Broker Performance Comparison

Hi Traders:

EurChf and EurAud. These 2 pairs are notorious with brokers who push up spreads during the scalping hours to get rid of scalpers.
Different spreads will lead to different fills and different results.

Different fills can even affect performance between 2 accounts with the same broker! 
This is normal since they are actually buying and selling us currency contracts, it's not just a number, like it is in a Demo account (hence the difference in performance between Demos and Live accounts) 
Once two accounts are off sync, the results may vary for the rest of the day. 

This happens in all kinds of trading: If, for example, we both put a buy order for a stock, at the same time and with the same broker, we are also going to get slightly different fills. That's trading, buying and selling at a price that changes constantly.

In the case of Forex, and particularly of scalping, which is rather high frequency trading, that may happen relatively often. 
You may get into a trade that I did not get into, because the market reversed at just that point. 
From that moment on, our two accounts are out of sync. 

If we are with the same broker this may happen because I did not get filled and the EA's signal went away on the reversal, sort of missed the chance for the trade. This often happens with variable spreads, like in ECN brokers. The funny thing is that occasionally you could actually benefit (even with worse spreads) because you are not hooked with that order. If the trading session ends, you will not enter more trades that day. So even though I got my order filled, I may be stuck with a losing position and you got spared: I may be facing a Stop Loss, which may account for the different results you are seeing.

This is a rare case, since usually worse spreads mean worse performance overall.

If you have a different broker who never had that price available, then you don't get to place the order at all. This is how it works:
Let's say that the price is 1.00000 and my broker has a 2 pips spread. My broker will sell at 1.00020 and my EA will be able to enter a "buy" order at that price. Your broker, who may have a 4 pips spread, will not even offer the chance to buy at my price: they will offer you a 1.00040 price, because of the higher 4 pips spread. Your EA won't send that "buy" order because it does not want that price, since it is not a good "buy" according to the strategy. The EA would like to buy at 1.00020, but not 1.00040. 
If the price reverses at that point, I am now in a trade and you are not. And so it begins.

If I am busy with my trade when you are not, you could enter a trade the next time a signal comes along, which may in opposite directions than mine.
If the price action remains normal and the price keeps bouncing up and down, both you and I will make money in time, even though we are out of sync. However, if the price takes off in one direction, your position may clear at a win and mine at a loss, or vice-versa. Luck of the draw, it could benefit you or me, but it will not be the same.
That's Forex!

Guest post - by Robert

Forex Robot Trading Performance March 2011

How was last month? Is it safe to trade today?
A client asked me that question today and the thought kept coming back the rest of the day.
Well, I would not choose last month as my favorite month ever,
Apart from the non-stop human tragedies and the completely overwhelming grief one feels with the loss of so many lives - as a trader a month such as this last one really puts you to the test.
Earthquakes, revolutions, air strikes, nuclear threats - it seemed as if the term "geo-political events" wasn't even fit to describe what was going on worldwide this month.

We are fine in general - what started out as a promising month has seen some set-backs, but we are still ahead for the month and I find that to be no small achievement.
The robots were performing fantastically and were actually doing quite well - we may have inadvertently been too cautious and decided on a few non-scheduled no-trade-days being swept away by the contagious panic trading in Wall Street. Always a bad idea. If in doubt  - leave them to trade.

Once again we had the feeling that our robots perform just fine during tumultuous times - that's why we have volatility filters - to rule out unfavorable markets.

The USD/JPY was of course the currency most affected and there were truly a few free-falling days - now of course it is more stable than ever - with the world watching its every hiccup.

So, hopefully you have traded through this month successfully as well and have come out ahead in the end.
Let me know how you did....

Nice article by a Reuters columnist regarding the Japan downgrade

By Ian Campbell

(Reuters Breakingviews) - A cut to Japan 's credit rating may not seem to mean much when the country already appears to live in a world of its own. But if Japan can be downgraded, so can Italy, and so can the United States. Standard & Poor's downward revision of the country is rightly reverberating globally as well as kicking the yen.

Japan's debt is obscenely high. Including short-term borrowings, the burden rises to twice GDP. Greece's debt is 150 percent of GDP, and yet Japan has not required a rescue. Far from it. Japan 's 10-year bonds are yielding only about 1.25 percent. The huge pool of domestic savings means the country, unlike other indebted economies such as the United States, does not need foreign savings. The Japanese government is therefore running a fiscal deficit of 9 percent of GDP and issuing still more debt, as though there is no constraint on its profligacy.

S&P's downgrade is reminder that all bad things may come to an end. Japan 's risks come in part from demographics and the world. The population is shrinking and aging. The old will have to be looked after. There will be fewer workers to do it.

The yen may fall further, helping to banish deflation and stimulate growth. But the slide would also carry a risk. A weaker currency and a stronger economy may mean more of the rampant inflation the world is feeling will pass through to Japan.

A recovering world helps governments fiscally but might intensify debt pressures. For Japan, only a small increase in bond yields would make the government's fiscal position disastrous. The debt is so huge that a crisis wouldn't require the catalyst of near-double-digit yields that sent Greece and Ireland into the arms of rescuers.

This should be a warning to other large and small economies that don't take their debt seriously. The Great Recession and deflation made the bonds of governments that were not at immediate risk of default appealing. It is now time for the market to reassess.