Slippage And Spreads


Hello Friends!

Let me get back to the Slippage and Spreads subject we’re talking about last Monday, April 8th.

I was just saying I’ve been a bit upset about this matter for a little while.

Let’s talk about Oanda, a top notch broker with a strong reputation and a very, very solid foundation. So, just to be clear, we’re not talking about the last to the moment Caribbean Islander adventurer Broker that wants to steal from you ANY possible profit!

They’ve been changing policies on spreads lately. They used to have a 0.9 pips fixed spread on EUR/USD for years. I understand that volatility has been flying all over the place lately. But… and there’s always a but… the fair thing to do would’ve been to leave spreads free to market behavior, plus a fair (but now very small) Zero Risk spread as their brokerage income. It’s my opinion.

What apparently – please, I said “apparently” is happening, though, is that some brokers (probably Oanda being one of them) are ADDING market spreads to their previous fixed spreads (which by themselves ALREADY included their level of risk as brokers), PLUS theirs own discretionary levels.

What ends up happening is that spreads fluctuate all the time (I’m OK with that), on TOP of the 0.9 pips fixed (I’m NOT OK with that)… and on TOP of discretionary levels – meaning, in other words, that the guy operating the broker’s trading desk can decide, at his own discretion, to higher the spreads to WHATEVER number he wants, at ANY moment, for WHATEVER reason he might have had! And, of course, I’m definitely NOT OK with that!

That brings, in some totally UNEXPECTED (sometimes totally random) moments of the daily trading, to inexplicable 10 to 20 pips spreads for EUR/USD, and unbelievable numbers for other pairs.

For some of my friends, that was enough to move on to other horizons… other brokers. I’m conservative. I tend to trust my old friends till they prove, without a hint of doubt, that they’re REALLY trying to screw my eyeballs off! Oanda is not there … yet!

We’re keeping an eye on this. Nowadays there are many brokers with great reputation and very reasonable low spreads, offering what we’ll be looking for very soon, i.e., a light-fast VPS, close (or even dedicated) to either London or NY Exchanges. In other words, a dreamland for our R3D3 robot!

Thanks for watching…

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