Execution Risks
Execution Risks
Trading Station II Execution Information


Trading foreign exchange and contracts for difference ("CFDs") on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade these products offered by Forex Capital Markets, Limited ("PCM") you should carefully consider your objectives, financial situation, needs and level of experience. Forex Capital Markets, Limited is authorised and regulated by the UK Financial Services Authority ("FSA") [Registration No. 217689]. PCM maintains its registered office at Northern and Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD. PCM provides general advice that does not take into account your objectives, financial situation or needs. The content of this website must not be construed as personal advice. The possibility exists that you could sustain a loss of some or all of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. PCM recommends you seek advice from an independent financial advisor.


Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. PCM will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.


There are risks associated with utilising an internet-based deal-execution trading system including, but not limited to, the failure of hardware, software, and internet connection. Since PCM does not control signal power, its reception or routing via the internet, configuration of your equipment or reliability of its connection, we cannot be responsible for communication failures, distortions or delays when trading via the internet. PCM employs backup systems and contingency plans to minimise the possibility of system failure, this includes allow clients to trade via telephone.


Forex: PCM provides forex execution via a straight through processing, or no dealing desk execution model. In this model, PCM passes on to its clients the best prices that are provided by one of PCM's liquidity providers with a fixed mark-up for each currency pair. PCM is not a market marker in any of the currency pairs it offers. As such, PCM 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.

CONTRACTS FOR DIFFERENCE: CFD products are not subject to no dealing desk execution. As such, PCM does not execute CFD orders with an external counterparty. Instead, PCM is the final counterparty for any CFD position you undertake. Please note that as the final counterparty, PCM may receive compensation beyond our standard fixed mark-up. PCM makes prices for all of the CFD instruments it offers to its clients. Although these prices may be indicative of the underlying market for the product being traded, they do not represent the actual prices of the underlying asset on the physical market or exchange where it is listed.


PCM 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. During periods such as these, your order type, quantity demanded, and specific order instructions can have an impact on the overall execution you receive.

Examples of specific order instructions include:

  • Good 'Til Cancelled ("GTC") Orders: Your entire order will be filled at the next available price(s) at the time it is received.
  • Immediate or Cancel ("IOC") Orders: All or part of your order will be filled at the next
    available price with the remaining amount cancelled should liquidity not exist to fill
    your order immediately.
  • Fill or Kill ("FOK") Orders: The order must be filled in its entirety or not at all.

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 PCM's model for forex execution, sufficient liquidity must exist to execute all trades at any price.

PCM 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 PCM'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 best 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. If the order cannot be filled within the specified range, the order will not be filled. Please note, Market Range orders specify a negative range only. If a more preferential rate is available at the time of execution traders are not limited by the specified range for the amount of positive price improvement they can receive.

Additionally, when triggered, stop orders become a market order available for execution at the next available market price. Stop orders guarantee execution but do not guarantee a particular price. Therefore, stop orders may incur slippage depending on market conditions.

* PCM is compensated by a mark-up, which is automatically added to the spreads it receives from its liquidity providers, PCM may also receive compensation for order flow from its liquidity providers. PCM does not charge commissions on standard accounts, however, commission charges may apply for certain classes of non-standard accounts such as Active Trader.

Foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose.

** Re-quotes occur when a trader makes an order at a specific price, but the order is rejected by a trading desk, and the trader is given a new price to accept or reject. Re-quotes can slow down your trading. PCM cannot re-quote forex orders because those orders operate on straight through processing. PCM also maintains a no re-quote policy for indices, metals, and oil, although those orders do not operate on straight through processing. Orders are executed at the best price available within the trader's parameters, subject to market liquidity at the time.


FOREX: During the first few hours after the open, the market tends to be thinner than usual until the Tokyo and London market sessions begin. These thinner markets may result in wider spreads, as there are fewer buyers and sellers. This is largely due to the fact that for the first few hours after the open, it is still the weekend in most of the world. In illiquid markets, traders may find it difficult to enter or exit positions at their requested price, experience delays in execution, and receive a price at execution that is a significant number of pips away from your requested rate.

CONTRACTS FOR DIFFERENCE: As discussed previously, PCM is the final counterparty to all CFD transactions. Available liquidity is dependent on the overall market conditions expressed in the underlying reference market for the CFD instrument. Prior to making a trading decision all clients are advised to consider their overall trading strategy, size of the transaction, market conditions, and order type before placing a trade.

In addition to the order type, a trader must consider the availability of a currency pair prior to making any trading decision. As in all financial markets, some instruments within that market will have greater depth of liquidity than others. Ample liquidity allows the trader to seamlessly enter or exit positions, near immediacy of execution, and minimal slippage during normal market conditions. However, certain currency pairs have more liquid markets than others.

At PCM the following are considered Exotic Currencies which may have limited liquidity:

These pairs have a level of risk associated with them that may not be inherent. The market for these currencies is very illiquid, with liquidity being maintained and provided by one, or few external sources. These liquidity concerns include but are not limited to, the inability to exit positions based on lack of market activity, differences in the prices quoted and final execution received, or a delay in execution while a counterparty for your specific transaction is identified. With these considerations in mind it is imperative that any trader factor this into any trading decision. For this reason we strongly encourage all traders to utilize advanced order types to mitigate these risks.


A delay in execution may occur for various reasons, such as technical issues with the trader's internet connection to PCM; a delay in order confirmation from a liquidity provider; or by a lack of available liquidity for the currency pair that trader is attempting to trade. Due to inherent volatility in the markets, it is imperative that traders have a working and reliable internet connection. There are circumstances when the trader's personal internet connection may not be maintaining a constant connection with the PCM servers due to a lack of signal strength from a wireless or dialup connection. A disturbance in the connection path can sometimes interrupt the signal and disable the PCM Trading Station, causing delays in the transmission of data between the trading station and the PCM server. One way to check your internet connection with PCMs server is to ping the server from your computer. For more details on how to do this please click here.


Market volatility creates conditions that make it difficult to execute orders at the given price due to an extremely high volume of orders. By the time orders are able to be executed, the bid/ask price at which a liquidity provider is willing to take a position may be several pips away.

In cases where the liquidity pool is not large enough to fill a Market Range order, the order will not be executed. For Limit Entry or Limit orders, the order would not be executed but instead reset until the order can be filled. Remember, both Limit Entry and Limit orders guarantee price but do not guarantee execution. Depending on the underlying trading strategy and the underlying market conditions traders may be more concerned with execution versus the price received.


FOREX: There may be instances when spreads widen beyond the typical spread. Spreads are a function of market liquidity and in periods of limited liquidity, at market open, or during rollover at 5:00 PM ET, spreads may widen in response to uncertainty in the direction of prices or to an uptick in market volatility, or lack or market liquidity. This may occur during news events and spreads may widen substantially in order to compensate for the tremendous amount of volatility in the market. The widened spreads may only last a few seconds or as long as a few minutes. PCM strongly encourages traders to utilize caution when trading around news events and always be aware of their account equity, usable margin and market exposure. Widened spreads can adversely affect all positions in an account including hedged positions (discussed below).

CONTRACTS FOR DIFFERENCE: CFD's are contracts whose underlying value is derived from the futures contract for the product being traded. Differences in settlement are made through cash payments, rather than the delivery of physical goods or securities. PCM make prices for all CFD instruments it makes available to its clients. During time periods outside of the market hours for the underlying product being traded spreads maybe wider then what you are accustomed.


During periods of high volume, hanging orders may occur. This is a condition where an order is in the process of executing but execution has not yet been confirmed. The order will be highlighted in red, and the "status" column will indicate "executed" or "processing," in the "orders" window. In these instances, the order is in the process of being executed, but is pending until PCM receives confirmation from the liquidity provider that the quoted prices is still available. During periods of heavy trading volume, it is possible that a queue of orders will form. That increase in incoming orders may sometimes create conditions where there is a delay from the liquidity providers in confirming certain orders.

Depending on the type of order placed, outcomes may vary. In the case of a Market Range order that cannot be filled within the specified range, or if the delay has passed, the order will not be executed. In the case of an At Market order, every attempt will be made to fill the order at the next available price in the market. In both situations, the "status" column in the "orders" window will typically indicate "executed" or "processing." The trade will simply take a few moments to move to the "open positions" window. Depending upon the order type, the position may in fact have been executed, and the delay is simply due to heavy internet traffic.

Keep in mind that it is only necessary to enter any order once. Multiple entries for the same order may slow or lock your computer or inadvertently open unwanted positions.

If at any time you are unable to access the PCM Trading Station to manage your account, you may call the Trading Desk directly at +1 212-201-7300 or freephone in the U.S. and Canada, or visit www.phiforex.com for contact information.


Greyed out pricing is a condition that occurs when forex liquidity providers that supply pricing to PCM are not actively making a market for particular currency pairs and liquidity therefore decreases. PCM does not intentionally "grey out" prices; however, at times, a severe increase in the difference of the spread may occur due to a loss of connectivity with a provider or due to an announcement that has a dramatic effect on the market that limits liquidity. Such greying out of prices or increased spreads may result in margin calls on a traders account. When an order is placed on a currency pair affected by greyed out prices, the P/L will temporarily flash to zero until the pair has a tradable price and the system can calculate the P/L balance.


The ability to hedge allows a trader to hold both buy and sell positions in the same currency pair simultaneously. Traders have the ability to enter the market without choosing a particular direction for a currency pair. Although hedging may mitigate or limit future losses it does not prevent the account from being subjected to further losses altogether. In the forex market a trader is able to fully hedge by quantity but not by price. This is because of the difference between the buy and sell prices, or the spread. At PCM, while a trader is fully hedged the margin requirement is zero, and when one leg of the hedged position is closed the remaining open exposure will be subject to the normal margin requirement for the specified pair. This can be monitored at all times in the simple dealing rates window. While the ability to hedge is an appealing feature, traders should be aware of the following factors that may affect hedged positions.

DIMINISHING MARGIN A margin call may occur even when an account is fully hedged, since spreads may widen, causing the remaining margin in the account to diminish. Should the remaining margin be insufficient to maintain any open positions, the account may sustain a margin call, closing out any open positions in the account. Although maintaining a long and short position may give the trader the impression that his exposure to the market's movement is limited, if insufficient available margin exists and spreads widen for any period of time, it may certainly result in a margin call on all positions.


Rollover is the simultaneous closing and opening of a position at a particular point during the day in order to avoid the settlement and delivery of the purchased currency. This term also refers to the interest either charged or applied to a trader's account for positions held "overnight," meaning after 5 p.m. ET on PCM's Platforms. The time at which positions are closed and reopened, and the rollover fee is debited or credited, is commonly referred to as Trade Rollover ("TRO"). It is important to note that rollover charges will be higher than rollover accruals. When all positions are hedged in an account, although the overall net position may be flat, the account can still sustain losses due to the spread that occurs at the time rollover occurs. Spreads during rollover may be wider when compared to other time periods because of liquidity providers' momentarily coming offline to settle the day's transactions.


Exchange rate fluctuations, or pip costs, are defined as the value given to a pip movement for a particular currency pair. This cost is the currency amount that will be gained or lost with each pip movement of the currency pair's rate and will be denominated in the currency denomination of the account in which the pair is being traded. On the PCM Platforms, the pip cost for all currency pairs can be found by selecting "View," followed by "Dealing Views," and then by clicking "Simple Rates" to apply the checkmark next to it. If "Simple Rates" already has a check mark next to it, viewing the dealing rates in the simple view is as easy as clicking the "Simple Dealing Rates" tab in the dealing rates window. Once visible, the simple rates view will display the pip cost on the right-hand side of the window.


FOREX: When you trade forex with PCM, you are trading on price feeds that are being provided by multiple liquidity providers, plus PCM's mark-up. In rare cases, these feed can be disrupted. This may only last for a moment, but when it does, spreads become inverted. During these rare occasions, PCM advises that clients avoid placing At Market orders. While it may be tempting to place a "free trade," keep in mind that the prices are not real and your actual fill may be many pips away from the displayed price. In the event that trades are executed at rates not actually offered by PCM's liquidity providers, PCM reserves the right to reverse such trades, as they are not considered valid trades. By placing Market Range orders or not trading during these moments, traders can avoid the risk associated with the above scenarios.

CONTRACTS FOR DIFFERENCE: When trading CFD products at PCM all quotable prices are provided by our Trading Desk. PCM's Trading Desk may rely on various third party sources for the prices that it makes available to clients. In the event that a manifest (misquoted) price is provided to us from a source that we generally rely, all trades executed on that manifest (misquoted) price may be revoked, as the manifest (misquoted) price is not representative of genuine market activity. These manifest (misquoted) prices can lead to an inversion in the spread.


FOREX: The quoted hours for the Trading Desk are from Sunday 5:15 p.m. ET to Friday at 4:55 p.m. ET. Please note that orders placed prior may be filled until 5:00 p.m. ET and that traders placing trades between 4:55 p.m. and 5:00 p.m. ET may be unable to cancel orders pending execution. In the event that a Market GTC Order is submitted right at market close, the possibility exists that it may not be executed until Sunday market open. Please use caution when trading around Friday's market close and factor all the information described above into any trading decision.

The open or close times may be altered by the Trading Desk because it relies on prices being offered by liquidity providers at PCM. Outside of these hours, most of the major world banks and financial centres are closed. The lack of liquidity and volume during the weekend impedes execution and price delivery.

CONTRACTS FOR DIFFERENCE: The hours for each CFD are determined by PCM's Trading Desk based on the schedule for trading on the exchange for the underlying market, commodity, or asset.

Please refer to the CFD Product Guide for specific hours for each instrument: click here

Additionally, liquidity at, or around market open/close for any CFD instrument can be very thin. Traders are advised to use extreme caution during these periods and to utilize PCM's basic and advanced orders types to mitigate execution risk. Based on the illiquidity illustrated during these time periods traders using market orders can experience slippage, or gapping in prices that can have a material impact on your final execution price.


Shortly prior to the open, the Trading Desk refreshes rates to reflect current market pricing in preparation for the open. At this time, trades and orders held over the weekend are subject to execution. Quotes during this time are not executable for new market orders. After the open, traders may place new trades, and cancel or modify existing orders.


Sunday's opening prices may or may not be the same as Friday's closing prices. At times, the prices on the Sunday open are near where the prices were on the Friday close. At other times, there may be a significant difference between Friday's close and Sunday's open. The market may gap if there is a significant news announcement or an economic event changing how the market views the value of a currency. Traders holding positions or orders over the weekend should be fully comfortable with the potential of the market to gap.

CONTRACTS FOR DIFFERENCE: There is a substantial risk that stop-loss orders left to protect open positions held overnight may be executed at levels significantly worse than their specified price.

Commensurate with the opening/closing of the market for the underlying instrument, CFD traders may experience gaps in market prices. Due to the volatility expressed during these time periods, trading at the open or at the close, can involve additional risk and must be factored into any trading decision. These time periods are specifically mentioned because they are associated with the lowest levels of market liquidity and can be followed by significant movements in prices for both the CFD, and the underlying instrument.

For more information on the differences between execution models please see: click here


Limit orders are often filled at the requested price or better. If the price requested is not available in the market, the order will not be filled. If the requested price of a Stop order is reached at the open of the market on Sunday, the order will become a Market order. Limit Entry orders are filled the same way as Limit orders. Stop Entry orders are filled the same way as Stops.


Traders who fear that the markets may be extremely volatile over the weekend, that gapping may occur, or that the potential for weekend risk is not appropriate for their trading style, may simply close out orders and positions ahead of the weekend. It is imperative that traders who hold open positions over the weekend understand that the potential exists for major economic events and news announcements to affect the value of your underlying positions. Given the volatility expressed in the markets it is not uncommon for prices to be a number of pips away on market open from market close. We encourage all traders to take this into consideration before making a trading decision.


Please note that PCM does not provide a margin call warning to clients prior to liquidating open positions. Margin calls are triggered when your usable margin reaches zero. This occurs when your floating losses reduce your account equity to a level that is less than or equal to your margin requirement. Therefore, the result of any margin call is subsequent liquidation unless otherwise specified.

FOREX: The idea of margin trading is that your margin acts as a good faith deposit to secure the larger notional value of your position. Margin trading allows traders to hold a position much larger than the actual account value. PCM's Trading Station has margin management capabilities, which allow for the use of leverage. Of course, trading on margin comes with risk as leverage may work against you as much as it works for you. If account equity falls below margin requirements, the PCM Trading Station will trigger an order to close all open positions. When positions have been over-leveraged or trading losses are incurred to the point that insufficient equity exists to maintain current open positions, a margin call will result and all open positions will be closed out (liquidated).

Please keep in mind that when the account's useable margin reaches zero, all open positions are triggered to close. The liquidation process is entirely electronic, and there is no discretion on PCM's part as to the order in which trades are closed.

Although the margin call feature is designed to close positions when account equity falls below the margin requirements, there may be instances when liquidity does not exist at the exact margin call rate. As a result, account equity can fall below margin requirements at the time orders are filled, even to the point where account equity becomes negative. This is especially true during market gaps or volatile periods. PCM will not hold traders responsible for deficit balances in this scenario, but clients should be cognizant that all funds on deposit in an account are subject to loss. PCM also recommends that traders use Stop orders to limit downside risk in lieu of using a margin call as a final stop.

It is strongly advised that clients maintain the appropriate amount of margin in their accounts at all times. You may request to change your margin requirement by going to www.phiforex.com and filling out the "Margin Change Request Form," which is subject to approval by PCM. Margin requirements may be changed based on account size, simultaneous open positions, trading style, market conditions, and at the discretion of PCM.

CONTRACTS FOR DIFFERENCE: PCM process all liquidations for CFD products automatically. Open and close times for the underlying reference market are determined by the exchange, or third party execution venue, and not by PCM, If the client's liquidation event is triggered during the period when the underlying reference market is closed, it may be necessary for the PCM Trading Desk to wait until the underlying reference market re-opens before liquidation of the CFD positions can be finalized. Depending on market conditions, this could mean that the final price the client receives is a significant number of points away from the price that triggered the client's liquidation. If the clients' account contains open positions for both CFD and forex at the time liquidation is triggered it is possible that only the client's forex positions will be liquidated. This would only occur in situations where the underlying reference market for the client's CFD positions is closed, and the liquidation of the client's forex positions satisfies the liquidation requirement.


Please note that MT4 users are subject to different margin call procedures. When a margin call is triggered on the account individual positions will be liquidated until the remaining equity is sufficient to support existing position(s). In deciding what positions will be individually liquidated the largest loosing position will be closed first during liquidation


It is important to make a distinction between indicative prices (displayed on charts) and dealable prices (displayed on the PCM Trading Station). Indicative quotes are those that offer an indication of the prices in the market, and the rate at which they are changing. These prices are derived from a host of contributors such as banks and clearing firms, which may or may not reflect where PCM's liquidity providers are making prices. Indicative prices are usually very close to dealing prices, but they only give an indication of where the market is. Executable quotes ensure finer execution and thus a reduced transaction cost. Because the spot forex market lacks a single central exchange where all transactions are conducted, each forex dealer may quote slightly different prices. Therefore, any prices displayed by a third party charting provider, which does not employ the market maker's price feed, will reflect "indicative" prices and not necessarily actual "dealing" prices where trades can be executed.


There are a series of inherent risks with the use of the mobile trading technology such as the duplication of order instructions, latency in the prices provided, and other issues that are a result of mobile connectivity. Prices displayed on the mobile platform are solely an indication of the executable rates and may not reflect the actual executed price of the order.

Mobile TS II utilizes public communication network circuits for the transmission of messages. PCM shall not be liable for any and all circumstances in which you experience a delay in price quotation or an inability to trade caused by network circuit transmission problems or any other problems outside the direct control of PCM. Transmission problems include but are not limited to the strength of the mobile signal, cellular latency, or any other issues that may arise between you and any internet service provider, phone service provider, or any other service provider.

Please note some features of the PCM Trading Station will not be available on the PCM Mobile Trading Station. Key differences include, but are not limited to, charting packages will be limited, daily interest rolls will not appear, and the maintenance margin requirement per financial instrument will not be available. It is strongly recommended that clients familiarize themselves with the functionality of the PCM Mobile Trading Station prior to managing a live account via portable device.


PCM's Trading Station Web platform has been modified to run on mobile and tablet devices. The mobile platform is called Trading Station Mobile. With the exception of OCO orders (one-cancels-other), Trading Station Mobile for tablet devices has the same trading features as Trading Station Web. The same connectivity risks described above regarding our Mobile TS II apply to use with any application made available for tablet trading.