For any news trading strategy, it’s very important to choose a forex brokerage that doesn’t mind you trying to trade the news, or news scalping,if you can find such a brokerage! Needless to say, most brokerages don’t like us to news trade, their loss (our gain) can be too great. And so let the games begin! A major negative thing to look out for is a brokerage that will drastically widen their spreads just before or during a news release. Recently, a very popular trading platform has been guilty of widening its spread up to as much as 30 pips during a US news release! Also, some trading platforms will delay your market entry order until you get filled at the top of a spike.

Other trading platforms re-quote your price so often that you can’t get a good price fill. Extreme slippage is common. Some platforms actually freeze, for minutes or even hours! Others simply don’t honor your stops or limits and probably all of them engage in stop hunting. For instance, just the other day, I had put on a trade that was the safest straddle trade possible, in a favorite well-known brokerage trading platform.

Well, being the US Non-Farm Payroll news release, otherwise known as “Freaky Friday” (the first Friday of the month), it typically experiences the most trading volume and volatility of all the US news releases.

I had put in my stops and limits on two currency pairs that hedge each other and entered the orders right before 8:30 am EST and all orders were immediately accepted. The trouble began when the price spiked up and the trading platform froze! The platform was frozen for about three minutes! I had another trading platform open at the same time and it performed fine and I could watch the price action. It was a perfect sell-off of the Eur/Usd and purchasing of the Usd/Chf, no back and forth swings for this news event! Well, when the trading platform finally started showing prices and positions, I was dismayed to see that one stop had been triggered 33 pips beyond my stop order! After beating my head on the wall, I then noticed that the other buy limit order had executed at +31 pips! So all in all, I only lost 2 pips on this trade, and I considered myself lucky. Of course, my target had been 75 pips, and I should have gained that, but for the slippage and frozen platform. But before I had discovered the 31 pip gain (while still in shock), I had written an irate email to the brokerage complaining about the frozen platform and the 33 pip slippage.

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