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IG CFD Order

Discussion in 'Derivatives' started by socialise, May 8, 2019.

  1. socialise

    socialise

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    Hi everyone,

    I'm a new IG client and decided to have a crack trading the RBA with them on their CFD platform today.

    I placed a stop order to sell AUD/USD at 0.6988 with a stop-loss at 0.6994 at around 14:29:40.

    At 14:30:04, the market was rallying following the decision to keep rates on hold and my stop wasn't triggered, so I manually entered a buy order at 0.7338. All was well until at 14:30:11 I noticed that despite the market rising, my order was closed for a considerable loss at 0.6988.

    I contacted IG on chat, thinking that IG had widened their spreads enormously to trigger the stop order, and the person I spoke to instead told me that the market dipped and triggered the stop order at 14:30:02, but that they didn't execute the order until 14:30:11.

    How can IG take an earlier price (0.6988) that was eight seconds old, wait until I manually entered a buy at 0.70338 (thinking the stop hadn't been hit), and subsequently close out that buy order for a massive loss at 0.6988. By executing it so late the stop-loss I set was always going to be irrelevant. This seems pretty unconscionable from IG here but maybe I am in the wrong.

    Cheers
     
    StockyGuy likes this.
  2. peter2

    peter2

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    Just before every important news event in the FX world, liquidity dries up. You can see this in the chart. The range of the bars are super small and there's very little volume. If you could look at a market depth screen it would have been very thin.

    As soon as the news is released the bots (that read/react faster than humans) will charge in and their orders will move price around a little until other bots and humans react to the news and enter their orders. This creates extra volatility within the 1 minute bar.

    You can see that AUDUSD did go down early and trigger your stop sell order. You can't blame IG for the eight second delay in notifying you that your sell order was executed. Their order book would have been stampeded by the algos, then the humans. The price movement up may have been too quick for your stop loss order to have been triggered. Your buy order closed your sell trade at a loss.

    IG has done nothing wrong. You didn't do anything wrong, but what you attempted was unwise. Most new FX traders attempt this and get stung. I hope you've learned your lesson.

    This sort of volatility happens in all markets when there's important scheduled news. Remember that moment in the movie Trading Places when all were waiting for the orange crop report. There was no trading immediately before the news. Then immediately after, wham.

    AUD070519.PNG
     
  3. Smurf1976

    Smurf1976

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    I don't use this broker but is there are chart available from their platform?

    If so, do the prices on the chart align with what you've observed both the price and the time of it?
     
  4. socialise

    socialise

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    Thank you for the replies.

    The price definitely touched 0.6988 at 2:30:02 and that is what the person on the chat told me as well. What I am trying to understand is why the order wasn't executed then, and instead took eight seconds to execute. By that time I had entered a buy trade (at 2:30:04) thinking the market hadn't touched my stop, and then was suddenly closed out at 2:30:11 when they decided to execute my order at old prices and ignoring my stop-loss. Also it wasn't an eight second delay in notification -- the trade wasn't actually executed until eight seconds later when the market had already moved considerably.
     
  5. peter2

    peter2

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    Their order book would have been swamped with orders as the news was released. Your sell order may have triggered properly but their notification system may have been delayed by the amount of orders that were being processed. We may not like it, but it's reasonable in these circumstances (RBA decision). I am impressed by your quick reactions to realise (incorrectly) that your sell order hadn't triggered and placed a buy order within two seconds.

    You have to consider this a costly market lesson and get on with creating a profitable trading plan for yourself. Problems with broker executions is all part of doing business in the financial markets.
     
    Gringotts Bank and cynic like this.
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