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

[CharlieB]

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...

[Caseynotes]

1 hour ago, CharlieB said:

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...

yeah, the long tails look false though note they are still there this morning. The FXCM chart via Tradingview won't be the actual broker client chart but cleaned up for the third party. There is often widened spread and spikey action at 22:00 as brokers switch from their normal liquidity providers to out of hours providers but not as much as is shown on the IG chart, not unusual though to see 1 large spike.

see below the CMC chart for the same period, more in line with the IG chart than the Tradingview chart. 

maybe @CharlotteIG can check with tech and get the IG chart cleaned up. If they are false spikes they would not have triggered orders as prices are delivered to your account and to the chart maker at the same time not to the chart maker first then on to your account.

 

[Kodiak]

https://community.ig.com/forums/topic/1618-getting-stopped-by-the-spread/

[CharlieB]

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?

 

 

[Caseynotes]

5 minutes ago, CharlieB said:

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?

 

 

you misunderstand, false spikes can and do occur but do not affect your account, those swings look false but couldn't say for sure, see if IG cleans the chart up.

IG operate a variable spread model and a widening at 22:00 is common as they go out of hours and change liquidity providers, been that way for years.

[CharlieB]

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

[Caseynotes]

3 minutes ago, CharlieB said:

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

yeah, what you see on your chart comes from the third party chart maker (IT Finance), if they send false data it is not what goes to your account affecting your positions and orders.

Your account receives the IG price feed at the same time as the chart maker receives it and they then create your chart, if the chart making programe makes a mistake you will watch it happen on your chart but it will not affect your orders at all.

If IG clean up the chart and you can show that your orders were adversely affected by the false chart data you can show IG and they will reimburse you. It can happen but doesn't happen very often.

 

[CharlieB]

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)

[Caseynotes]

29 minutes ago, CharlieB said:

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)

the problem is the time, 22:00 is start of 'out of hours' (after US close) and the biggest providers UK, EU and US shut down there main desks, note the that the average spread calculation is from 00:00 to 21:00 and so avoids the 22:00 uncertainty (making it look better)

What happens is actually slippage such as can be seen at high volatility during an unexpected news event. IG suddenly needs to cast wider to find prices to offer clients, there will be a wider gap between the best available buy and sell at that time and could last for some time after. I don't trade that market anymore but if you do you should get a feel for what's normal over time though there will still be occasional surprises, I do know that slippage of 12 points on news is not uncommon even on the majors.

 

[CharlieB]

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...

 

 

[Caseynotes]

2 minutes ago, CharlieB said:

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...

 

 

yeah, the 3 markets will be correlated but they each still have their own market participants who will be pulling one way or another in the short term and then correcting overall from time to time.

After the US shutdown there is only Auckland and Melbourne were big boys are still playing but they don't command the same level of volume or, therefore, the best prices.

I wouldn't worry about your broker acting to get your stops, it's just every other b*****d out there, everyone knows where your stop orders are, they're in the same place as everyone else's 🙂. A big player usually only has to cover about 25 points in order to collect 75% of the stops around a major level.