I was sitting and looking at tradestation from FXCM running Team Aphid Bird signals when sudenly all pending orders disappeared (stop loss too), although there was opened position. So I waited and manually closed position with big loss. (Much bigger that it would be with stop loss)
After some time C2 showed that there is new opened position and few pending orders. My trading station did not have any of them.
Tthere were constantly few pips slippages.
My only subscription is to TAB through Bulldog/FXCM and just pulled it up and saw that my account balance has been totally hammered.
Looks like the same thing: the main loss is BTO EUR/JPY at 157.81 with the cover at 156.10. Clearly the stop loss was not there.
I don’t know who dropped the ball, but I guess my time with C2/TAB/Bulldog/FXCM is done.
I would appreciate any explanation of what happened.
Guys -
Something happened at FXCM this morning at around 8:30 am. Orders were not processed properly; market orders were left hanging; cancels were not confirmed. We are on the phone with FXCM now, investigating exactly what happened. When I learn more, I will post it here.
Here’s what occurred. According to FXCM, the disruption was industry-wide: Nonfarm Payroll numbers came out this morning much lower than expected. Banks stopped quoting currency prices, market orders weren’t processed, cancels hung in the air… etc.
This might be a good example of the reason systems should consider closing positions before NFP numbers come out. We’re still looking into things on our side to make sure we did everything within our power to handle orders efficiently, but upon first examination there was no C2 error; this was a demonstration of the risk of trading forex on an NFP day.
More soon…
You ride the tiger, and may think everything is fine, but then he gets hungry and wakes up, and then eats you.
I agree that closing positions before important news comes out can protect against sudden volatility combined with a lack of liquidity. However, it does not protect against those events in case of unexpected news. Vendors/subscribers might consider to use lower leverage instead, because a 1-2% move like today, will simply turn into a 20-40% move if leverage is 20:1.
Today’s problems reiterate the benefits C2 subscribers could reap from statistics on the max leverage used by vendors and ways to impose limits on the max leverage. Unfortunately, they also demonstrate that stop-losses don’t offer any protection in forex when it’s needed most, and might give subscribers a false sense of protection.
Mathew wrote:
> According to FXCM…Banks stopped quoting currency prices
This is arrant bullshit! Markets went a little crazy, but banks
were still quoting prices and making markets. I was watching
CurrenEx, HotspotFXI, EBS, and Avidus at the time and all
of them were handling much greater than average order flow.
Spreads were wide and quotes were jumping all over the place,
but there was never a lack of tradeable bids and offers.
FXCM is one of the sleaziest outfits in the business.
Perhaps you are referring to dealing desk accounts where the broker is making a market but those accounts are being phased out.
No dealing desk means the FX broker is not making a market, and all orders are routed to banks. If the counter parties decide to kill orders and reject new ones the result is chaos and lack of liquidity. Whether a quote is available does not mean orders will be filled at that price, there is no such guarantee in the Forex market during news events like Friday. The markets you mention are all institutional markets where minimum account and order sizes are much greater than the retail market, it’s like comparing apples with oranges.
FXCM makes money on volume so if clients can’t trade they’re not making any money; it’s not good for them.
To minimize the recurrence of incidents like this in the future, I think it would be a good policy for Forex system vendors to close all positions before big news events. C2 filled a stop because there was a quote at that price, but no one filled it in their account. The realism factor on this one is zero.
Francis
Perhaps there would be a use for Collective2 to BROADCAST major news events, somehow…?
Perhaps publish it, in red, on our home page or at the top, under the advertisements? Make it flashing when within an hour of the event??? But consensus could be reached on what is "major" nad what is "meaningless"?
I am not an expert like Matthew, Schmitty, Francis and Ross…but the majority of ideas that are wrangled about in these forums are absolutely ridiculous. First off we are talking trading…not investing. So losers magnamoniously abound. Subscribe at your own risk. Matthew/C2 can’t play Daddy Day-Care with your money.
Number 2, there are so many factors involved with markets…you simply cannot contrain a system (“market-moving” events/AWOL vendors/please protect my money buttons, etc.) unless you do so yourself.
Take a little time to understand the bounding range which entails the arena you navigate within.
Gilbert
I have several comments regarding this FXCM issue.
First - when Collective2 fills trades based upon bad ticks the system vendor generally complains, Matthew investigates and makes changes to the system results if justified. In this particular incident, C2 has investigated and determined that there was no market at the time in question. (Orders were cancelled and not filled.) Therefore the correct method of handling this is to manually adjust the trade(s), stats and equity curve for this system and all other Forex systems that may have been affected.
Second - Dealing with this issue by assigning a Realism Factor of zero is absurd. I don’t have anything against Team Alpha Bird system but if I look at the current results it has an overall Realism Factor of 99.7% and is at the top of the list for best system and best Grandma system. Yet at least two people and probably a lot more lost their shirts trading this system. I would suggest that assigning an RF value of zero for one trade is not a satisfactory way of representing the system results.
Third - Collective2 advertizes itself as an independent verification of trading systems. If another incident of this nature occurs, C2 could be open for legal action simply because it knowingly did not accurately reflect system results in this previous case.
Fourth - Many of the high flying Forex market timing systems are completely dependent upon Auto-trading and fast execution. As I understand it in this incident the orders were outright cancelled leaving the trader naked. Having a large amount of slippage is one thing but having orders cancelled is quite another. It seems to me that C2 needs to find a reliable solution to the problem (not suggest to close positions before every news event). Otherwise the feasibility of autrading has to be brought into question.
Steve
Hi Steve,
I should probably clarify that I don’t work for C2 and I can’t speak for C2/Matthew. I have no idea how the Realism Factor is calculated, I was merely referring to BulldogFX accounts: I did not see any live account being filled at that price and time.
Francis
Steve,
I forgot to address your last point. It was the first time in a year of trading with FXCM that I observed multiple orders being canceled/rejected like this, so I don’t think any conclusions can be drawn by a single event.
Other autotrading options are available: IFX Markets is now available and we have started integrating with Gain Capital.
Francis
Thank you Francis -
I will look forward to hearing from Matthew as to how this issue will be addressed. I will keep pressing until I see an answer since I believe this is important for the credibility of C2.
I refer to your previous post:
"No dealing desk means the FX broker is not making a market, and all orders are routed to banks. If the counter parties decide to kill orders and reject new ones the result is chaos and lack of liquidity. Whether a quote is available does not mean orders will be filled at that price, there is no such guarantee in the Forex market during news events like Friday. The markets you mention are all institutional markets where minimum account and order sizes are much greater than the retail market, it’s like comparing apples with oranges."
You speak of other autotrade options. Given your statements above, how would another autotrade option have worked in this situation? If I read it correctly there are essentially no market makers, only banks accepting or rejecting orders. This raises all sorts of questions, such as how such events will be handled in the future; and does the Forex market truly have the vast liquidity that is made out once you factor out the institutional volume.
Keep in mind that Friday’s occurrence was just a little blip on the radar screen but had the effect of destroying people’s trading accounts. What will happen when there is a true crises that causes either a run on a country’s currency or flocking to the U.S. dollar? Many people here are under the mistaken impression that their liability is limited to the amount of money in their trading account… I need say no more.
Steve
Steve,
Both Gain and FXCM have a negative account balance protection policy. They guarantee no debit balances. See their web sites.
Francis
Francis,
Perhaps you can point out to us where in the Trading Agreement FXCM states they will protect my account against negative balances. I couldn’t find it. All I could find was “Trader shall at all times be liable for the payment of any deficit balance” (under the heading “Liquidation of accounts and payment of deficit balances”).
http://www.fxcm.com/docs_pdfs/trading_agreement.pdf
Francis - I would suggest that you have a good hard read of the FXCM new account agreement.
The policy you are referring to is under Risk Disclosure Statement.
"FXCM warrants and represents that its platform has been designed so that your account will not have a negative balance due to failure to meet the required margin."
There platform is DESIGNED so that your account will not have a negative balance… I read this an intent not a legal agreement.
Read the rest of the agreement including the Notice to Traders (This Agreement is a Legal Contract Please Read It Carefully)
1.
there may be certain cases in which trading liquidity decreases causing trading in a certain currency to cease, thereby preventing the liquidation of an adverse position that may result in a substantial financial loss.
4. … FXCM also reserves the right to refuse to accept any order or guarantee a market in which to offset.
5. … As with all facilities and systems, they are vulnerable to temporary disruption or failure…
6. … you will be exposed to risks associated with the system including the failure of hardware and software.
7. LIQUIDATION OF ACCOUNTS AND PAYMENT OF DEFICIT BALANCES. In the event of … (d) insufficient margin … Trader shall at all times be liable for the payment of any deficit balance of Trader upon demand by FXCM and in all cases, Trader shall be liable for any deficiency remaining in Trader’s account(s) in the event of the liquidation thereof in whole or in part by FXCM or by Trader. In the event the proceeds realized pursuant to this authorization are insufficient for the payment of all liabilities of Trader due to FXCM, trader shall promptly pay upon demand, the deficit and all unpaid liabilities, together with interest thereon equal to three (3) percentage points above the then prevailing prime rate at FXCM’s principal bank or the maximum interest rate allowed by law, whichichever is lower, and all costs of collection, including attorney’s fees, witness fees, travel expenses and the like. In the even FXCM incurs expenses other than for the collection of deficits, with respect to any of the account(s) of Trader, Trader agrees to pay such expenses.
If you think that there is no liability beyond what is in your trading account then think again.
Steve
Steve,
I don’t know what you are trying to prove, you don’t even have an
account with us.
As I mentioned both web sites say you won’t have debit balances right on their home page. Gain even call it a guarantee. In any event I would always assume that trading on margin exposes one to margin calls and negative balances when the markets swing rapidly. It’s just common sense.
Francis
I think Francis is saying that on the FXCM home page, they guarantee no debit balances. On the other hand, Steve rightly points out that the actual legal agreement is a bit tougher. This wouldn’t be the first time in the history of corporate America that the marketing people say one thing, and the lawyers say another. In any case, the safest, most responsible thing to do is to be aware that forex trading - like all speculation - is incredibly risky; that you can lose your entire account and possibly more; and that the only place where you can make millions of dollars without any risk is in your dreams, while you sleep soundly at night. In real life, risk is commensurate with potential reward.
Matthew
A good test would be for someone to contact FXCM and request that #7 LIQUIDATION OF ACCOUNTS … be stricken from their legal agreement because it does not apply. If FXCM refuses then you know the truth.
I don’t trade Forex so I can’t do this but I would be interested in seeing their response.
Matthew - at present your statistics for Team Aphid indicate 3.28% drawdown. How do you plan on addressing the issue?
Steve
