CMS Follows FXCM's lead on not guaranteeing to honour all stops

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Ahah, now the foundations of the houses are really beginning to shake

I received an email from CMS early this morning telling me that the server will be down for repair over the weekend and bringing to my attention that the way that they process orders has changed - Link to site http://www.cms-forex.com and read "How we process orders.

Now I know why It wouldn't accept an order that I was trying to place on Thursday.

The pertinent portions have been copied and pasted below

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The Stop and Limit policy, with regard to no slippage, applies only under normal market conditions. We do our best to provide execution at the trader's specified price. It is the in-house policy of CMS to try to honor all stop and limit orders up to 10 standard lots. However, during extremely fast market moves, this sometimes is not possible.

The minimum range between a new stop or limit order and the market price is a function of current market volatility. It is obvious that during, or immediately preceeding, significant economic announcements, market volatility is greatly increased. As a consequence, most FCMs have 2 options: (1) widening the spread on currency pairs, or (2) increasing the entry stop and limit ranges. Effective immediately, the required range between a new stop or limit order and the market price will increase from 5 pips to a maximum of 20 pips approximately 15 minutes before a significant economic announcement, in order to reflect the degree of current market volatility. During extremely fast market moves, you may therefore notice that you are unable to place or move any stop or limit order to within 20 pips of the current market price. As do many FCMs, CMS offsets many orders with counterparty banks that supply price feeds. During the heavy market conditions, it is extremely difficult to get prices from these counterparties. This is another reason why CMS has adapted this policy. CMS feels that this policy is more beneficial to the client than offering a variable spread during times of peak volatility.

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Have a restful weekend
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[JumpOff]

It's all good...

This makes sense to me. I've been wondering about these retail FOREX shops that guarantee stops. I'd rather they wouldn't. When they say they do, - I want to believe them.

But given the choice, I want my stop loss on my open position to happen now , at the best market price they can get. I don't want to see non-confirmation messages and requotes appearing on my screen and requotes appearing on my screen and requotes appearing on my screen and requotes appearing on my screen while the price continues to move against me.

Part of the confusion for me at CMS, (where I am happily losing my paper trading stake while learning how all this works) is that there little pop up window says "market order," but in that window there is a field called "trader's range." I guess that's where you put in how much slippage you''ll allow based upon how fast you think the market is moving. My answer has been to leave it at thedefault of 0 in normal times and to set it at 10-30 or more when things get wild. Ideally, I could choose a "real market order" which I define as, "just do the best you can and get me out now! "

This concerns me somewhat less regarding entry stop orders. If I miss a trade because they couldn't meet meet my stop limit entry order, well - there will always be another trade. But missing a stop loss on an open order in a fast market could mean you lose your stake and get a margin call besides... ugh

Effective immediately, the required range between a new stop or limit order and the market price will increase from 5 pips to a maximum of 20 pips approximately 15 minutes before a significant economic announcement, in order....

Do you read this the same way I do? That people who have their orders in place (and confirmed and stored on the CMS servers) get their orders honored or processed ahead of the people who are "piling on" at the crazy moments...? I'll ask and report back here..

JO

 

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Hi Jo,

From my experience and I have been trading with CMS for about 10 months -

When you have an open position with CMS as long as you have got a stop and/or a limit built in - they have always been honoured no matter how wild or crazy the market.

At times during great moves the actual deal which you have open may not disappear from your "open positions" window, but there will be a green line on the graph which tells you that it has been done and dusted and it will just take time for your software to catch up. Indeed, at such times if you go into the reports for the day you will see that the funds have been added to your account even though the deal may still be showing as open in your open positions window.

In general I always put a traders range of about 5-8 in, and it has to be a really crazy market to keep on missing the "buying in" spot. In such cases I have learned to move very quickly and instead of trying to buy in live I have placed an entry order in and had it auto execute. I think given what they are saying now I will certainly be more aware around highly volatile movements.

I will have to study just how it all works out

Happy trading