Capital Spreads - the lost order

[Ozzie]

I have been using Capital Spreads for some time. Yesterday I was long on at index (had been since 14/1) and had set a stop which had not changed in that time.

Two days ago I decided that if the market stopped me out I wanted to go short at the same level.

Yesterday I was stopped out and I assumed that (from the email message) that I was short on the index. (Didn't check because I was at work). When I arrived home and checked my account Capital Spreads had stopped me out but not opened the new short position (which was by this stage comfortably in the money).

I spoke to them and they claimed that it depended on whether my stop or new order had been filled first - if it was the new order the long position would be closed out and the stop level on the long order would be ignored and consequently the short trade would not be executed. They then pointed me towards their T&C's to say this might happen and refused to do anything further about the problem.

Any one else had this problem with CS? This problem occurs because CS insist on having a stop on the original order and therefore it is not possible to get around it by doubling the size of the short order. (As it is for IG).

Any thoughts on this?

 

[random12345]

I have been using Capital Spreads for some time. Yesterday I was long on at index (had been since 14/1) and had set a stop which had not changed in that time.

Two days ago I decided that if the market stopped me out I wanted to go short at the same level.

Yesterday I was stopped out and I assumed that (from the email message) that I was short on the index. (Didn't check because I was at work). When I arrived home and checked my account Capital Spreads had stopped me out but not opened the new short position (which was by this stage comfortably in the money).

I spoke to them and they claimed that it depended on whether my stop or new order had been filled first - if it was the new order the long position would be closed out and the stop level on the long order would be ignored and consequently the short trade would not be executed. They then pointed me towards their T&C's to say this might happen and refused to do anything further about the problem.

Any one else had this problem with CS? This problem occurs because CS insist on having a stop on the original order and therefore it is not possible to get around it by doubling the size of the short order. (As it is for IG).

Any thoughts on this?

Doesn't make any sense to DMA market mechanics. A stop loss is just a stop order in the other direction for the same quantity as your open position. Adding a stop loss to an open buy position and a sell stop order at the same price should just be a stop order reversal for your current long, no matter how they are ordered.

If it's in the T&Cs you're in trouble, but they are basically saying they have their own version of what a stop order is versus how it has been since the dawn of time (i.e. a broker side market order fired to fill at any price available at or near trigger executed regardless of open interest), which gives you something of a case.

 

[wackypete2]

Doesn't make any sense to DMA market mechanics. A stop loss is just a stop order in the other direction for the same quantity as your open position. Adding a stop loss to an open buy position and a sell stop order at the same price should just be a stop order reversal for your current long, no matter how they are ordered.

If it's in the T&Cs you're in trouble, but they are basically saying they have their own version of what a stop order is versus how it has been since the dawn of time (i.e. a broker side market order fired to fill at any price available at or near trigger executed regardless of open interest), which gives you something of a case.

Good post. Your first line highlights the problem the OP has. Cap. Spreads is not a DMA broker, correct? A lot of non DMA and bucket shop brokers have the stop loss order tied to the original entry order so that a stop loss order can never open a new position, only close the position it's tied to. If the stop loss order fills first the original entry is closed and then the sell stop will create a short position. If the sell stop order fills first it closes the original position AND removes the stop loss order that was tied to it. There would no short position opened.

There's actually good reason for this. Too many new traders manually close the original entry order and then (on a DMA acct) FORGET to cancel out the sell stop/stop loss manually thus leaving them vulnerable to an unwanted position. Non DMA brokers do this to protect BOTH the broker AND the client.

It's not likely the OP has much recourse but a more service oriented broker would have checked the account and probably offered some remediation.

Peter

 

[Ozzie]

Doesn't make any sense to DMA market mechanics. A stop loss is just a stop order in the other direction for the same quantity as your open position. Adding a stop loss to an open buy position and a sell stop order at the same price should just be a stop order reversal for your current long, no matter how they are ordered.

If it's in the T&Cs you're in trouble, but they are basically saying they have their own version of what a stop order is versus how it has been since the dawn of time (i.e. a broker side market order fired to fill at any price available at or near trigger executed regardless of open interest), which gives you something of a case.

Thanks for your responses Random and Peter.

This is the T&C they quoted me - it still doesn't make any sense as to why they didn't open a short position for me (although your response Peter gives some insight - although CS told me they are very keen to open new positions because they earn the spread):

"16) Where a series of Orders may be filled to close existing open Transactions and/or open new Transactions then these Orders will be filled by us in any sequence determined by us. If this results in subsequent Orders having insufficient Trading
Resources for activation, then these Orders will be cancelled. We will not look at Order filling sequences that may result in one Order being filled and another failing, we will fill Orders as and when they are seen by our dealers and at their sole discretion."

I had plenty of trading resources in my account (only using about 2% of them). Looks like I need to obtain a written response from CS and then complain to the Financial Ombusdsman.

 

[random12345]

Good post. Your first line highlights the problem the OP has. Cap. Spreads is not a DMA broker, correct? A lot of non DMA and bucket shop brokers have the stop loss order tied to the original entry order so that a stop loss order can never open a new position, only close the position it's tied to. If the stop loss order fills first the original entry is closed and then the sell stop will create a short position. If the sell stop order fills first it closes the original position AND removes the stop loss order that was tied to it. There would no short position opened.

There's actually good reason for this. Too many new traders manually close the original entry order and then (on a DMA acct) FORGET to cancel out the sell stop/stop loss manually thus leaving them vulnerable to an unwanted position. Non DMA brokers do this to protect BOTH the broker AND the client.

It's not likely the OP has much recourse but a more service oriented broker would have checked the account and probably offered some remediation.

Peter

I hear you, very good points.

The OP's only chance is to appeal to their greed and say he'll take his business elsewhere without a satisfactory resolution.

 

[counter_violent]

Ozzie, they have offered a reasonable and coherent explanation and all in accordance with their t&c's. Also, I doubt the ombudsman would be interested anyhow and that could turn into another source of frustration.

It would probably be a mistake and waste of productive time to dwell on the issue. Have a think about what happened and use your time to plan how you will trade a similar situation going forwards. Fretting over profits that might have been is really not worth the energy, and it's also worth remembering that you could have been triggered short then the market reverses...there are no guarantees in trading and it's no use looking back at what you might have gained. Yesterdays action across the markets only happens a handful of times/year.

 

[PualoP]

Where were your levels to sell?

 

[Hate2Lose]

I have been using Capital Spreads for some time. Yesterday I was long on at index (had been since 14/1) and had set a stop which had not changed in that time.

Two days ago I decided that if the market stopped me out I wanted to go short at the same level.

Yesterday I was stopped out and I assumed that (from the email message) that I was short on the index. (Didn't check because I was at work). When I arrived home and checked my account Capital Spreads had stopped me out but not opened the new short position (which was by this stage comfortably in the money).

I spoke to them and they claimed that it depended on whether my stop or new order had been filled first - if it was the new order the long position would be closed out and the stop level on the long order would be ignored and consequently the short trade would not be executed. They then pointed me towards their T&C's to say this might happen and refused to do anything further about the problem.

Any one else had this problem with CS? This problem occurs because CS insist on having a stop on the original order and therefore it is not possible to get around it by doubling the size of the short order. (As it is for IG).

Any thoughts on this?

So, it sounds as though the order wasn’t ‘forced’ open’, but rather was used to net off (i.e. close) the original position?

Yeah, I’m aware they make you put a stop on – I think the issue here is that they don’t allow you to ‘force open’. I use IG and Accendo, they do. Not sure about other providers, but it’s a useful feature for me if I want to ‘roll over’ a profit or loss to the next tax year.

It’s annoying, but not much you can do, I think. I had same problem with CS. Sounds like you’ve used IG - why did you stop?