Which FX brokers are best for or close to honoring Stop-Losses orders during economic news? Is there an order such as 'trailing limit order' that allows a trailing order to be activated only after price hits a certain profit target?
Stop Loss is not a limit order, it's a market order (you want a guarantee that it would be filled and you are ready to accept a worse price for that guarantee). Asking what market maker would fullfill it's "guaranteed" stop at news time, it's like asking what market maker would give you free money at news time. Because that's what's happening: when there is no liquidity, the market maker can't hedge its clients orders, and it has to take as a loss all your profits from your straddle strategy. And if you want to trade the news, you cannot rely too much on market makers, you'd probably get the best deal from an ECN. The more liquidity available, the better for you; but no guarantees with ECN as well. Basically there cannot exist such thing with the current markets. So either: you get guaranteed fill, but accept slippage (no price guarantees). Or you get guaranteed price, but accept partial fills. It's always a compromise between the two.
There are companies who offer GSO's (Guaranteed Stop Order) but they can be expensive and there are exclusions. As for a 'trailing limit order', have a look on the IB Order Types page, I think EFX also have a good range of order types.
Is anyone doing a news straddle using CME currency futures instead of spot fx? Can you place a stop loss before 8:30est? Get ready for this friday non-farm payroll.
No serious and honest broker will guarantee stops. Only those who do bucketing, (simulating your currency trades, without actually placing your order into the interbank market), gurantee stops. If the market as a whole jumped from, say, 1.5110 directly to 1.5112 (no bid/ask at 1.5111), how can they guarantee it?
They all 'do bucketing' as you call it, it's the way the business works for small retail speculators, only an idiot thinks he's trading his mini account in the interbank market just because his broker tells him there's no dealing desk, lol. Smoothed price and spreads, and GSO's are just a couple of the benefits of trading a derivative. It doesn't really matter what your broker does with your trade though, all that matters is that his quotes reflect the underlying market and that he fills you at the price you want, job done. Whether he subsequently decides to hedge his exposure in the market is up to him, it makes very little difference to the trader. This is all like a foreign language to you isn't it crgarcia, I imagine you have that kinda vacant glazed look reading this.....
Spot is not a derivitive, as an OTC market, a broker can make a legitimate market, but any picker will tell you they can also deny business or interupt a profitable strategy that is taking advantage of price latency. For those traders, it certainly makes significantly more than 'very little difference to the trader'. Guaranteeing a price has nothing to do with hedging risk. Idiots love 'guaranteed stops' because they do not realize that is the broker simply locking in the profit. Electronic pricing/delivery systems have evolved to a level where quoting and offsetting retail volume in aggregate is possible and profitable for the buy-side of the market (that means banks) and some brokers have made the move in this direction. 'bucketing' is exclusive to those brokers that assume risk when accepting a clients trade. In lamens terms, dealing desk brokers
Ok, a bit of hair-splitting going on there. Trading with a marketmaker (dealing desk or not, it doesn't really make any difference at these levels) if not strictly a derivative of the underlying market it is trading on theoretical prices which the marketmaker derives from the underlying market, whichever description you choose it amounts to the same thing, you're not trading in the actual market, you're simply betting with a marketmaker. And yes of course a marketmaker will protect his bottom line, traders exploiting such things as latency obviously wouldn't be acceptable to them and they deal with it appropriately. For the 'normal' trader though it makes very little difference whether the marketmaker hedges his exposure or not, that's his business. Guaranteed stops are no different than any other stop in so far as the 'broker simply locking in the profit', the added benefit of a stop being guaranteed is obvious I would have thought. But like I said, there are exclusions and they're not cheap, again the reasons I would of thought are fairly obvious. What marketmakers do isn't bucketing in the traditional sense of the word, seeing as we're being so particular. They take the other side of your trade and like I've said before hedge their exposure as they see fit. That isn't exclusive to dealing desk marketmakers though, it's just the way the business works, ecn-style, dealing desk, non dealing desk, it all amounts to the same thing as far as the trader is concerned.