clear on this matter. The question is how many clients have been effected? One imagines that the compliance officer would be duty bound to ask dealing to go back over any trade which may have been effected? There's a lesson their for client services - if a client phones in with a valid complaint then don't let it go to complaince when the mistake is so obvious.

Steve.

Yes I agree completely with you on this issue. The underlying market is not gapping, in fact, according to the chart, there were several opportunities for them to execute the stop loss order. Also as I understand, the client went into the trade much before a news release, so this is not a hedging issue at all.

 

[Black Swan]

are you sure your 'friend' experienced slippage? The forex markets went haywire for a couple of hours on Frday early afternoon. On sharescope, meta trader and IG it was all the same. The spikes happened across the board on the 3 SB Co's platforms/software I use... I'd suggest your friend just got caught, all for the sake of the cost of a 3 pip stop loss...unlucky, move on.

 

[Black Swan]

It would be nice if the cost of a Guaranteed Stop was an "extra few ticks". It is not that simple. G.Stops with IG are very expensive, and there are considerable restrictions where you can place a G.Stop before trade entry, and futher restrictions about moving them once in a trade. IG really do have all angles covered. They love punters who think "well its only a few extra ticks".

This has considerable implications for risk management, and makes it even harder to be consistently profitable

Eh? Stop (guaranteed) costs 3 pips on most of my pairs...

 

[stevespray]

We are talking about Thursday's market right after the BoE announcement not Friday's NFP spike.

Many years of experience have taught me that g/teed stops are a waste of money providing the firm is reasonable. If you drill down into tick data you will often find that gaps are actually quite small even on a 100+ pip move which occurs in a few seconds.

What people also forget is that there is a limit on how close you can place a g/teed stop as otherwise clever people will take advanage of them as well under-priced options trades.

 

[tar]

We are talking about Thursday's market right after the BoE announcement not Friday's NFP spike.

Many years of experience have taught me that g/teed stops are a waste of money providing the firm is reasonable. If you drill down into tick data you will often find that gaps are actually quite small even on a 100+ pip move which occurs in a few seconds.

What people also forget is that there is a limit on how close you can place a g/teed stop as otherwise clever people will take advanage of them as well under-priced options trades.

I disagree G stops is perfect for news trading , ofcourse they widen the minimum distance to place a G stop b4 big news sometimes , but if u want to bet on pound b4 news u can trade other pound crosses instead of cable ...

 

[stevespray]

I disagree G stops is perfect for news trading , ofcourse they widen the minimum distance to place a G stop b4 big news sometimes , but if u want to bet on pound b4 news u can trade other pound crosses instead of cable ...

As with all things trading it comes down to personal opinion. Obviously things like this are highy subjective. To be honest I'm not someone who 'news trades' as a direct strategy. That doesn't mean that I don't / won't have positions open over the period of a news release - I'm just saying that my own systems don't specifically target having to be in the market at that time.

In my opinion 'news trading' strategies come and go. Once a few weeks pass with only minor reactions to news (<40 pips say) then news strategy systems dry up. As soon as there are a couple of 100+ pip moves suddenly news trading is back in fashion and people start talking about it again. I'm guessing that from a broker perspective they must react accordingly. If they didn't react then punters would fleece them. This also goes in cycles. Once the broker sees a large loss or two after a news release they are going to react. A few years back some of the retail brokers started offering g/teed stops as standard and at no extra charge. All was fine with them until a couple of monster moves on EURUSD (200 pips on one occasion). Then all of a sudden extra T&C's were introduced.... then we had "g/teed stops in 'normal market conditions'! "

My personal feeling is that brokers should show clarity on the stop policy. In the case of IG Index their T&C's appear to openly specify this. That is good. What is not good is when they suddenly change that policy without notification! I would suggest that a g/teed stop is not required so long as the T&C's are observed by the firm. The underlying market data clearly shows that gaps are small so why is there a need to pay a premium for service which is already provided (so long as T&C's are followed)?

Steve.

 

[tar]

As with all things trading it comes down to personal opinion. Obviously things like this are highy subjective. To be honest I'm not someone who 'news trades' as a direct strategy. That doesn't mean that I don't / won't have positions open over the period of a news release - I'm just saying that my own systems don't specifically target having to be in the market at that time.

In my opinion 'news trading' strategies come and go. Once a few weeks pass with only minor reactions to news (<40 pips say) then news strategy systems dry up. As soon as there are a couple of 100+ pip moves suddenly news trading is back in fashion and people start talking about it again. I'm guessing that from a broker perspective they must react accordingly. If they didn't react then punters would fleece them. This also goes in cycles. Once the broker sees a large loss or two after a news release they are going to react. A few years back some of the retail brokers started offering g/teed stops as standard and at no extra charge. All was fine with them until a couple of monster moves on EURUSD (200 pips on one occasion). Then all of a sudden extra T&C's were introduced.... then we had "g/teed stops in 'normal market conditions'! "

My personal feeling is that brokers should show clarity on the stop policy. In the case of IG Index their T&C's appear to openly specify this. That is good. What is not good is when they suddenly change that policy without notification! I would suggest that a g/teed stop is not required so long as the T&C's are observed by the firm. The underlying market data clearly shows that gaps are small so why is there a need to pay a premium for service which is already provided (so long as T&C's are followed)?

Steve.

Gaps not always small after news , check stocks gaps after news , oil as well ...

 

[stevespray]

Just to clarify that I am talking specifically about fx here hence the title of the thread. I agree that gaps on other insrtuments could well have differing charateristics.

 

[Pippppin]

Eh? Stop (guaranteed) costs 3 pips on most of my pairs...

Apologies - I should have specified that I was referring to G.Stops on US shares using IG, not FX.

 

[jansher21]

I do know IG, they are a good broker - but as with pretty much all brokers they are notorious in hunting for stops.

There is a way around this and we have developed a way to trade around it with reasonable success.

If anyone wants to know, please get in touch and I will explain as I don't want to be slated for spamming etc.

Thanks,

 

[stevespray]

I do know IG, they are a good broker - but as with pretty much all brokers they are notorious in hunting for stops.

There is a way around this and we have developed a way to trade around it with reasonable success.

If anyone wants to know, please get in touch and I will explain as I don't want to be slated for spamming etc.

Thanks,

Thanks Jansher but this isnt really a 'stop hunting' issue. Instead it's a synthetic slippage issue. If you have a stop loss order with a broker and his position with you is unhedged then the broker is going to make more money from you if he can claim that the market gapped your order by more than it actually did. That is very different to claiming that a broker moves thier price to deliberately tag a stop order.

Steve.

 

[jansher21]

Thanks Jansher but this isnt really a 'stop hunting' issue. Instead it's a synthetic slippage issue. If you have a stop loss order with a broker and his position with you is unhedged then the broker is going to make more money from you if he can claim that the market gapped your order by more than it actually did. That is very different to claiming that a broker moves thier price to deliberately tag a stop order.

Steve.

Hi Steve,

Perhaps the difference is semantic, but I think the two are not entirely dissimilar.

When I first started trading, I used to have "actual" stops and irrespective of which broker I used, there were always problems with "spikes", "gapped markets" and just about every other excuse you never thought of.

My own development as a trader really began when my journey took me to some very successful traders with long term track records.

One thing I learned from them, which has to be incorporated into an alternative trading methodology, is not to use hard stops - but "mental stops". I know this sounds crazy, but the discipline is mental and there is extra risk. Let me explain.

If you have a hard stop and the market gaps through it (unless it is a guaranteed stop for which you pay alot extra) the broker will fill you a long way away from your stop. Hence, if you have the discipline a mental stop is actually more powerful as it is not falseley activated.

People can see my trades / profits if they want and those of the team I trade with, in case anyone thinks I am totally bonkers !

Best of luck to all.

 

[Jack Hughes]

There's method in your madness, jansher, but what happens when a price goes straight through a stop and keeps on going?

 

[jansher21]

Hi Jack,

That's a valid question and actually I would like to thank you for your politeness in how you asked it. As opposed to what I was expecting, which was to be flamed by someone asking a similar question.

Right - when I started working learning my current method of trading, I had exactly the same question. I used to think, "which idiot would sit there with NO stop". However, using stops and tight stops I was losing money - and the team I found ... were making money. What's more, is that I also found that some funds were using these trades.

So, no matter what I thought I knew - I thought it would be best to take a different look at things.

The answer to your question is two-fold. When you enter a position, the discipline has to be there to ensure that your position is not so big that it can't take a big swing against you.

Then if the market does melt through you, you can sit for a while let the dust settle and make an intelligent decision. If you have a stop and it spikes, you can bet your house on the fact that the broker will fill you at the bottom of the spike.

For your interest, we were long on 9/11 - that was when this was tested to the max.. but we still made money that year...although most definately not that month !!!

Look, this is about approaches. Some people psychologically could never entertain sitting with a position (any position) and no stop. They then have to spend their time working and perfecting a system works within these boundaries. I have not been able to find such a system that works for anything more than a few months.

What works for me and the team I work with, is a longer term play - and even though we sit with our eyeballs hanging out sometimes ... ultimately, we have been profitable each year.

This is not just a line, I can show anyone trades if they want to see.

Anyway, hope this helps.

 

[donaldduke]

IG Change T&Cs

She phoned them and they basically said "hard luck, that's where the market was by the time we filled you".

Seems to be a breach of T&Cs....

Term 11(5)...

When we execute an Order, we will do so within a reasonable time of the Order being triggered and, subject to Term 11(10), we will seek to execute your Order based on the first attainable price that might have been achieved had a similar order (including as to size) been placed on the Underlying Market. Notwithstanding the foregoing, you acknowledge and agree that (a) the first attainable price may differ from your specified Order level; and (b) that it may not be possible to determine what the first attainable price might have been. Accordingly, we do not guarantee that your Order will be executed at your specified level and you acknowledge that the time and level at which Orders are executed will be determined by us, acting reasonably.

I'll get her to ring again.

Steve.

IG have just changed their T&Cs, this applies to all new orders placed after September 12th 2009. So your friend should be ok. But going forward its seems the IG T&Cs will support the "hard luck" view expressed by the dealer.

Term 11(3) If your Order is triggered (as set out in Term 11(1) above) we will seek to open/
close the Bet to which your Order relates, acting in accordance with our duty of best
execution. In the case of a Stop Order, we will seek to open/close a Bet at a level that
is the same (but may be worse) than your stop level; and in the case of a Limit Order,
we will seek to open/close a Bet at a level that is the same or better than your limit.
You acknowledge and agree that the time and level at which Orders are executed will
be determined by us, acting reasonably. In this regard:
(a) We will seek to execute your Order within a reasonable time of your Order
being triggered. Because there may be a manual element to our processing of
Orders and because it is possible for a single sudden event to trigger a large
number of Orders, you acknowledge that what constitutes a “reasonable time”
may vary according to the size of your Order, the level of activity in the Underlying
Market, and the number of Orders that have been triggered at the time your
Order is triggered.
(b) At the time we are seeking to execute your Order, we will have regard to
the price that could be achieved in the Underlying Market for a similar order
(including as to size).

So the following section from the old T&Cs:

we will seek to execute your Order based on the first attainable price that might have been achieved had a similar order (including as to size) been placed on the Underlying Market

has now been replaced by:

At the time we are seeking to execute your Order, we will have regard to the price that could be achieved in the Underlying Market for a similar order (including as to size).

The new T&Cs explictly state that orders may be executed manually with a delay so 'the time we are seeking to execute your order' is not always the same time as the trigger time. In the case when your order is handled manually (ie during price spikes), it will be the time when the dealer gets around to filling your order which could be several minutes after the price spike triggered it.

Also worth mentioning that the 'first attainable' price wording has now been dropped.

 

[Jack Hughes]

So basically they want punters to accept that they fill orders when and where they feel it's to their best advantage? How does that fit in with MFID?

 

[Black Swan]

IG have just changed their T&Cs, this applies to all new orders placed after September 12th 2009. So your friend should be ok. But going forward its seems the IG T&Cs will support the "hard luck" view expressed by the dealer.



So the following section from the old T&Cs:



has now been replaced by:



The new T&Cs explictly state that orders may be executed manually with a delay so 'the time we are seeking to execute your order' is not always the same time as the trigger time. In the case when your order is handled manually (ie during price spikes), it will be the time when the dealer gets around to filling your order which could be several minutes after the price spike triggered it.

Also worth mentioning that the 'first attainable' price wording has now been dropped.

Thanks for the comparsion of the old v the new terms, much appreciated.

 

[Trader333]

What this means is that it is now impossible to do any type of news trading using IG. Those of us who have traded news in the past will know that even if you get a spike it will often retrace 50% or more and allow for an entry that will then go on into profit. The wording of this means that IG can pick any time they like to execute an order when news is announced. As such you can be sure it will be at the price that is absolutely worse than any other in range of the spike.

This just confirms to me that if you want to be in a trade when news is expected (unless you are position trading) then use DMA.


Paul