The Virtual Dealer is a MetaQuotes plug-in available to Forex brokers that offer the MetaTrader 4 platform. The plug-in allows the broker to delay an order placed by a trader from 1-5 seconds. Some brokers have used this plugin to induce slippage.
Documentation around the Metaquotes plugin has show how brokers have used it at customer expense. The plugin allows you to delay an order by a period / time frame specified by the broker. During this time, if slippage occurs in favor of the trader, that is offering a better price, the broker will execute the order at the original quoted price. However, if the order is executed at the asked price or worse price (slippage), this cost is passed on to the customer. As you can see this plugin can be used by dishonest brokers to gain at the expense of their customers.
The plugin also allows the Forex broker to pass on positive slippage to their customers.
What is a “positive slippage”?
If the price moves in the favour of the customer, the better pricing is passed onto the client. There is a catch, the broker can set a limit to the amount of positive slippage it can pass onto their clients. For example , a broker might set the plugin to do the following:
Maximum Unit Profit to the trader : 2 pips
Max Unit Loss for the trader : 10 pips
This approach would allow the broker to give the customer an improvement in the price of maximum two pips positive slippage where applicable, and keep the rest. In the event the slippage is not in favour of the trader, they would pass onto the client the full negative slippage of up to 10 pips. This approach would make it difficult to identify if a broker is using the plugin. Even if the customer has the occasional price improvement, the virtual dealer plugin is set to favor the broker.
This form of disadvantage is called: “asymmetrical slippage”.
How to find out if a Forex company is using the Virtual Dealer Plugin?
There is no real way to tell if your broker is using the Virtual Dealer Plugin . The Virtual Dealer plugin works by delaying the execution of an order. So if you notice a constant poor execution in your orders of one or more seconds , this could be a sign that the broker is using the virtual dealer plugin. However, these delays can also be attributed to a slow connection to the broker’s server or the Broker is not big enough.
Some Experts have scheduled a series of scripts that allows to monitor the speed of execution. These tools can help you determine whether a broker is using the plugin.
There are also free scripts out there that allow you to monitor your broker’s execution, but most are sold or subscription based. Be assured, you will always have some occasional delay in the execution of your orders as technology is never infallible, but be weary if this occurs too frequently.
The Speed of execution at Key To Markets
Here at Key To Markets we send your orders directly into our liquidity pools and inter banking liquidity without any plugin or second-look.
Our main servers are located in the NY4 farm and, if you have a VPS in there you can get an execution as fast as 1 ms.