Discuss Fxcm.com

[CFLFX]

Your Opinions (FXCM and Slippage)

I just wanted other people's opinion here...

I had a pending order at 100.05 during the recent smash through 100.00 with the USD/JPY. My broker, FXCM, filled this order with 36 pips slippage! I understand what slippage is and why it occurs, but is it just me, or is that a little absurd? I did file an audit and they did refund the slippage based on my complaint, but then went into what appeared to be a defensive explanation of what slippage is, almost like they thought 36 pips was justified. I was dumbfounded. I've never paid close to that much slippage ever with any broker.

I guess I'm just wondering if anyone else on FXCM or another broker incurred slippage, and what your slippage was, and if I should be upset about this. Thanks for your feedback.

Chris

 

[Pharaoh]

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[Jason Rogers]

I just wanted other people's opinion here...

I had a pending order at 100.05 during the recent smash through 100.00 with the USD/JPY. My broker, FXCM, filled this order with 36 pips slippage! I understand what slippage is and why it occurs, but is it just me, or is that a little absurd? I did file an audit and they did refund the slippage based on my complaint, but then went into what appeared to be a defensive explanation of what slippage is, almost like they thought 36 pips was justified. I was dumbfounded. I've never paid close to that much slippage ever with any broker.

I guess I'm just wondering if anyone else on FXCM or another broker incurred slippage, and what your slippage was, and if I should be upset about this. Thanks for your feedback.

Chris

Hi Chris,

First, I'm glad to hear that you reached out to the Trade Audit Committee, and that they already responded to your inquiry and even made a credit to your account in good faith. However, I would like to follow up to address your questions regarding slippage. You mentioned that you understand what slippage is and why it occurs. That's great. It means you already know that in order for an order to be filled, there has to be sufficient liquidity in the market. For a buy order to be filled, there has to be someone willing sell on the other side.

I can appreciate that you may never have encountered slippage of 36 pips in the past, but it's important to understand that this was no ordinary situation. The 100.00 USD/JPY level is an extremely important level for traders. I assume that's why you placed a pending order to buy at 100.05. In fact, many other traders had the same idea as you. That means a huge number of buy orders existed around 100.00 in anticipation of a breakout to the upside. On May 9th, as the market approached 100.00, these buy orders triggered en masse. There was a limited supply of sellers to provide liquidity on the other side (Would you want to sell at 100.05?), so the market gapped higher, as you can see in the chart below.

When there are more buy orders than there is available liquidity, then the oldest buy orders get filled first based on their position in the order queue. Your buy order was filled at the best available price at the time. Keep in mind that it works both ways. If you had a limit order to sell and the market gapped higher as it did on May 9th, then your order would have been filled with positive slippage (also know as a price improvement). The stats below show that FXCM clients experience price improvements just as often as they do negative slippage. It's just that price improvements are more common with limit orders, while negative slippage is more common with stop orders, such as your pending order to buy above the market price.

Jason

 

[CFLFX]

Hi Chris,

First, I'm glad to hear that you reached out to the Trade Audit Committee, and that they already responded to your inquiry and even made a credit to your account in good faith. However, I would like to follow up to address your questions regarding slippage. You mentioned that you understand what slippage is and why it occurs. That's great. It means you already know that in order for an order to be filled, there has to be sufficient liquidity in the market. For a buy order to be filled, there has to be someone willing sell on the other side.

I can appreciate that you may never have encountered slippage of 36 pips in the past, but it's important to understand that this was no ordinary situation. The 100.00 USD/JPY level is an extremely important level for traders. I assume that's why you placed a pending order to buy at 100.05. In fact, many other traders had the same idea as you. That means a huge number of buy orders existed around 100.00 in anticipation of a breakout to the upside. On May 9th, as the market approached 100.00, these buy orders triggered en masse. There was a limited supply of sellers to provide liquidity on the other side (Would you want to sell at 100.05?), so the market gapped higher, as you can see in the chart below.

When there are more buy orders than there is available liquidity, then the oldest buy orders get filled first based on their position in the order queue. Your buy order was filled at the best available price at the time. Keep in mind that it works both ways. If you had a limit order to sell and the market gapped higher as it did on May 9th, then your order would have been filled with positive slippage (also know as a price improvement). The stats below show that FXCM clients experience price improvements just as often as they do negative slippage. It's just that price improvements are more common with limit orders, while negative slippage is more common with stop orders, such as your pending order to buy above the market price.

Jason

Jason,

Thanks for your time. Maybe I should re-introduce myself. I've been trading successfully for several years. In fact, I love trading news events, so I'm quite familiar with slippage and what it is and why it occurs, but thanks for the explanation. 36 pips is ridiculous. I've never even paid half than that on an NFP print. Colleagues on other brokers encountered slippage, but nothing like this. I was just wondering why the slippage on FXCM was so steep for this event. In any event, thanks for the refund, and I would appreciate any answers you have about my specific question (not slippage in general), as I am now seriously concerned.

Chris

 

[CFLFX]

I posted another post, but I don't think I did it right, lol.

1) If anyone else had a pending order triggered for UJ on the day of the breakthrough at or around 100.00, buy or sell, I am curious to know what slippage you encountered and who your broker is. Thanks to anyone who is reading this, lol.

2) Jason, don't get me wrong. I have been with you guys for years and have nothing but nice things to say about your brokerage and your platform, but the slippage for this event really threw me for a loop and was very inconsistent with the level of execution I normally receive from you guys. Thanks again for your time.

Chris

 

[Rambo35]

I posted another post, but I don't think I did it right, lol.

1) If anyone else had a pending order triggered for UJ on the day of the breakthrough at or around 100.00, buy or sell, I am curious to know what slippage you encountered and who your broker is. Thanks to anyone who is reading this, lol.

2) Jason, don't get me wrong. I have been with you guys for years and have nothing but nice things to say about your brokerage and your platform, but the slippage for this event really threw me for a loop and was very inconsistent with the level of execution I normally receive from you guys. Thanks again for your time.

Chris

I got my order executed at the exact price I entered my pending sell order. I don't want to say anything negative here, but I know this is not the first time FXCM traders complained about this. FXCM was fined a while ago for $6 million as they did not pass on positive slippage to traders and withheld it from their clients. They paid, claimed they fixed it but you are not alone about this issues as I read in various forums a similar story.

 

[Jason Rogers]

I've been trading successfully for several years. In fact, I love trading news events, so I'm quite familiar with slippage and what it is and why it occurs, but thanks for the explanation. 36 pips is ridiculous. I've never even paid half than that on an NFP print.

Jason, don't get me wrong. I have been with you guys for years and have nothing but nice things to say about your brokerage and your platform, but the slippage for this event really threw me for a loop and was very inconsistent with the level of execution I normally receive from you guys. Thanks again for your time.

Hi Chris,

First, I'm glad to hear that you've been trading successfully with FXCM for years. On our No Dealing Desk (NDD) forex execution, we make money off of client trading volume, not client losses, so we want all of our client to be successful.

You mentioned that over the years you've grown accustomed to our excellent trade execution even during news events like NFP. So I can understand why you might be surprised by the slippage you encountered when the market broke through the 100.00 level on USD/JPY, but it's important to keep in mind that these weren't ordinary market conditions. As I mentioned in my previous post, buy orders outnumbered sell orders by a huge margin. That means there was limited supply on the sell side. When there is not enough liquidity to fill all the buy orders at a given price level, the buy orders are put in a queue and filled on a first-come, first-served basis. Buy orders at the front of the queue get filled, while orders at the back of the queue have to wait until the next price level where there is liquidity to be filled. Also, FXCM is not the one setting these prices. On our NDD price feed, multiple liquidity providers stream us competing quotes. Your orders are filled at the best available price being quoted on the platform. We just add a fixed pip markup which acts as a commission, so we can make money on the trading volume.

Jason

 

[Jason Rogers]

I got my order executed at the exact price I entered my pending sell order. I don't want to say anything negative here, but I know this is not the first time FXCM traders complained about this. FXCM was fined a while ago for $6 million as they did not pass on positive slippage to traders and withheld it from their clients. They paid, claimed they fixed it but you are not alone about this issues as I read in various forums a similar story.

Hi Rambo,

Regarding the NFA action you mentioned concerning positive slippage not being passed on, I discussed this in detail in an earlier post: https://www.forexpeacearmy.com/forex-forum/forex-brokers/1125-fxcm-com-10.html#post70117

FXCM enhanced the execution system in 2010 so that clients now benefit from price improvements in both steps of a transaction for all order types. Since then, we've compiled statistics to track the percentage of orders positively slipped and negatively slipped, and which orders most frequently experience each. The percentage of orders between positive and negative slippage has been roughly equal.

And we have broken this down even further to display the number of orders on a monthly basis positively and negatively slipped:

Jason

 

[Jason Rogers]

Attention to traders using ZuluTrade and Tradency

There have been articles written about a new build of MT4 that may cause problems for Tradency (Mirror Trader) and ZuluTrade connections. While I can't speak for other brokers, both Tradency and ZuluTrade connect to FXCM's back office directly using our API. Often times whenever another website or service provider wants to offer an additional service to FXCM clients, we're happy to work with them by offering our API which is free to use. This offers a much more reliable direct connection without interruption in services that could result from going through a third party connection. FXCM clients using ZuluTrade and Tradency have not been impacted during this entire period.

 

[Triantus Shango]

jason, i have a question for you, albeit unrelated, but since here you are i thought i'd take this opportunity to let the community here learn a little more about FXCM.

1- can you please tell us what is the maximum order size allowed on the retail FXCM system? 5M? 10M? 20M? 50M? in other words, is there an upper limit? apparently some dealers do have such limits. Interactive Brokers publishes on their site that they only allow orders up to 5M per one-time clicks of the BUY or SELL button.

2- is it the same limit or different on the FXCMPro system?

3- are both the retail and FXCMPro systems true DMA or just ECNs?

4- do you allow 'last look' to your liquidity providers on the retail and FXCMPro system?


looking forward to your answers.

There have been articles written about a new build of MT4 that may cause problems for Tradency (Mirror Trader) and ZuluTrade connections. While I can't speak for other brokers, both Tradency and ZuluTrade connect to FXCM's back office directly using our API. Often times whenever another website or service provider wants to offer an additional service to FXCM clients, we're happy to work with them by offering our API which is free to use. This offers a much more reliable direct connection without interruption in services that could result from going through a third party connection. FXCM clients using ZuluTrade and Tradency have not been impacted during this entire period.