New Feature: the Execution Quality section

Perhaps because currencies are THE oldest asset around, spot foreign exchange trading remained over the counter (OTC) over the years and has yet to move onto regulated exchanges the way other asset classes (think spot equities, futures, interest rates, etc.) have long done.

When it comes to the retail (now independent 🙂 traders, this is bad news. OTC trading is OK as long as between it’s equals (think GS vs. UBS) who trade with (e.g. bet against) each other. 2-sided bets between market makers simultaneously set the prices at which they bet against more vulnerable retail counterparts was bound to enjoy a bad reputation. A party plays the game (takes risk) and is the referee (sets the prices!) for the outcome of the game is further compound by the fact that a dealer knows A LOT more about its customers than its customers know about said dealer:

  1. The trader’s balance (how long can he hold on to a position?)
  2. The traders track-record (is he any good?, what’s his trading pattern?)
  3. Any stop-losses etc.

In short, as a retail trader, trading against a retail market maker is engaging an asymmetric battle on several accounts:

  1. Information (the dealer knows more about the retail trader than the retail trader knows about the dealer)
  2. Experience – the average life of a retail trader is counted in months
  3. Capital – as someone once put it, “the market can stay irrational a lot longer than you can stay solvent” (especially if you trade 500:1 leverage 🙂
  4. Last look / re-quotes: dealers unilaterally reserve the right to reject / re-quote trades on the feed they publish in the first place

Yes, there is regulation to prevent abuse, and it works in respectable jurisdictions: no-one forces traders into ill-advised high leverage trades that blow accounts. But regardless, forex “brokers” (note, most forex “brokers” are actually making markets, and the word that describes that activity is dealing, not brokering!) don’t enjoy presumption of innocence. The moment a trade doesn’t go as planned (e.g. yielding a handsome profit), even DMA brokers like Darwinex regularly receive accusations of execution malpractice – unsurprising given how prone to abuse the system is.

There’s only two recipes to prove our innocence:

  1. Incentives: as a pure broker (click here to learn how to tell a broker from a broker-dealer / market maker) our allegiance is 100% with our trading customers. We have NOTHING to gain from deliberately filling a client’s order other than at the best available market price. Whenever customers get slipped, it’s because we got slipped.
  2. Transparency: from this point onwards, we will provide every Darwinex customer with EVERY detail on EACH order traded.

 Where’s my Execution Report?

To access your Execution Quality section, log in at Darwinex.com –> Click Trading Accounts  (point 1 below) –> Click the relevant account’s name (point 2 below). You’ll find the new tab at the bottom of your strategy’s report.

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Note: this section is only available for Darwinex live account holders. 

What detail?

See below screenshot!

For each trade, the report contains:

  1. Prevailing BID & ASK price at the precise ms timestamp for each trade
  2. Execution speed in milliseconds, tracking the time lapsing since your order reaches our routing engine until we receive fill confirmation from the LP.
  3. Negative / positive slippage (if any) tracking the difference between requested and achieved fill price, both in terms of price and pips.

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Note: Data are updated every weekend to avoid excessive requests to our servers during weekdays.

What’s next?

We’re working on upgrades to present the information in a more intuitive and usable format – stay tuned. Further, we’ll likely publish regular posts on execution quality for the overall Darwinex community. Feel free to suggest upgrades / charts / filters to better present the information!

Do you have any question about the new execution section? Feel free to contact us at info@darwinex.com!

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1 reply
  1. Oliver Kraft
    Oliver Kraft says:

    Great progress!

    It’s these types of features that truly provides consumers (retail traders) with professional tools.

    The community around Darwinex will over time, as more features are added move from being consumers to prosumers.

    Reply

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