Interbank FX – What Works and What Doesn't

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We've chosen Interbank FX as the first broker to examine in our status reports about what works and what doesn't following the long awaited implementation of the FIFO requirement of NFA compliance rule 2-43(b). We're looking at IBFX first because they made some impressive claims about MetaTrader 4 expert advisors in their July 20th announcement:

All of your Expert Advisors will continue to work.

We don't think it's that simple, so Interbank FX is where we started our tests.

We downloaded the MT4 installer from ibfx.com and ran it. It told us the software was called Interbank FX Trader 4.00 published by Interbank FX LLC. Then it asked us to accept a software license agreement which started out by telling us that:

MetaQuotes Software Corporation makes no warranty or representation, either express or implied,with respect to this software, the hardware, or documentation, including their quality,performance, merchantability, or fitness for a particular purpose.

We ticked the box to agree that we understood that, and pressed the "Next" button to continue to install the MT4 client software.

We chose to open an IBFX mini demo account, and when everything was up and running MetaTrader told us it was build 225, dated July 10th 2009. Interbank provide quotes to 5 decimal places, and we soon discovered that they allow you to trade with a lot size of 0.01 on their mini accounts. This equates to a position size of $100, which might well be of interest to those of you wanting to risk as little money as possible when experimenting with your first live account. Despite the fact that in scientific circles the prefix means a billionth, Interbank refer to them as nano-lots. Putting pedantry aside we set some of our "robots" loose, starting out with humble nano-lot position sizes. Here is what we discovered:

We wanted an EA that could be setup to trade quite often, so we started off our first example robot on a one minute chart of EUR/USD, but with the targets and stops brought in much closer. It worked perfectly, without us even needing to worry about the Straight Through Processing option we added to our robot #2. Basically that means that the IBFX version of MetaTrader still accepts orders with built in stop loss and take profit levels. So far so good!

Next we upped the ante a bit and tried out a new example robot, our fifth. This one is a lot like robot #1, but instead of using forex style built in stops and targets it uses a futures style technique of placing separate stop and limit orders to exit from the trade. When one of the two pending orders is executed the EA cancels the other one. Basically it's a way of achieving the One Cancels the Other function you might have heard a lot about recently from some brokers. The only trouble is that this robot doesn't work properly at IBFX! Interbank don't allow our robot to offset the entry and exit orders against each other itself, and they don't offset the two orders automatically the way a futures broker would either. Instead when one of the exit orders is triggered the IBFX version of MT4 simply deletes it with the explanation "hedge is prohibited". Try it for yourself and see, if you don't believe me.

Now you may be thinking to yourself that isn't a such a big problem if robot #1 works OK. Built in stops and targets are a lot simpler aren't they? Maybe so, but now try setting off 2 copies of robot #1 on two different charts that use the same currency pair. Make one trade long term using the default input settings, and other trade short term by setting the ProfitTarget to 50 and the StopLoss to 500. What do you suppose the result will be? Here's our expert's log of what happens if one decides to go long, whilst the other decides to go short:

07:35:43 GuruEx01 EURUSDm,M1: loaded successfully
07:36:31 GuruEx01 EURUSDm,M1 inputs: Magic=12344; Slippage=30;
                  ProfitTarget=50; StopLoss=500; Lots=0.01;
07:36:31 GuruEx01 EURUSDm,M1: Digits = 5, Points = 0.00001
07:36:31 GuruEx01 EURUSDm,M1: Initialized OK
07:36:31 GuruEx01 EURUSDm,M1: open #156577850 buy 0.01 EURUSDm
                  at 1.41724 sl: 1.41199 tp: 1.41769 ok
07:36:42 GuruEx01 EURUSDm,M15: loaded successfully
07:36:48 GuruEx01 EURUSDm,M15 inputs: Magic=12345; Slippage=30;
                  ProfitTarget=1000; StopLoss=10000; Lots=0.01;
07:36:48 GuruEx01 EURUSDm,M15: Digits = 5, Points = 0.00001
07:36:48 GuruEx01 EURUSDm,M15: Initialized OK
07:36:51 stdlib EURUSDm,M15: loaded successfully
07:36:51 GuruEx01 EURUSDm,M15: Error opening SELL order: hedging is prohibited (149),
                  Entry = 1.417, Target = 1.407, Stop = 1.5172

There is one way around this last problem.  I phoned the Interbank FX toll free number and asked if it was possible for one person to open more than one account. I was told that it was.  There used to be a limit of 3 accounts per person, but now it was possible to open more if you could provide a valid reason.  I asked if a requirement to trade several EAs on the same currency pair qualified as a valid reason. I was assured that it did.

All in all we think that Interbank FX are overstating their case when they claim that "All of your Expert Advisors will continue to work". A lot of ours don't! To summarize our findings at Interbank FX:

  • Forex style EAs that use built in take profit and stop loss levels – PASS
  • Futures style EAs that use separate target and stop orders – FAIL
  • Using two EAs on the same currency pair – FAIL
  • Can open multiple accounts – PASS

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