To perform a technical analysis when trading I always use www.tradingview.com for their charts. When I need to use specific indicators I also use the MetaTrader platform. I signed up for an account at FXCM and Markets.com and use their data feed for MetaTrader.
I deposited my money at my Plus500 account. Their platform was really user-friendly, people who are new to trading with CFD’s will love it. I only didn’t liked their charts and graph’s so I kept using TradingView and MetaTrader only for my technical analysis. When I decided to trade something, I placed an order on my Plus500 platform.
While trading with Plus500 I often had the idea that there was something wrong, that some of my trades were closing even though the price never reached my stop loss level. Sometimes there were serious differences in prices. The price showing on Plus500 didn’t match the prices showing on www.tradingview.com and MetaTrader.
According to an article that appeared on one of the respected financial papers in The Netherlands, Financieel Dagblad, Plus500 offers great loans for those who find new clients for them. ‘’Revenues of Plus500 ($ 115 million) are three and a half times the amount of money that 85.795 customers have on their Plus500 account. For each euro a customer entrusts Plus500, the broker creates three and a half euros for himself. Remarkably, since the deposits of customers is the source of income of a broker.’’ For every new Dutch customer they offer €500-€600.
See http://www.plus500affiliates.com.
A lot of articles about Plus500 appeared on the Financial Times: http://ftalphaville.ft.com/tag/winning-with-plus500/
Plus500 offers CFD’s and they operate like a Market Maker as they create their own markets. For every individual client, they can create a unique market with different prices/rates. If you don’t know the difference between a Market Maker and an ECN broker, I suggest you take your time to read article http://www.investopedia.com/articles/forex/06/ecnmarketmaker.asp.
‘’As counterparties to each forex transaction in terms of pricing, market makers must take the opposite side of your trade. In other words, whenever you sell, they must buy from you, and vice versa.’’
As Plus500 knows its clients margins and stop-loss levels, they can adjust the price at such way that you lose the trade. I am not saying they do so and use this advantage to beat you, but I can say that according to the above mentioned article it seems like when you lose a trade, they win it from you and make profit (in addition to the spread between bid and offer prices where they make profit too). Market Makers most of the time interest that their client suffers loss.
There could be some market makers out there who offers fair rates, but I advise you guys be careful when dealing with them. Trading is already hard enough as you are competing against the sharpest minds in the world. It’s even harder when you also have to trade against your ‘’broker’’. That’s why it is in my opinion better to go for an ECN broker, those who has no meaning to let you lose a trade, as they don’t make profit of your loss.
Let’s get back to my story. I used to trade stocks via a well-known broker in The Netherlands. When I decided to start trading forex and CFD’s, I searched for a reliable broker on Dutch forums. What I noticed is that most of the forums I entered were sponsored by Plus500. I didn’t realize that they might tell all the good things about Plus500 because they get paid by them, I still don’t say that’s the case, but he who pays the piper calls the tune. I noticed in almost each topic that was started by a user who had bad experience with Plus500 the forum moderators were always there to protect the broker.
Recently I was trading the USD/TRY pair. Below you see the USD/TRY pair on TradingView.com (30M period) and on MetaTrader (15M period). The data is exactly the same, only difference in the periode (30M and 15M).
I was selling short at price 2.9422 (blue line) on the USD/TRY pair.
After I entered this trade, the pair resumed moving downwards as I was
hoping. My stop-loss was set at 2.9582 (orange line). I aimed on
take-profit price 2.9152 (green line). I went downstairs to have a
lunch, when I got back into my room and looked at the chart on
MetaTrader and TradingView.com, I was happy as they were showing that
the price resumed it’s downwards run and that my take-profit should have
been triggered. However, when I opened my Plus500 platform to see how
much profit exactly I had made, I saw a loss call 2.9758 (red line) in
15 minutes after I entered the trade.
The strange thing was that the
price had not even retraced back to my stop-loss level of 2.9582, how
could I lose this trade with a stop-loss call at 2.9758?! I felt like I
got scammed! Below you see the graph that Plus500 was showing:
But this candle doesn’t match the candle showing on the graph from MetaTrader and TradingView, the original market data. I marked this candle with B on the previous image showing the MetaTrader graph so that you can notice the huge difference. For me there was only 1 explanation of this situation: Plus500 adjusted the price in such way that their adjusted market-mid rate would reach my stop-loss level. Even worse, it passed the stop-loss level with 176 pips! They adjusted the price with more than 200 pips!!
When trading with Contract For Differences one should not whine about small differences in prices of a stock. But when a price has a difference of 200 pips, you might get angry.
Thank you for contacting us.
I can see that your position #948494710 was closed by an activation of your predefined close at loss.
In your case position #948494710 was set at a “Sell” rate of 2.9422 with a stop loss at the rate 2.9580. The first time that “Buy” rate has reached the rate of 2.9580 or above it was closed (at the rate of 2.9758) This stop loss that you have selected is free of charge and therefore is not guaranteed.
You’re welcome to read more on our Risk Control and Order Types help page – http://www.plus500.com/Help/HelpOrders.aspx
Furthermore, please be aware that on the graph from our platform is displayed the sell rate. Since the position you are referring to is a sell position, it will be closed at the current buy rate. Thus in order to receive the current buy rate you should add to the sell rate the market spread.
I would like to inform you that Plus500’s quotes are based on external and independent providers, which transmit these rates from the recognised market where the underlying instrument is traded. An adjustment is applied to the market mid-price we receive from our providers in order to arrive at the Plus500 quoted price.
Should you require any further assistance, feel free to contact us.
So what they’re saying is that on the graph of their platform is displayed the ‘’Sell’’ rate. When the ‘’Buy’’ rate would reach my stop-loss level or higher, so 2.9580, my position would close (I agree so far). So to the ‘’Sell’’ rate, I should add the spread of the USD/TRY pair which is about 20 pips. It still wouldn’t trigger my stop-loss level. After I sold short at 2.9422, the price where this pair could have retraced back upwards is limited to 2.9460, the high of the candle. If we add the spread of 20 pips to this price, it would be 2.9480, still far away (+102 pips) from my stop-loss level 2.9582, and even further away from the price which Plus500 closed my position at 2.9758 (+278pips). I understand that they adjust the market mid-price they receive from they providers so that they make money, but let’s be realistic, an adjustment of 278 pips is just not fair in my opinion.
When I explained this to the customer service, I got informed that my query was forwarded to the relevant department and that I would be contacted as soon as she (my contact person) received the answer. After a few days I received an answer:
Final Response
Further to our recent email communication, we have completed our review of your complaint and can provide you with our Final Response in relation to your complaint.
Your complaint relates to the closure of your position on Stop Call and your claim that our rates are incorrect.
We have reviewed your complaint and considered the following facts and circumstances.
First, we wish to state that Plus500 offers trading only on CFD (Contract for Difference).
Contracts for Difference (“CFDs”) products were developed to allow customers to enjoy all the benefits of possessing a stock, index, ETF, forex or commodity position without having to physically own the underlying instrument itself. A customer enters into a contract for a CFD at the quoted price. The difference between that price and the price when the position is closed is settled in cash, giving rise to the name “Contract for Difference” or CFD.
For more info on CFDs, please read:
http://www.plus500.com/Help/HelpIntroduction.aspx and http://en.wikipedia.org/wiki/Contract_For_Difference
Moreover, Plus500 utilises live prices directly from the recognised market where the underlying instrument is traded. A small fixed adjustment is then applied to the market mid-price to arrive at the Plus500 quoted price. Our spread can be calculated by subtracting the sell price from the buy price of the instrument.
Please note, as above suggested, the rates shown in our software are the prices that we offer. The rates on display in other exchange trade sites are the prices we use for hedging when presenting the transactions to our banks and providers.
Our quotes are based on external and independent providers. We use these quotes automatically. Also, each instrument has additional providers as backup. Sometimes as trading is done globally, providers might have prices that may vary by a little margin from one another.
In addition, please note that a part of our instruments (commodities and indices, for example) are future based contracts. You can see the information at the instruments’ Details. This means it is a contract that is based on future rates for this instrument as opposed to current rates.
Furthermore, please note that we do not offer compatibility with any external third party software. Accordingly, we do not offer an API.
Second, we would like to clarify that your position #948494710 was closed by your predefined close at loss.
In your case position #948494710 was set at a “Sell” rate of 2.9422 with a stop loss at the rate 2.9580. The first time that “Buy” rate has reached the rate of 2.9580 or above it was closed (at the rate of 2.9758).
This stop loss that you have selected is for free and therefore is not guaranteed.
On the basis of these facts, we are unable to uphold your complaint or agree to your request for compensation. The results of our investigation did not yield any wrongdoings or misbehavior by Plus500CY Ltd.
We hope that we have been able to address your complaint to your satisfaction. If you have any queries, please contact us directly by responding to this email.
If you remain dissatisfied with our Final Response and wish to take the matter further, you may be able to refer your complaint to the Cyprus Securities and Exchange Commission or the Financial Ombudsman service of Cyprus, when the Financial Ombudsman body will be activated.
Okay they repeat they make a ‘’small adjustment’’ to the price. Depends on what you call small, but 278 pips in my opinion is not small. They don’t act illegal so complaining at the Securities and Exchange Commission will result in nothing. But in my opinion they take advantage of the loophole, of the inadequacy in the free market. It’s sad that there is not a lawful limit on the adjustment market makers are allowed to make on the market-mid price. What I now understand is that Market Makers can give at any time, for every individual client, adjusted rates. I citate plus500:
“The trading you conduct on the Trading Platform is not conducted on an Exchange. We act as a counterparty in Transactions conducted on the Trading Platform and, therefore, act as the buyer when you offer to sell an Instrument and the seller when you offer to buy an Instrument. The prices we offer on the Trading Platform might not be the best prices available and we may offer different prices to different users. “All I’ve written above describes my experience with Plus500. Next to the huge adjustment to the market rates, there are also a few other aspects I’d questioned:
One of them is that they automatically upgrade your account after a while. When you get upgraded to what they call a Gold account, you can not buy small lot sizes. When you could open a trade with a margin of €10, now you have to buy for at a minimum of €100 margin. This way they can earn more money. When you wish to trade small sizes just as in the beginning, you have to contact the customer service.
Another disadvantage is that you can not set your stop-loss and take-profit levels too close to your entry point. It occurred for so many times that I had to risk more money on my stop-loss level than I wished.
What also irritates me is that you can only withdrawal money if you have about €176 or more on your account. If you have less than that you can not withdrawal. You have to deposit additional funds so that you can withdraw it.
You are also not able change the leverage levels. I felt like they tried to maximize the risks of my trades. According to Plus500 you can not lose more money then you have on your Plus500 account. However, there are complaints that clients gave a command to withdraw money and once this was pending, they lost more money on their open order because Plus500 used the pending withdrawal as additional fund. Glad this didn’t happen to me.
Let me make it clear, everybody is free to chose it’s own market maker/broker/company to trade with. I can not ask or command you to stay away from this broker. I just wanted to share my experience with them. For some people Plus500 could be a good pick, but definitely not for me.
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