CMC Markets - slippage policy

[options-george]

(I apologise in advance if I am stating something really obvious on this thread.)

I have been trading for a while and I am and have used a number of brokers in the UK and the US. Something is becoming clearer and clearer to me in regard to CMC Markets and I would like to know if I am seeing this correctly - and thus invite comments from other traders and also CMC if they have representation on T2W.

Slippage is common regardless of the markets I trade - fx, commodities, indices.
It seems that with CMC [trading the CFD platform] I only have ever slippage that works against me - with other brokers, such as FXCM, I get slippage both ways. In at least 200+ trades with CMC, I don't recall ever having slippage in my favor.

Meeting with FXCM in person, they explained to me that they pass on the slippage (whether good or bad) to the clients, and in the long-run this averages out - I think they did an analysis on some 12 million executed retail trades.

I have done some testing by using identical orders across CMC and FXCM. With CMC my profit was 18 pips (as expected), with FXCM the profit was 22 pips, because there had been slippage in my favor on the closing of the trade.

Obviously CMC would make a lot of profit from this tactic - just think of 10 million executed trades - and say that 2 million have some slippage - 50% are positive and 50% are negative. CMC passes the negative ones to the client, and keeps the positive ones in its own book. This would add up to a huge amount over time, and is a fairly risk-free profit to CMC.

Am I seeing this correctly?

 

[kalott]

Meeting with FXCM in person, they explained to me that they pass on the slippage (whether good or bad) to the clients, and in the long-run this averages out - I think they did an analysis on some 12 million executed retail trades.

depending on what type of order you use?

if someone get negative slippage on a stoporder someone else should get positive slippage on a limit to close on the same level?

 

[karmit]

CMC is probably the worst platform... try closing two similar positions in quick succession.. it will show a message of "wait for 5 seconds" or something

Also, trying to close combined bets of as little as 4 quid a tick will make you wait ages ... IG doesn't even blink for 30, 40, 50 GBP a tick!

 

[Fugazsy]

(I apologise in advance if I am stating something really obvious on this thread.)

I have been trading for a while and I am and have used a number of brokers in the UK and the US. Something is becoming clearer and clearer to me in regard to CMC Markets and I would like to know if I am seeing this correctly - and thus invite comments from other traders and also CMC if they have representation on T2W.

Slippage is common regardless of the markets I trade - fx, commodities, indices.
It seems that with CMC [trading the CFD platform] I only have ever slippage that works against me - with other brokers, such as FXCM, I get slippage both ways. In at least 200+ trades with CMC, I don't recall ever having slippage in my favor.

Meeting with FXCM in person, they explained to me that they pass on the slippage (whether good or bad) to the clients, and in the long-run this averages out - I think they did an analysis on some 12 million executed retail trades.

I have done some testing by using identical orders across CMC and FXCM. With CMC my profit was 18 pips (as expected), with FXCM the profit was 22 pips, because there had been slippage in my favor on the closing of the trade.

Obviously CMC would make a lot of profit from this tactic - just think of 10 million executed trades - and say that 2 million have some slippage - 50% are positive and 50% are negative. CMC passes the negative ones to the client, and keeps the positive ones in its own book. This would add up to a huge amount over time, and is a fairly risk-free profit to CMC.

Am I seeing this correctly?

you are right, happened to me as well recently, not only that they will run your stops, I will forward all the documentation to the appropriate bodies and I did withdraw all my money account.

 

[options-george]

depending on what type of order you use?

if someone get negative slippage on a stoporder someone else should get positive slippage on a limit to close on the same level?

Kalott, sorry for not providing this detail. Yes I was referring to limit orders (whether for opening or closing positions).

So I would say that in the case of two traders looking to trade in opposing directions from the same level - one will get the disbenefit of the negative slippage - however the other trader will not get the benefit of the positive slippage, because CMC will book the slippage in their book.

If it was FXCM, one trader would lose a little bit, and the other trader would gain a little bit.

 

[options-george]

depending on what type of order you use?

if someone get negative slippage on a stoporder someone else should get positive slippage on a limit to close on the same level?

CMC is probably the worst platform... try closing two similar positions in quick succession.. it will show a message of "wait for 5 seconds" or something

Also, trying to close combined bets of as little as 4 quid a tick will make you wait ages ... IG doesn't even blink for 30, 40, 50 GBP a tick!

I have not had the feeling that CMC was running my stops. Possibly that's because I am trading on the CFD platform rather than on the spreadbetting platform.

Aside from the slippage issue, I have actually been happy with the platform in recent months. A couple of aspects I quite like is the responsiveness of their Live-Help team, and the ability to use any type of order size (this helps me a lot with my position-sizing and risk management).

 

[options-george]

A question for the T2W Moderators - does T2W have a policy for getting a broker (in this case CMC) to share their view/comments on these situation?

[Update, same day, a few hours later:
I ended up speaking with CMC on the phone this morning in regard to smthg else, and raised this issue with them. I also gave them the URL for this thread, and they said they would take a look at it, and possibly respond, depending on company policy].

 

[highbury fx]

CMC is probably the worst platform... try closing two similar positions in quick succession.. it will show a message of "wait for 5 seconds" or something

Also, trying to close combined bets of as little as 4 quid a tick will make you wait ages ... IG doesn't even blink for 30, 40, 50 GBP a tick!

this is a repeat dealing rule. most brokers will have something similar. its a way of protecting themselves from clients who deal just below the maximum auto fill size in quick succession. for example, if the max auto fill size was £200 a point, someone may try and sell lots of £199 clips in quick succession instead of trying to deal in their full amount to begin with and risk being dropped.

 

[karmit]

this is a repeat dealing rule. most brokers will have something similar. its a way of protecting themselves from clients who deal just below the maximum auto fill size in quick succession. for example, if the max auto fill size was £200 a point, someone may try and sell lots of £199 clips in quick succession instead of trying to deal in their full amount to begin with and risk being dropped.

maybe ok for 200 GBP/pip.. but not for a couple of 3 GBP/point bets.. that is ridiculous!

 

[karmit]

In fact even tried it with 1GBP/pip... same result

 

[highbury fx]

maybe ok for 200 GBP/pip.. but not for a couple of 3 GBP/point bets.. that is ridiculous!

I agree, but It's difficult to have so many specific rules on your system. You'd have to have different rules for different products. £2 a point in eurusd is nothing but in Google its a lot.

If you have multiple small bets open can't you close them all in one click or partial close in one click?

 

[karmit]

I agree, but It's difficult to have so many specific rules on your system. You'd have to have different rules for different products. £2 a point in eurusd is nothing but in Google its a lot.

If you have multiple small bets open can't you close them all in one click or partial close in one click?

That's why I said it's a terrible platform. I don't see this issue at all in IG or other leading SB's.

Like I said, most times even trying to close combined positions has severe delay.. something which jumps out immediately if you are used to better/faster platforms.

 

[dealer911]

depending on what type of order you use?

if someone get negative slippage on a stoporder someone else should get positive slippage on a limit to close on the same level?

In this example the limit order to close a trade would be a resting order and therefore no slippage - the stop loss order would only be "activated" at the specified level and may be executed at the next available price so you could get slipped on that side.
I agree with you generally though that if you are never getting any positive slippage alarm bells should be ringing!

 

[options-george]

In this example the limit order to close a trade would be a resting order and therefore no slippage - the stop loss order would only be "activated" at the specified level and may be executed at the next available price so you could get slipped on that side.
I agree with you generally though that if you are never getting any positive slippage alarm bells should be ringing!

Hi Dealer911, I am not quite sure I follow you on this one.

I do sometimes get slippage on limit orders to close a trade - mostly in my favor.

Would it be ok for you to elaborate on why limit orders to close, should not have slippage?

 

[highbury fx]

Hi Dealer911, I am not quite sure I follow you on this one.

I do sometimes get slippage on limit orders to close a trade - mostly in my favor.

Would it be ok for you to elaborate on why limit orders to close, should not have slippage?

The convention in the interbank market is not improve limit orders. they are considered to be an order at a very specific price. This can cause the broker problems sometimes, if for example the client has an order to sell eur25m at 1.3025 and 1.3025 is the absolute high and only ever had eur5m on the bid the client can quite reasonably in some circumstances expect to have the full amount filled at 1.3025 regardless of whether the broker got the full amount away. most times a limit order was a great order to get because normally you can get the full amount done at the level or better if there is momentum so it outweighs the rare moments it can cost you. we now partial fill limit orders so as not to commit to having to fill the whole order if its at the high or low.

A stop order is consider an instruction to close the position at the next available price once the market has touched the stop order level. This is no risk to the broker as where ever he hedges you is where you'll be done (or thereabouts). if the market tanks and you get done at a worst level the broker simply passes that on to you.

a lot of brokers in the last decade have used slippage to their advantage. a lot of brokers in the past have not passed on the positive slippage a limit order sometimes has because they refer to the interbank market convention of not improving limit orders.

times are changing. most brokers now since fxcm's fines because of this reason have learned to pass on positive slippage. slippage on stops is still to some regard a free for all for some brokers.

 

[options-george]

Highbury FX - thank you for the detailed explanation. That's very helpful and appreciated.

 

[broncko]

Test

 

[Aston1st]

If your trading with CMC you are really taking your chances.

 

[gle101]

Overall I have very little problems with slippage, this because of my trading style. But when I do get only negative slippage, and it becomes a problem, I move quickly to another broker. It is very easy to dedect it and in the long run the broker don't fool anyone but themselves. DF Markets, I have especially noticed of giving slippage on market orders, but you always get the correct price, this as positive slippage is just as common as negative slippage trading with them.

 

[options-george]

Today provided a good opportunity to see how your broker handles positive and negative slippage.

WTI (Crude Oil) had a 25 point down-gap on the release of the weekly oil inventories (at 3.30pm GMT). Price gapped from around $50.50 to $50.25.

If someone has an example of having positive or negative slippage involving that situation, that would be great.

I would imagine that had I been shorting with a limit order to close 1/2 halfway through the gap, say at $50.35, then I believe CMC would have filled me at $50.35 whereas FXCM would have filled me at $50.25.

If I had been long and had a stop at $50.35, then I believe both brokers would have stopped me out at $50.25.

I am saying that based on past experience with both brokers.