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EURGBP last night 22.00-22.30 - unusual or normal price action?


CharlieB

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I havent traded EURGBP for a while so it may well be normal activity - maybe some sort of algo running between 22.00-22.30.

For no apparent reason the spread moves to 12 pips wide (from 0.9) and swings erratically.

Take a look at the IG 1 minute chart here with a corresponding chart from TradingView (FXCM feed but they were all the same) at the same time.  The chart I share is 1m and mid price so with that in mind this action would have swept all stops above and below the high 8698 and 8686 by a further 6 pips so call it a 25 pip range of 8680 and 8705 it what was for all intents and purposes a quiet market (EURUSD had a 6 pip range at this time and GBPUSD had a 8 pip range)

Luckily I saw it and pulled my stop and left in my Limit - need less to say my stop would have probably been hit at 80, and of course my Limit at 8700 whilst swept, was not triggered as the spread was 12 pips not the usual 0.9 pips.

Very odd action - I can only assume algo driven - but definitely not in the interest of the trader...

IG - WTF - Screenshot 2021-04-14 223944.png

Screenshot 2021-04-14 222613 IG Index EU 12 pip spread.png

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the price action was real alright - i was watching it in real time - very odd

IG have advised me in the past that spreads widen at times of volatility - but 0.9 to 12 pips and then erratic swings - smells of stop hunting to me with no chance of getting filled on the limit orders

playing with a stacked deck?

 

 

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i do understand false spikes can appear on charts - what i am saying is that i was watching it at the time and those spikes reflect the erratic bid and offer prices as they changed, so in this case i do not believe they were false spikes

I appreciate while changing providers that spreads may widen but a 12x factor is more than a little excessive and didnt happen in other pairs so it doesnt quite justify the action.

It would be interesting to get an official IG EURGBP market maker response as to the mecahnics of what was going on here.  Id rather they didnt just delete the wicks and assume it didnt happen.

You are of course right, i do recall see this sort of thing around the same time - might be a factor as to why i havent traded EG in a while :)

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thanks for your comments Casey, very interesting.

What is your take on the spread going from 0.9 pips to 12 pips - in a very docile market - acceptable or overkill?

(I accept that in times of extreme volatility the spreads can widen considerably, which is fair enough,  but I don't think we can put it down to that this time)

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I hear you

I guess my only comment would be the lack of consistency across the three pairs that by their nature should mean they are not altogether different in character (EU, GU and EG) - one would have thought (and of course I accept I could be wrong) that if GU and EU are behaving normally with perhaps a minimally wider spread then there is little reason for EG to be both very spiky and excessively wide spread

the cynic in me will always ask the question.  Its not unlike having that very special ability to place a stop on what turns out to be the very bottom tick and yet it never seems to happen with quite the same degree of accuracy or regularity with one's limits :)

I jest of course but I bet I am not alone in pondering that one...

 

 

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