RESOLVED - AvaFX/AvaTrade cancelled profits of $9188.54

[Pharaoh]

Too bad the platforms don't show these to the second. From the variations of price on opening trades within a 1 minute window, it's obvious that there was some volatility involved - which presents opportunities for spike trading and can result in slippage, off-quotes, and off-market fills.

I would think that it would be very hard to tell spike news trading from arbitrage around news time, since the window of opportunity for each would be only a few seconds long.

The same could be said for manually trading a speech. I was one of a lot of people who clicked and made money when Trichet once said "heightened alertedness" during a speech. Price moved suddenly, and those people who reacted a fraction of a second slower than I did could have their orders filled off-market at the same time as those allegedly looking to take unfair advantage of price lags.

Under those circumstances, how can anyone tell the difference in the tidal wave of inbound orders around a speech or news spike because of a big deviation are from "good" news traders vs. "evil" arbitrage traders using software spotting the lag between two different price feeds?

I would think the hallmark of anyone truly abusing a broker by using arbitrage software would be quick, high leverage trades that only make a handful of pips, most or all of which are due to the off-market nature of the entry price. Yes, some of these would be around news events, but any sort of illiquid time could provide these opportunities. Why limit oneself to news when "guaranteed arbitrage profits" can happen at other times? Why leave an "arbitraged" trade open when the market could reverse?

I'm still waiting for the AvaTrades rep to answer my questions about the number of orders in each category. I have the feeling that those numbers don't support the theory of any of these trades really being anything more than a news trade with an off-market fill.

 

[PaulWilliams]

Official response from AvaTrade to customer

The fact that the client was consistently trading while the market price was up to 39 pips in his favor. This creates a situation where the trader can make certain profits on his positions against the broker.
Specifically 27 trades were found to have opened at a price that was very different from the actual market.
The reason we use Bloomberg is to specifically prove this.
Tick history from other reputable brokers or banks can also be used to show the actual market rates at the time those trades opened.

Discrepancy in the feed is very uncommon but can occur due to the technical nature of business. As this unfortunately happened it is obvious that the client only tried to take advantage of the discrepancies to make unfair or illicit profits.
Trading only during these specific moments over the period of 30 days is another reason to believe that the arbitrage was not accidental.

It is AVA’s policy which is included in the Terms & Conditions to completely cancel those trades that are found to be intentional arbitrage.
This policy is included to prevent such arbitragers from trying to take advantage of the company.

There are various external software that aim to take advantage of these feed discrepancies from brokers by comparing brokers rates to another third party’s rates. This type of software is strictly prohibited.
Only where there are undisputed evidence that the arbitrage is intentional will AVA proceed with cancellation of trades.

AVA provides service to over 100,000 traders and such occasions are extremely rare.

 

[crunchy]

Hi Guys,
I know this is beside the tread, but I have been following this thread for some time now.
I want to ask, does anybody have an idea, how much does it cost to hire a financial attorney in England?
Thanks
Crunchy

 

[Master Yoda]

Hi Guys,
I know this is beside the tread, but I have been following this thread for some time now.
I want to ask, does anybody have an idea, how much does it cost to hire a financial attorney in England?
Thanks
Crunchy

Like in every service/country the price range can be very big. You need to find lawyers online and ask for quotes.
But why England? They are in Ireland.

 

[blackrose]

You do NOT have to hire a lawyer!
AVA has to prove, NOT YOU!
Go with Financial Ombudsman!

 

[Thug Willy]

Tradetowin,

Can you please post the code for your ea so that it proves beyond a shadow of a doubt that you don't trade in this fashion.

@ Paul

wouldn't arbritage be proven if you showed your feed didn't offer the same price Bloomberg offered. What your stance is right now is reversed arbritage (atleast in my mind it is)
showing that another broker's feed didn't have the price at the time tradetowin brokered a deal with your server proves nothing other than avoidance.
Proving that no other client of yours opened at the price trade to win did would prove that but you keep cloking your feed leading us to believe you are in the wrong and know it.

 

[Tradetowin]

Like in every service/country the price range can be very big. You need to find lawyers online and ask for quotes.
But why England? They are in Ireland.

I'd only go the lawyer route once I go through the regulators first. If that does not prove successful the next step is the lawyer. But you'd have to share whatever funds you are able to recover with the lawyer(70/30 perhaps?) or pay money upfront with no guarantees of recovery.

 

[Pharaoh]

Your original story indicated that Tradetowin drew attention and was being monitored since July 4th. How could anything like what you described continue for 30 days with no adjustments, no warnings, or not just locking the client down?

Paul, I was hoping for a direct answer to direct questions. Allow me to remind you of those questions:

Paul, I have some questions, and I hope they can be answered within a reasonable period of time.

1. Starting from the first off-market trade, how many trades:

a. entered at an off-market price.
b. exited at an off-market price.
c. were on-market for both entry and exit.

2. How much money was gained/lost by trades that had an off-market entry or exit?

3. If those trades were adjusted, how much money would be gained/lost?

4. How much money was gained/lost by on-market trades?

You have provided some limited information, but skipping out on important details makes it appear that those details would not support the position of AvaTrades.


Considering the size of the off-market prices you've mentioned, if those aren't around a news event, then AvaTrades has a major issue with its datafeed. This brings up an additional point:

If a large, clean (no big revisions, no simultaneous releases in conflict) deviation happened, price would almost always rocket in one direction. If any trader opened a trade using perfectly legal spike trading software just as that data was coming out, they would have a good chance of getting either slippage or an off-market fill. Under those circumstances, the off-market fill would almost always be in the trader's favor. This would require no form of arbitrage at all, but the trades would be virtually identical to those that could be triggered by arbitrage software.

How would AvaTrades differentiate this from using arbitrage software?

 

[FxMaster]

Lets hope that will get proper response from AVAFX representative....

 

[Pharaoh]

My confidence that AvaTrade is either willing or able to provide direct answers to direct questions is rapidly eroding.

Suspecting possible arbitrage is a valid reason to examine trades. If (and ONLY if) arbitrage can be PROVEN, then that is a valid reason to cancel trades. Otherwise, trades should only be adjusted to match real market prices. If Ava's terms define Bloomberg as the "real market" then those are the prices that should be used for this adjustment.

If no one at Ava can provide complete numbers to support this contention as well as explain how successful news trading can be differentiated from use of arbitrage software around news events, then the most logical conclusion is that Ava Trade is taking money owed to a client based on nothing more than the assumption that profitable trades initiated during fast market conditions (resulting in off-market entries) can't be legitimate, so must be arbitrage and shouldn't be paid. In my book, that's theft.