so whats new?...... chood - you may find this interesting: http://faculty.haas.berkeley.edu/lyons/Yao FX dealer profits.pdf#search='fx%20trade%20shading'
cheers
cheers
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RefcoFX vs. Oanda
- Thread starter eagerbeaver
- Start date
I am cross posting this from the Oanda forum with regards to some of Oanda's business practices, in case anyone here doesn't visit that forum. Here is the thread:
http://www2.oanda.com/cgi-bin/msgboard/ultimatebb.cgi?ubb=get_topic;f=16;t=004838;p=1
I did not want to go into this because I usually like to keep a low profile, but in light of the flak Jose is getting from some members on this list who seem to have drunk too much of the Oanda Cool Aid, I want to add my support for what Jose is saying. I have experienced everything Jose is talking about in this thread. He calls it shading, I call it slippage. Whatever you call it, this is a major problem at Oanda. A little background: I have done thousands of trades with Oanda and each of these trades was tracked by an automated piece of software for estimated fill price vs. actual fill price. When I ran the analysis of actual fill prices to ideal fill prices there was a dramatic change about 3 months ago. I can prove that Oanda systematically started treating my account differently than everyone else's accounts (in spite of Michael Stumm's repeated statements to the contrary). I believe this is why so many are quick to jump in and ridicule those who post their contrary experiences, and to defend Oanda on the slippage issue - I did the same until Oanda started systematically treating my account differently.
My system's average slippage was .5 pips per trade up to that point (normal latency type of slippage.) When Oanda started treating my account differently, the slippage went to 1.5 pips in normal trading conditions and 2.5 pips in high volatility conditions (Note: this is slippage, not the spread). As Jose mentioned, dozens of times for me I received my fill many seconds ahead of the price moving to that level. This never happened before Oanda started treating my account differently. My effective EUR/USD spread with Oanda became 3 pips in a dull market and a whopping 4 pips in a volatile market. This is only taking into account a 1.5 pip actual spread, not the 2-7 pip spread Oanda quotes around news reports, so my effective news cost to trade was enormous. As a result of this behavior I pulled my account and am trading elsewhere.
How can I prove that Oanda was systematically treating my account differenty? I ran the exact same automated system on my account and also on an associate's account at the same time. The initial average slippage was identical: .5 pips per trade (normal slippage). Then my account mysteriously started experiencing the increased 1.5-2.5 slippage on each trade, while my associate continued to receive the previous .5 pips per trade slippage (on the exact same trades entered the exact same microsecond). We switched around everything, internet connections, hardware, computers and found that the extra slippage was not generated on my end (as I assumed because I too believed that Oanda would never do this after so many statements on the boards by Oanda representatives).
The only conclusion I was able to draw from this experience was that this extra slippage was rather intentional on the part of Oanda and automated on the Oanda server. Just as Jose mentioned, I would get filled higher or lower than the posted price. Then anywhere between 1-5 seconds later the chart would print the price of my fill, but the actual quote most times would never reach that level. And on those exact same trades, my associate would receive the normal fill, even though that order was entered simultaneously. When I say simultaneously I mean down to the microsecond. So I conclude that Oanda has predatory pricing practices that it employs in an automated fashion against SOME of its customers. I believe those who are complaining in this thread about the shading practices of Oanda have probably been put in the same category and are also receiving extra slippage. Just because it is not happening in your account does not mean that Oanda does not do this. Unfortunately it appears that Michael Stumm is knowingly deceiving Oanda customers by making statements along the lines that all customer orders are treated equally.
If you read my posts on this board, and on Moneytec & Elitetrader you will see I'm not a fly by night Oanda basher. I was Oanda's biggest supporter before this happened in my account. Oanda is practicing predatory shading practices, and on principle I simply won't do business with a firm that acts in this unethical manner.
http://www2.oanda.com/cgi-bin/msgboard/ultimatebb.cgi?ubb=get_topic;f=16;t=004838;p=1
Originally posted by Jose02:
[QB]
again problem is in price shading..so you see 1.5 pip spread but spread is actually 2-3 pips
of coures oanda will blame volatility for it..
I also trade over autobahn FX from Deutsche bank..eurusd spread is 2 pips..sometimes i get choice price(no spread)
Comparing autobahn and fxtrade..in dull market price on autobahn will not change 10-20 sec..but on fxtrade you will see that price goes up and down almost every second
and when price is near your SL level probability that price will hit SL is grater at oanda than elswere,just my opinion...
that is ok if you are long term trader...but for day trading...
maybe you don´t see that,and you are satisfied with your trading..but in the end you will see that you was trading on 2-3 pip spread instead of 1,5
and we have problem with filling every SL order unbelivable precisly..but when it comes to filling limit order..they are often canceled
if you don´t believe me just look on FXTrade Platform Issues forum... [/QB]
I did not want to go into this because I usually like to keep a low profile, but in light of the flak Jose is getting from some members on this list who seem to have drunk too much of the Oanda Cool Aid, I want to add my support for what Jose is saying. I have experienced everything Jose is talking about in this thread. He calls it shading, I call it slippage. Whatever you call it, this is a major problem at Oanda. A little background: I have done thousands of trades with Oanda and each of these trades was tracked by an automated piece of software for estimated fill price vs. actual fill price. When I ran the analysis of actual fill prices to ideal fill prices there was a dramatic change about 3 months ago. I can prove that Oanda systematically started treating my account differently than everyone else's accounts (in spite of Michael Stumm's repeated statements to the contrary). I believe this is why so many are quick to jump in and ridicule those who post their contrary experiences, and to defend Oanda on the slippage issue - I did the same until Oanda started systematically treating my account differently.
My system's average slippage was .5 pips per trade up to that point (normal latency type of slippage.) When Oanda started treating my account differently, the slippage went to 1.5 pips in normal trading conditions and 2.5 pips in high volatility conditions (Note: this is slippage, not the spread). As Jose mentioned, dozens of times for me I received my fill many seconds ahead of the price moving to that level. This never happened before Oanda started treating my account differently. My effective EUR/USD spread with Oanda became 3 pips in a dull market and a whopping 4 pips in a volatile market. This is only taking into account a 1.5 pip actual spread, not the 2-7 pip spread Oanda quotes around news reports, so my effective news cost to trade was enormous. As a result of this behavior I pulled my account and am trading elsewhere.
How can I prove that Oanda was systematically treating my account differenty? I ran the exact same automated system on my account and also on an associate's account at the same time. The initial average slippage was identical: .5 pips per trade (normal slippage). Then my account mysteriously started experiencing the increased 1.5-2.5 slippage on each trade, while my associate continued to receive the previous .5 pips per trade slippage (on the exact same trades entered the exact same microsecond). We switched around everything, internet connections, hardware, computers and found that the extra slippage was not generated on my end (as I assumed because I too believed that Oanda would never do this after so many statements on the boards by Oanda representatives).
The only conclusion I was able to draw from this experience was that this extra slippage was rather intentional on the part of Oanda and automated on the Oanda server. Just as Jose mentioned, I would get filled higher or lower than the posted price. Then anywhere between 1-5 seconds later the chart would print the price of my fill, but the actual quote most times would never reach that level. And on those exact same trades, my associate would receive the normal fill, even though that order was entered simultaneously. When I say simultaneously I mean down to the microsecond. So I conclude that Oanda has predatory pricing practices that it employs in an automated fashion against SOME of its customers. I believe those who are complaining in this thread about the shading practices of Oanda have probably been put in the same category and are also receiving extra slippage. Just because it is not happening in your account does not mean that Oanda does not do this. Unfortunately it appears that Michael Stumm is knowingly deceiving Oanda customers by making statements along the lines that all customer orders are treated equally.
If you read my posts on this board, and on Moneytec & Elitetrader you will see I'm not a fly by night Oanda basher. I was Oanda's biggest supporter before this happened in my account. Oanda is practicing predatory shading practices, and on principle I simply won't do business with a firm that acts in this unethical manner.
Quote from illiquid:
I can't imagine how anyone puts up with a market quoted through a middleman that is always actively on the other side of your trades. Remind me again why you guys don't just trade globex?
Fair question. I trade on Globex and several spot outlets for diversification and because at times you will get a better deal on one over the other. Globex isn't always the best deal, and sometimes Globex / various brokers go down. And at the time I opened the account I guess I just didn't know better.
Quote from illiquid:
I can't imagine how anyone puts up with a market quoted through a middleman that is always actively on the other side of your trades. Remind me again why you guys don't just trade globex?
insufficient liquidity at times (when i need it...)
pipscooper - auto-shading (1-2pips) is the norm, thats part of how yr dealer manages his risk position (have a read of the harvard article i early posted in response to chood, i wasn't just being facetious), however what yr being hit by is 'individual pricing', which is totally dishonnest, even in the eyes of the ACI (cambistes)...
u shld start a separate thread with this, there r things one can do to inflict a price on the brokers for doing this - e.g. stir up a sh*tstorm with the ACI, consumer assoc., fair trade commission, gvt audit agencies, ombudsman and what have you - if you want to spend the time, effort etc (i wldn't...)... in the meantime your right, just go to another broker...
Quote from pipscooper:
If you read my posts on this board, and on Moneytec & Elitetrader you will see I'm not a fly by night Oanda basher. I was Oanda's biggest supporter before this happened in my account. Oanda is practicing predatory shading practices, and on principle I simply won't do business with a firm that acts in this unethical manner. [/B]
Hi pipscooper,
From your experienec, when does Oanda start practising these things against you? Was it when you become consistently profitable? Or was it that you have a bigger account? Or were you trading much bigger than before?
Thanks
Quote from 2cents:
insufficient liquidity at times (when i need it...)
pipscooper - auto-shading (1-2pips) is the norm, thats part of how yr dealer manages his risk position (have a read of the harvard article i early posted in response to chood, i wasn't just being facetious), however what yr being hit by is 'individual pricing', which is totally dishonnest, even in the eyes of the ACI (cambistes)...
u shld start a separate thread with this, there r things one can do to inflict a price on the brokers for doing this - e.g. stir up a sh*tstorm with the ACI, consumer assoc., fair trade commission, gvt audit agencies, ombudsman and what have you - if you want to spend the time, effort etc (i wldn't...)... in the meantime your right, just go to another broker...
Thanks for your post. I hesitated posting any of these details because I didn't want to become the poster boy for this kind of thing. Thanks for your references, but as you wouldn't want to go to the effort, I also don't want to spend any more time with this.
It is interesting to note that the term "forex dealer" seems to be a code word for "bucket shop". And bucket shops seem to operate just as they did in "Reminiscences of a Stock Operator" albeit with a few new tricks -- I guess some things never change.