Hi Phillip,
I totally agree with you about Gomarkets requoting in their favour(spikes) and I have proof about increased spreads during news events.
On the 2nd July 2010 I had a few positions opened and they had gone the wrong way on me, so I placed a reverse or hedge trade to stop any further loss effectively freezing the loss until the market turned back the other way. I have used this strategy to reduce losses quite effectively except for the Friday 2nd July, Non-Farm Payroll day.
I went to work Friday night and Sat morning checked my account to find my account of $400 was now -$88. It had been wiped out by the broker, GoMarkets. All positions were hedged and therefore could not be affected, or so I thought.
At 14:30 the price spiked over 109 pips in a one-minute time frame. If you check your M1 chart at 14:30 on 2nd July you will see what I mean.
What had happened was the broker applied a spread of 109.8 pips to my open positions which then created a margin call. They effectively closed one side of the hedged position and let the other side run into massive loss until my account was wiped out.
here's the email I sent them..........
From: Graeme Little [mailto:glittle56@yahoo.com.au]
Sent: 03 July 2010 9:18 PM
To:
info@gomarketsaus.com
Subject: Re: Positions forcefully closed on acc# ---------
Dear Sir,
I would like an explanation of why my open positions were closed at 14:30 on 2/7/10?
I do not believe that any margin call was warranted.
If there was a need for positions to be closed, why wasn't I notified? I could have closed them myself without wiping out my account.
Secondly, as all my positions were closed at exactly the same time, why was there such a discrepancy in the price at the time of the closure. For example...........
GBPJPY
Short pos #1 @ .07 lots opened at 134.258 closed at 134.008
Short pos #2 @ .07 lots opened at 134.366 closed at 134.008
Short pos #3 @ .07 lots opened at 134.413 closed at 134.008
Short pos #4 @ .07 lots opened at 134.480 closed at 134.008
Long pos #5 Hedging @ .28 lots opened at 135.147 closed at 132.919
This is a difference of 108.9 pips??????????
If the four short positions could all be closed at the same price, why wasn't the long position also closed at the same price of 134.008, seeing that the closure was at exactly the same time.
This diference has effectively wiped out my entire account.
I can see that on the M1 timeframe, price moved upward by 117.3 pips in the space of 1 minute, however my long position happened to be closed in that particular minute and at the start of that move.
If it had been closed 1 minute later I would have been 50 pips better off at $2.80 per pip.
Are you telling me that I am just unlucky. That the whole world market pushed the GBP upward by 117 pips in 1 minute and that my account was closed out at exactly the same time?
Also that my corresponding short positions were closed out 108.9 pips later but in the exact same minute.
Also that my short positions were closed at 134.008 and the high for that minute was 133.888, which means that the high never reached my closure point by 12 pips.
So if the price high was 12 pips below 134.008, at 14:30 how was my position closed at that price?
I have to say, things are looking very fishy here and I would like an investigation into this.
All my other positions have significant differences in the price they were closed at yet all positions were closed at the same time(14:30).
USDCHF had 4 positions closed (2 long, 2 short) with a difference of 39.9 pips at the time of the closure.
GBPUSD had 2 positions closed with a difference of 13.8 pips
EURUSD had 2 positions closed with a difference of 9.7 pips.
I await your explanation,
From: Go Markets <info@gomarketsaus.com>
Subject: RE: Positions forcefully closed on acc# 502363
To: "'Graeme Little'" <glittle56@yahoo.com.au>
Received: Monday, 5 July, 2010, 1:20 PM
Hi Graeme,
As a gesture of goodwill I am happy to reinstate these hedged positions to your account, but you also need to understand a couple of things.
Firstly, just because you are hedged it does not mean you have frozen yourself from further loss. Your account equity is defined by the cash balance plus or minus the floating profit and loss on your positions. The floating profit or loss when hedged will obviously be impacted upon as the spread fluctuates. Also, you need to consider that if you hold hedges for a long time the equity will fall as the swap fees accumulate. This is why holding hedged positions is no guarantee of ‘safety’.
Another important thing to consider is that it is not a case of us as a broker “panicking”, it is an automatic procedure which is triggered instantly by the MetaTrader4. It involves nothing manual from our end. It also does not close one half of the hedges only, it closes every single position as soon as you have a negative equity.
The situation with MT4 will not change, so this is always possible so it is important for you to understand the risks involved with hedged positions.
You will see the hedged positions reinstated on your account within the next 30 minutes or so.
Regards,
Chris
===========================================
From:
"Go Markets" <info@gomarketsaus.com>
Add sender to Contacts
To:
"'Graeme Little'" <glittle56@yahoo.com.au>
Hi Graeme,
It is all a learning curve! Around news announcements spreads can spike well over 100 pips. I think the largest genuine spread I have seen is around 240 pips!
The best thing to do in such a situation like this is to email us as you have done. We pride ourselves on our honesty as a broker and we will always get back to you at the first available opportunity, but if you don’t hear from us, it doesn’t mean you are being ignored, so feel free to call in our email again.
Thanks,
Chris
=====================================================
So there you have it, spreads of 250 pips are possible and can be applied to overnight positions' profit/loss. What a joke this is. The reason I was given was one of low liquidity causing the spread difference.
I have many examples where the "market" will just reverse enough to take out my stop loss and then continue back the other way. Or, when trading with the trend it will move down, take up the pending entry and then reverse suddenly to spike and take out my stop loss.
I am not kidding, this is no better than a rigged roulette wheel at an online casino.
What I need to find is a broker that can give real time quotes of the "real market" and then I am happy to take my chances but at the moment I'm playing against a stacked deck.
I'll bet most people who read this are wondering why their system works on a demo account and then when they go to a real money account, it doesn't work anymore. We then blame our system as being faulty. It's probably not your system at fault.
If anyone can help with a trust worthy broker, I would be grateful. Also a platform that is giving accurately quoted prices.
Thanks,
Graeme Little