On December 23, 2008, at approximately 3:20 p.m. EST, the NZD/USD pair had a spike in price. It does not seem to matter what platform you trade on, the spike was real. The issue is how much the price spiked and why different platforms show a different price. I trade primarily on two platforms. Since I began trading the Forex I have had an account at FXCM. By all accounts it has been a good relationship. I've felt that my trades were executed fairly (within reason) and I as I don't trade the news (a sore spot with many different traders across many different platforms) I have not run afoul of the huge spreads and illiquidity that many have complained of. But on December 23 something odd happened that I would like to explore by examining just two platforms, FXCM and MetaTrader.
At the appointed moment (3:20 p.m. EST, 2020 GMT) the high and low of the one minute bar on FXCM was High=0.5805 and the Low=0.5659 for a range of 146 pips. On MetaTrader at the same time the High=0.5712 and the Low=0.5664 for a range of 48 pips. Now what could account for the nearly 100 pip difference between these two platforms? More particularly why did FXCM trade 100 pips higher at that moment? The tick chart shows the spike happened at 3:30:51. There appeared to be significant activity within that one minute time frame on FXCM as the price pushed higher until it took out the 5805 price level (interestingly 5 pips higher than the round number of 5800).
These are just facts, not reasons or explanations. However, if I had been short the NZD/USD and had a stop 140 pips above the current price and a few pips above a round number of 5800, I would have been shocked and angered to see my stop hit on FXCM when if I'd had my trade on the MetaTrader platform I'd have still had a 100 pip cushion. Hopefully, those that were short the pair exited when it first hit the resistance line at around 5660 or they have lost about 100 pips since that point as the pair has moved nicely up the trend line (as a side note, I expect the pair to break south at some point and pierce the trend line and fall, perhaps as far as 5250).
I can't tell you what happened. Only FXCM knows for sure. In one of the books I've got listed to the left "Beat the Forex Dealer", the author Agustin Silvani has some theories about how and why this type of thing happens. My notion is that someone at FXCM saw the stops at 5800+ and wanted to take them out. I'd like to hear their explanation.
Happy Trading and Happy Holidays!
At the appointed moment (3:20 p.m. EST, 2020 GMT) the high and low of the one minute bar on FXCM was High=0.5805 and the Low=0.5659 for a range of 146 pips. On MetaTrader at the same time the High=0.5712 and the Low=0.5664 for a range of 48 pips. Now what could account for the nearly 100 pip difference between these two platforms? More particularly why did FXCM trade 100 pips higher at that moment? The tick chart shows the spike happened at 3:30:51. There appeared to be significant activity within that one minute time frame on FXCM as the price pushed higher until it took out the 5805 price level (interestingly 5 pips higher than the round number of 5800).
These are just facts, not reasons or explanations. However, if I had been short the NZD/USD and had a stop 140 pips above the current price and a few pips above a round number of 5800, I would have been shocked and angered to see my stop hit on FXCM when if I'd had my trade on the MetaTrader platform I'd have still had a 100 pip cushion. Hopefully, those that were short the pair exited when it first hit the resistance line at around 5660 or they have lost about 100 pips since that point as the pair has moved nicely up the trend line (as a side note, I expect the pair to break south at some point and pierce the trend line and fall, perhaps as far as 5250).
I can't tell you what happened. Only FXCM knows for sure. In one of the books I've got listed to the left "Beat the Forex Dealer", the author Agustin Silvani has some theories about how and why this type of thing happens. My notion is that someone at FXCM saw the stops at 5800+ and wanted to take them out. I'd like to hear their explanation.
Happy Trading and Happy Holidays!
