risky trade

FXCM provides forex execution through a straight through processing, or No Dealing Desk forex execution model. In this model FXCM passes on to its clients the best prices that are provided by one of FXCM's liquidity providers with a fixed mark-up for each currency pair.

In this model, FXCM does not act as a market marker in any currency pairs. As such, FXCM is reliant on these external providers for currency pricing.

Although this model promotes efficiency and competition for market pricing, there are certain limitations to liquidity that can affect the final execution of your order.

FXCM aims to provide clients with the best execution available and to get all orders filled at the requested rate. However, there are times

when, due to an increase in volatility or volume, orders may be subject to slippage. Slippage most commonly occurs during fundamental news events or periods of limited liquidity.

Instances such as trade rollover (5pm EST) is a known period in which the amount of liquidity tends to be limited as many liquidity providers settle transactions for that day.

For more information on why rollover occurs, see the section on ‘Rollover Costs’. During periods such as these, your order type, quantity demanded, and specific order instructions can have an impact on the overall execution you receive.

The volatility in the market may create conditions where orders are difficult to execute. For instance, the price you receive in the execution of your order might be many pips away from the selected or quoted price due to market movement.

In this scenario, the trader is looking to execute at a certain price but in a split second, for example, the market may have moved significantly away from that price.

The trader's order would then be filled at the next price available price for that specific order. Similarly, given FXCM's No Dealing Desk model for forex execution, sufficient liquidity must exist to execute all trades at any price.

FXCM provides a number of basic and advanced order types to help clients mitigate execution risk. One way to mitigate the risk associated with slippage is to utilize the Market Range (Max Deviation for MT4 users) feature on FXCM's Platforms.

The Market Range feature allows traders to specify the amount of potential slippage they are willing to accept on a market order by defining a range. Zero indicates that no slippage is permitted.

By selecting zero on the Market Range, the trader is requesting his order to be executed only at the selected or quoted price, not any other price.

Traders may elect to accept a wider range of permissible slippage to raise the probability of having their order(s) executed. In this scenario the order will be filled at the next price available within the specified range.

For instance, a client may indicate that he is willing to be filled within 2 pips of his requested order price. The system would then fill the client within the acceptable range (in this instance, 2 pips) if sufficient liquidity exists.