Top 10 Broker Tricks

Here are my top 10 “tricks” that brokers play around news events. Making sure you are aware of what can happen, will help you react better in a live trade scenario.

1.  Spikes that are held back – “Retarded Spikes”
This isnt too common… but it does happen. The main broker that i have seen do this is “MIG Bank”. What seems to happen is the chart starts to spike but the broker holds back about 50% of the spike size for around 10 seconds…. then after this time the platform catches up with what the price realy should be.
This is better explained when watching the video below….. the broker on the left is IBFX and the broker on the right is MIG Bank. You can see that the initial spike is only half as big. Then after around 25 seconds there is a secondary spike as the platform catches up with reality.

2. Spread Widening 
Below is a perfect example of spread widening 2 seconds before some GBP news is delivered. The tick chart on the left is taken from an IkonFX, 4 digit account. The tick chart on the right is from Alpari FS, 5 digit account,  on exactly the same trade at exactly the same time.

The spread suddenly and violently balloons… giving you no time to react.
If you were “Straddle Trading” during this news….. you would have your Buy and Sell hit before the news came out!!…. OUCH!!
If you didn’t have pre news controls in place, and you were Auto clicking… then you would also potentially be in a lot of pain!

3. Frozen Charts
Freezing a chart is a classic trick…. What normally happens is the broker fills the trade… then freezes the chart, in the hope that the trade will retrace beyond your fill price. Then when the platform unfreezes you are in a huge loss!!!
This is a very nasty trick, and needs to be factored into any trade plan.
Below is a live trading example of 2 out of 4 brokers freezing my charts after filling my trade. In this example when the chart had unfrozen, the trades were in massive profit, but if they had started to retrace, then things could have got VERY ugly!!

4. Massive Slippage
I always try to trade with a broker that has “Instant Orders” and not “Market orders” to avoid the possibility that I can be slipped to the end of a spike. With an “Instant order” I can set “maximum deviation from quoted price” or how much slippage I will tolerate.
Some broker such as IBFX who dont have slippage controll are notorious for slipping orders to the worst possible moment. See the video below to see what happened to me the last time i traded with IBFX!

5. Negative Slippage
Negative slippage is where a broker will wait until the worst possible moment to close your trade. So if you trade a spike, and you find your self up 25 pips…then decide to close the trade as the market is starting to retrace. The broker waits around for 5-10 seconds or as long as the the market is moving against you, until actually closing the trade.
This creates the possibilty of losing a lot of money. The worst culprits for this behaviour that i know of is Alpari.

6. Ignoring ALL commands – Stop Loss, Closing Trades, Take Profits
Some brokers will fill your trade, then will refuse to allow the trade to be managed by an EA or a human. So if you want to close the trade you cant, if you want to add a stop loss you cant, if you want to set a Take Profit…. you cant. This exposes the trader to aditional risk, and can be very stressful watching a trade that you cant mange.

7. Delayed Fill Times
This trick is becoming more and more common. When the Auto-clicker or EA fires the order to trade, the brokers server should respond with a ticket ID and a fill price in around 0.5-4 seconds. This then allows your EA or your self, to manage the trade.
On the video below you will see me trading with IBFX when “US Non farm payroll” is delivered. My auto-clicker entered me into a trade when the news was delivered but IBFX took nearly 16 seconds to return a ticket ID, and to top it off, when the ticket ID came back i was filled at the worst possible price!

8.  Fake moves in opposite direction- Spike Manipulation
I have seen on ocasions, some brokers tick charts spike back against the direction of the trade…and sometimes beyond the start of teh spike. If you are highly leveraged or have an EA that will automatically kill a trade if it detects it going into loss, it can be extremely dangerous. I am always vigilant to this sort of behavior and wont trade with a broker who behaves in this way.

9. The Fake Spike

A fake spike is extremely dangerous….. I have seen many tricks before but this  ”trick” is particularly dodgy!!
The method seems to be simple… wait for a the tick chart to start spiking, due to some news hitting,… then add on a further 20 or 30 pips for good measure, leaving the trader filled at a price that is in the middle of nowhere with virtually no hope of ever getting to break even. This seems to happen mostly in a “short” scenario, when the broker can’t affect your fill price in advance by spread widening. If this happens to me.. then the only thing you can do is close the trade at a loss ASAP. Anything else is a gamble… if the spike doesn’t have continuation, a bad situation could get catastrophic!

10. The disapearing trade
Im sure that we have all seen this before. You enter a trade, close out with a profit. The next time you open your platform the trade has disapeared without a trace!