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Trailing guaranteed stops

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Second suggestion: Trailing guaranteed stops

 

I am tremendously surprised how this feature has not been implemented yet.

I wonder what the rest of the community think about this.

Out of curiosity, which percentage of customers used this feature on any given day?

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Hi,

I've never used guaranted stops, never considered it worth it, but I trade intraday (high frequency, low load) and am able to keep an eye on the charts. Am also able to stay out for tier 1 data releases (NFP, ECB rate).

 

Was only ever badly caught out once several years ago in a cable trade (GBP/USD) when a central banker opened his mouth with something unexpected and the chart stamped an instant 60 pip bar against me, took out my 20 pip stop and gave me 40 pip slippage. Ouch. Hilariously price then instantly reversed again and carried on in the original direction of my trade. Ouch x2.

 

If I was doing something really stupid like betting against a central bank eg. Swiss National Bank last year, then I would definitly use a guaranteed stop.

 

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I do not use all the time, however on certain scenarios is just to risky do not use it.

 

The trailing guaranteed stops is great help to avoid the micro-monitoring of a position, or when you are abroad.

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Hi Caseynotes

 

Just reading your post, when you say betting against a central bank what do you mean?

 

Thanks

 

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sorry for missing your post and therefore late reply.

I was referring to the infamous occurance of Jan 2015 when the Swiss National Bank (SNB) had a peg at a certain currency level against the Euro. Whenever price dipped below that level the SNB stepped in to buy it back up. Loads of punters were buying that dip assured the SNB would step in ... until one day they didn't, the longs where left high and dry as price plummeted, slippage of hundreds of pips. Or consider Soros betting against the BOE, he was risking billions, it paid off. You and me can't afford to even try. We are most likely to lose.

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I was trading Euro past few weeks and i had one open order on weekend with normal stop loss it gapped down and my position in profit went heavy loss that sets up a series of down days for me.

 

if i would have used guaranteed stops it would have been small loss.

 

Ive been on phone with IG support and after many minutes i got this idea

 

1. Guaranteed stop price is dependent on volatility. if normal day hours its of no use unless black swan event takes Now since its based on volatility under high volatility your trailing guaranteed stop instead of in your favor can go against you as it wil lbe calculated dynamically

 

2. Guaranteed stops payment only when its hit if its not hit then its not charged

 This one i couldn't understand because the cc agent told me that they include the premium for guaranteed stop when you place the order so instead of spread being .6 they will charge you 1.6 so that means you have already paid for guaranteed stop

 

Here's how ill use them

1. You could use Daily ATR*1.5  as guaranteed stops as an insurance during market hours who knows

2. On weekends if ive positions open ill definitely use guaranteed stops.

3.If you are using PRT then you cant place Guaranteed stops so either go to portal or call IG

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Good points, I remember posting an article on the specific use of guaranteed stops for weekends but can't remember the thread. I saved the snippet reproduced below, I think it was about the introduction by IG to GS for ongoing positions.

 

gs.PNG

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i asked iG how can they support guaranteed stops wouldnt this means absorbing trader loss. i wanted to make sure that they will honor guaranteed stops no matter the gap couldnt find a suitable answer any ideas fellas

 

 

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Futures wrote:

i asked iG how can they support guaranteed stops wouldnt this means absorbing trader loss. i wanted to make sure that they will honor guaranteed stops no matter the gap couldnt find a suitable answer any ideas fellas

 

 

If they take the other side of the position the risk should be minimal?

 

and they have open trades i multiple markets in both directions so what can be a catastrophe for a single trader may not hurt them much

 

I hope it will be available in prorder soon as a "max loss stop" and if it can be moved its perfect

most trades are closed as markets order anyway

 

 

 

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Hi  &   I posted this a short while ago (different thread) but just realised the link was bad so here it is again.

 

http://www.financemagnates.com/forex/bloggers/differentiating-good-bad-brokers/

 

It discusses the different models used by brokers and combinations thereof, info I have picked up over time is that IG profits on spread (never been super tight) and hedges any imbalance on their books.

 

Difficult for IG to guarantee a guarantee but IG introduced these stops after EURCHF and GBPUSD flash crashes so they must have tested them on models? 

 

 

 

 

broker1.PNG

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Always remember that when ever you take a position its not just the broker that can take the other side of the position, but its all of us that perform this action which is what is ideal for everyone hence why it is a zero sum game, so if i buy one lot of aud usd, someone in the market will short the same amount, but when this cannot be done which is common when dealing with swaps and call and put options then the broker must perform the trade, it does not affect your chances of making money, but you cannot buy or sell without another buyer or seller being matched. The problem is with flash crashes is that temporarily their are no buyers until a threshold level is reached, this is why Level 2 data can be very useful as you can constantly observe the amount of liquidity being provided. 

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Execution in IG is much better but im assuming if you want to trade big sizes margin as well as execution will suffer.

 

As i understand IG calls its accounts DMA but the DMA account is different than spreadbet account :) if i'm correct.

 

Now about Guaranteed stops its still not clear one way im thinking is IG moves risk to their banks over weekend for a small fee.

 

 

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@Caseynotesi asked iG how can they support guaranteed stops wouldnt this means absorbing trader loss. i wanted to make sure that they will honor guaranteed stops no matter the gap couldnt find a suitable answer any ideas fellas

 

 

Answer: IG makes money when traders lose money. This fact might have been well known for many, but I didn't know it at the beginning.

So IG doesn't need to cover your loses when a guaranteed stop is triggered. It simply won't take as much of your money as it would have had, if you didn't use a guaranteed loss.

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Tri, IG makes their money through spreads and commissions, it is not in their interest for clients to lose money, otherwise they would have nobody left. They are not actively betting against you, it would not even be financially feasible,  contract sizes are to big, instead they hedge almost all client positions in the underlying market which is expected to ensure their is sufficient liquidity provided and manage client exposure. We all take each others side of the trade, this is normal in not just spread trading, but in stocks, futures, call and puts, swaps etc. Remember you cannot buy unless someone is selling to you and visa versa. Stop losses are also used by every single broker. With my HSBC broker i always used to instruct them to have a stop loss including guaranteed and if it got hit they would only take a tiny commission on the spread for the guaranteed stop loss. If you want examples of brokers actively betting against clients look no further than places like Barclays and CITI who have in the past purposely been betting against clients as they new where their stop losses where because they where actively managing their accounts. 

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i dont know sometimes when i compare the FXCM and IG charts i see the price tied above or below that i think is not normal only to get to profitable stops or not to reach profitable targets.

 

Execution in IG is better though IG doesn't allow scalping i was doing scalping on PRT and  the software put me immediately from 5pips to 10pips stop loss or i cant enter my orders thats gone now but it think scalping is not making money for IG.

 

Compared to City i think IG is much better i was with City their customer service is horrific and their mobile platform freezes so man times even when no news is coming. With City if your position is in profit and you want to close it early you cant do it because mobile platform will freeze i noticed that 20-30 times over a period of month and then i closed much better with IG. Luckily it hasnt happened with IG till now.

 

IG needs to have some documentation on how they use guaranteed stops i think Guaranteed stops are in favor of trader rather than IG but still want to know the mechanics so that i know it will be honored.

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i have not had an issue with scalping has majority of my trades are based on this, but i can understand where you are coming from. Best stay in contact with them to help resolve this, hope you resolve the issue.

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After the SNB swissy debacle all the big brokers lost a lot of money (that's before the introduction of guaranteed stops) simply because losing traders could not pay. FXCM was on the verge of going out of business and needed a rescue loan. So compared to that the increased income from the increased spread on a guaranteed stop must be an off set to the rare big spikes.

 

Interesting article on brokers share prices post FCA proposed intervention. This seems the bigger risk.

 

http://www.leaprate.com/2017/01/publicly-traded-forex-brokers-lose-2-4-billion-of-market-value-in-2016/

 

ig33.PNG

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It will hopefully turn out fine, the FCA need to crack down on the more aggressive small time brokers i think IG will continue to do well specially with the expected VOL coming from Trump and EU elections. They need to make sure ODEY A.M loses his bet.

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 didnt knew about ODEY but i believe by the time news hits the market transactions are already done look at GBPUSD falling since 2014 but news only consider 24th June.

 

FCA should audit random check to price spikes especially City Index scammers

 

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Donald, thank you for your comment. What you say is correct for other markets ,not for the playground that IG, Plus500 and the likes provide.

There is no real market here. Noone actually buys or sells anything. You simply bet on price movements of numbers that are said to follow the underlyng market. The prices are all made up, although spreadbetting conpanies claim that they follow the real market. Actually ,they even admit that their prices may diverge from the real prices.

IG doesn't bet against you. There isn't need for that. Just like a casino doesn't bet against a punter ,nor does one better bets against another one. We all bet on the outcome of the roulette,some on red others on black. Some win,others lose and so on.

I hope you can see the difference.

 

Of course our gambles are made easier by the fact that there is an underlying markets and we can follow the news ,draw charts , read candles and tea leaves...etc. So it's a bit of educated guess of a probable outcome ,not merely throwing the dice.

 

Most of the profits of spreadbetting companies come from wiping out customers' accounts. The commissions and so called 'funding ' charges that don't actually fund anything are just another income for the company.

 

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Leveraged based products do carry an element of risk, but remember many professional traders as well as algo trading use leverage to trade CFD's originally was an institutional only thing. Stocks and shares are also risky except you only loose the amount you put in. The difference unfortunetly between professional and retail is that professionals put risk management before profits and retails do the opposite of that. Wins and loses are part of trading, no system and no professional trader will ever get 100% wins it is not possible and no system including algo trading will give you that either. As far as prices are IG does give real prices, nobody trades fake prices. Another issue is that individuals dont do their homework, they think charts do the job, charts should be used for execution only, i barely even look at indicators, statistical data and correlations is the bread and butter for me. I always see the market has basically a laboratory where you come up with a hypothesis and put it to the test and like any hypothesis the aim is to get either a scientific or monetary gain, but equally you may fail. It is a probability game, but what in life is not?

In summary nobody learns in this business unless they actively trade and able to distinguish the huge difference between analyses and trading which are completely different tactics.  

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Good, we came to an agreement, Donald. With one exception - IG supplies their own prices. Look on their site what they say. It's not a real price. All spreadbetting companies do it. That's why charts differ from a company to company.

If it was a real price, then they would use the official LSE, Nazdaq, etc price 1:1.

 

Institutional traders don't bet on spreadbetting companies. The do so on the real market with real borrowing and leverage. They are those who sway the real market with their real trades of large volumes.

Good luck!

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Hi all,

Giving the new FSA intentions to regulate IG and others I found the case for trailing guaranteed stops is more robust.

It will present IG with an edge against competitors and maybe it worth considering to apply by default on positions on new accounts.

This will certainly limit the risk for new guys.

 

I wonder if anyone from IG could give us some idea if they are considering this on a near feature.

F

 

 

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