If you’re a serious straddle trader, you need to monitor spreads and price gaps. You might think you know what your broker is doing at news time but believe me, you don’t! It’s just not possible to spot what is happening with the human eye. Some people video all their trades and play them back in slow motion, but I have discovered a better way.

Until last week I thought brokers did some kind of voodoo magic which created slippage, spikes or reversals in the market, but now I know the truth. About a month ago, I was chatting with a trader who was trying to work around crazy spreads at news time. He actually managed it too by placing trades a few seconds after the news. However, I wouldn’t recommend that at all as you are extremely likely to miss the move. He was also running a Spreads and Sessions indicator, which gives you a visual guide as to the current spread and the maximum spread recorded so far. You can download it here:-

http://www.forexfactory.com/attachment.php?attachmentid=1161778

What I didn’t realise is that the indicator records all the bid and ask prices for the current chart in MT4\experts\files\tickdata in a file starting with the currency symbol and the date.

I just discovered this technique last week. Even if I am not trading all my brokers I can load up the correct chart and see what would have happened on each broker.

I recorded during UK GDP last week and here are the logs:-

Broker 1 – notice the low spread, but there are 2-3 seconds missing between 11:30:00 and 11:30:03. Did the broker ‘hold’ all the pending orders for a couple of seconds? – Impossible to tell but I’ll be monitoring it carefully. I had an order at 1.53 and it was filled at 1.5341 (41 pips slippage) but you can see why – there weren’t any prices between 1.52924 and 1.53410.

Before I would have stopped using the broker for something like this but I believe this broker is generally very good and this log helped me in that decision.

2013.04.25 11:29:58;1.52900;1.52934;3.4
2013.04.25 11:29:58;1.52891;1.52934;4.3
2013.04.25 11:29:58;1.52890;1.52931;4.1
2013.04.25 11:29:59;1.52877;1.52934;5.7
2013.04.25 11:29:59;1.52880;1.52934;5.4
2013.04.25 11:29:59;1.52876;1.52934;5.8
2013.04.25 11:30:00;1.52880;1.52924;4.4
2013.04.25 11:30:03;1.53377;1.53410;3.3
2013.04.25 11:30:03;1.53389;1.53411;2.2
2013.04.25 11:30:03;1.53414;1.53431;1.7
2013.04.25 11:30:04;1.53423;1.53441;1.8
2013.04.25 11:30:04;1.53490;1.53523;3.3
2013.04.25 11:30:04;1.53516;1.53532;1.6
Broker 2 – low-ish spreads and they are consistently 6 pips (weird), but also missing a couple of seconds of tickdata. I didn’t trade with this broker.
2013.04.25 11:29:56;1.52863;1.52923;6.0
2013.04.25 11:29:56;1.52870;1.52930;6.0
2013.04.25 11:29:56;1.52871;1.52931;6.0
2013.04.25 11:29:57;1.52876;1.52936;6.0
2013.04.25 11:29:57;1.52877;1.52937;6.0
2013.04.25 11:29:58;1.52870;1.52930;6.0
2013.04.25 11:30:00;1.52893;1.52953;6.0
2013.04.25 11:30:02;1.53331;1.53391;6.0
2013.04.25 11:30:02;1.53350;1.53410;6.0
2013.04.25 11:30:03;1.53373;1.53433;6.0
2013.04.25 11:30:03;1.53374;1.53434;6.0
2013.04.25 11:30:03;1.53409;1.53469;6.0
2013.04.25 11:30:03;1.53483;1.53543;6.0
Broker 3 – Much more Tickdata around the news release. Spread widened right on 11:30:00 to 13.7 pips. This broker obviously has access to deeper liquidity. Shame I didn’t trade with this one!
2013.04.25 11:29:56;1.52858;1.52940;8.2
2013.04.25 11:29:56;1.52862;1.52944;8.2
2013.04.25 11:29:56;1.52865;1.52948;8.3
2013.04.25 11:29:57;1.52872;1.52954;8.2
2013.04.25 11:29:57;1.52879;1.52961;8.2
2013.04.25 11:29:58;1.52875;1.52957;8.2
2013.04.25 11:29:58;1.52883;1.52965;8.2
2013.04.25 11:29:59;1.52870;1.52952;8.2
2013.04.25 11:30:00;1.52867;1.52949;8.2
2013.04.25 11:30:00;1.52922;1.53059;13.7
2013.04.25 11:30:00;1.53096;1.53183;8.7
2013.04.25 11:30:00;1.53118;1.53200;8.2
2013.04.25 11:30:00;1.53184;1.53210;2.6
2013.04.25 11:30:00;1.53152;1.53210;5.8
2013.04.25 11:30:00;1.53180;1.53264;8.4
2013.04.25 11:30:01;1.53178;1.53264;8.6
2013.04.25 11:30:01;1.53210;1.53292;8.2
2013.04.25 11:30:01;1.53289;1.53306;1.7
2013.04.25 11:30:01;1.53292;1.53308;1.6
2013.04.25 11:30:01;1.53342;1.53372;3.0
2013.04.25 11:30:01;1.53340;1.53356;1.6
2013.04.25 11:30:01;1.53273;1.53345;7.2
2013.04.25 11:30:02;1.53342;1.53375;3.3
2013.04.25 11:30:02;1.53372;1.53424;5.2
2013.04.25 11:30:02;1.53380;1.53428;4.8
2013.04.25 11:30:02;1.53368;1.53443;7.5
2013.04.25 11:30:02;1.53390;1.53443;5.3
Broker 4 – Plenty of Tickdata around the news and the spread yo-yo’ed between 11.5 and 2.0. However, it wouldn’t have caused a problem, if I’d traded with this broker. Ditto with Broker 3.
2013.04.25 08:29:56;1.52856;1.52939;8.3
2013.04.25 08:29:56;1.52861;1.52939;7.8
2013.04.25 08:29:56;1.52866;1.52955;8.9
2013.04.25 08:29:56;1.52894;1.52955;6.1
2013.04.25 08:29:57;1.52894;1.52958;6.4
2013.04.25 08:29:57;1.52895;1.52958;6.3
2013.04.25 08:29:57;1.52893;1.52961;6.8
2013.04.25 08:29:58;1.52893;1.52964;7.1
2013.04.25 08:29:58;1.52869;1.52964;9.5
2013.04.25 08:29:59;1.52864;1.52959;9.5
2013.04.25 08:30:00;1.52897;1.53009;11.2
2013.04.25 08:30:00;1.52897;1.53012;11.5
2013.04.25 08:30:00;1.53019;1.53039;2.0
2013.04.25 08:30:00;1.53048;1.53068;2.0
2013.04.25 08:30:00;1.53207;1.53227;2.0
2013.04.25 08:30:01;1.53218;1.53292;7.4
2013.04.25 08:30:01;1.53218;1.53313;9.5
2013.04.25 08:30:01;1.53257;1.53354;9.7
2013.04.25 08:30:02;1.53356;1.53422;6.6
2013.04.25 08:30:02;1.53348;1.53368;2.0
2013.04.25 08:30:02;1.53356;1.53422;6.6
2013.04.25 08:30:02;1.53358;1.53442;8.4
2013.04.25 08:30:03;1.53380;1.53442;6.2
2013.04.25 08:30:03;1.53372;1.53434;6.2
2013.04.25 08:30:03;1.53422;1.53507;8.5
2013.04.25 08:30:03;1.53422;1.53488;6.6
2013.04.25 08:30:03;1.53412;1.53507;9.5
2013.04.25 08:30:03;1.53464;1.53541;7.7
Broker 5 – Well, what can I say about this. MT4 completely frozen for 20 seconds before to 20 seconds after. I traded a very small amount with this broker but the EA did’nt even get to place the orders.
2013.04.25 08:29:40;1.52840;1.52965;12.5
2013.04.25 08:30:19;1.53765;1.53782;1.7
Conclusion:-
I’ll continue to monitor all my trades. Soon it may be possible to confirm the pattern I think I have already spotted.
1) The low spread brokers seem to freeze their feed for a couple of seconds, right on news time. The result of this is increased chance of slippage.
2) The brokers with the wider spreads don’t freeze but there is a risk the spread may be so wide, it may cost you the trade or an early stop out.
3) Some brokers like Broker 5  just freeze for the entire trade.
I plan to trade and monitor NFP on Friday, so this should be very interesting and I’ll update here over the weekend or early next week.

 

 

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