The FXCM (Forex Capital Markets) Group posted a report on its execution quality for the month of May in 2019. This report showed significantly higher rates across the average spreads for both cryptocurrencies and some forex instruments.
When it comes to cryptocurrency, the company was able to average around 28.2 pips with the BTC/USD trading pair, which is up from 25 pips during the whole of the first quarter. There is a problem though – both metrics are significantly lower than they were a year ago when the company announced its first reported spreads. The bitcoin instrument metrics at the time showed them at 44 pips which is almost a third higher than the current spread.
Fresh highs for cryptocurrency this year leading to institutional interest
The continued extension of the rally upwards this year for most cryptocurrencies has seen many coins double in value. This all started in April when the price of Bitcoin started to bounce upwards and from a sub 4000 dollar start, the main cryptocurrency in the world is nearing the 10 thousand dollar mark.
Rumors regarding various brokers and institutions looking to get on board the cryptocurrency gravy train are having an overall positive impact on the price of cryptocurrency and will continue to do so for the foreseeable future. Among the rumored institutions is a titan of the exchange world, Interncontinental Exchange Inc., which owns the largest stock exchange in the world (the New York Stock Exchange). Their partnership with Bakkt seems to point to a more mainstream future for Bitcoin at least – and there are whispers that Ethereum will follow soon.
Meanwhile, FXCM’s spreads for top altcoins Ethereum and Litecoin were sitting at 1.9 and 0.57 pips respectively. These are only a slight touch higher than in previous months.
FXCM introduced new asset class this year
While FXCM is mainly a forex broker, they introduced the new asset types that they deemed would complement their already existing Bitcoin offering. Reporting with regards to the speed of executions was also mentioned. This is measured by taking the time when a customer places an order and comparing it to when the order is fulfilled. According to the company, the average order took just 24 milliseconds in May, compared to 21 in March.
This is not such a drastic drop, and other things need to be taken into account when looking at order processing. Slippage, both positive and negative need to be looked at. Look at certain trading platforms, they can offer higher speeds, but can often fail when it comes to price improvement and liquidity.
The slippage statistics for May were as follows. 67.4% of orders were executed at price, while 21.9% were executed with positive slippage. Only 10.7% were executed with negative slippage and is a metric that the company needs to work on, though many in the industry believe that it is almost impossible to eliminate entirely. This is due to the nature of online systems and factoring human tendencies and how trade works, there needs to be some slippage at any point in time.