There are no guaranteed Stops. EVER.

Discussion in 'Forex Brokers' started by Remiraz, Jun 20, 2005.

  1. Remiraz


    It doesn't take a rocket scientist to figure out that any broker who guarantees stop losses will go out of business.

    Yes they do advertise guaranteed stops. But your stops are only guaranteed in situations when there wouldn't be any stop loss slippage in the first plac.e

    Some brokers/fans argue that spot FX is better than Currency Futures because you're "protected" by the guaranteed stop. This is NOT true. During the times when you need the "protection", your broker will never ever guarantee your stops.

    This is why...

    Anyone remember the big incident over at Refco/FXCM last year when many profitable trades were "rollbacked"?

    Any market, especially Forex, WILL spike during big news announcement. Say NFP (Non-Farm Payroll).

    There is a sure-fire method to make money 100% of the time off brokers who guaranteed their stops and this was what Refco/FXCM was hit with last year that caused them to ammend their "guaranteed stops" advert with "gauranteed stops...most of the time".

    Its called a straddle. :D

    Straddle 5 pips above and below the price 1 minute before news announcement. Set a stop loss of say 10 pips for each side.
    Once the 100-200pip spike happens, one side will be 100-200 pips in the green while the other side will get stopped out for 10 pips.

    Free money.

    This is the reason why no one is stupid enough to guarantee your stops.
  2. Finally someone else caught this, I used to be a broker at a large B***S*** Introducing Broker (please don't ask which one). I would argue with some of my former co-workers, how stops can be guaranteed in a fast moving market? unless the FXfirm used bucket shop tactics(which most of them are). Final answer stops can't be guaranteed period!
  3. jrkob


    Remiraz is entirely right.

    Another reason why brokers CAN'T guarantee stops is because their liquidity providers DON'T guarantee stops.

    In 10 years of money market at 3 investment banks I have NEVER heard of any bank guaranteeing stop loss in FX, FX Fwd, X-FX swap and other derivatives of FX. It simply doesn't exist and is part of the life of FX traders. It's very simple to understand.
  4. Just one little detail is missing ... how to know the news 1 minute BEFORE the announcement

    Please please tell me, I'll pay you 10% off my first trillion dollars
  5. The only protection(if you can call it that) is trailing stops, but even with this tactic your a** is still hanging out in the wind. When trading a fast moving market timing is critical a few seconds between putting your order in and then getting a confirmation of the trade could cost you hugh especially if you are using leverage. Some bucket shops oops I meant FX houses only allow you ten pips or more to place a stop well no need to say more :eek:
  6. Trent



    Read the post again and this time try to understand it :)

    Old news btw.

  7. now I see ... you mean some news are known to be announced at pre-determined times and are sure to move the market in either direction. I never traded FX and missed out on this point. Looks too simple to be true :)
  8. The only bit of this I disagree with is the taking of two opposite positions - you didnt even need to do this. You would go through the figures square but have a stop buy entry just above the pre figure price, and a stop sell just below. When the market gapped on the figure you were then in at the bottom of the gap.

    It was great free money whilst it lasted.
  9. Do you trade at all? There are predetermined news announcements that move the market on a daily basis. Are you trading on the first friday of every month, do you not notice something happening?
  10. I trade stocks where news are rarely announced during market hours.
    #10     Jun 20, 2005