USDTRY and the broker-side surprises

[Shadow Trader]

Turkish lira pairs have been among the most volatile in the FX market for years. They also come with a package of broker-specific conditions that rarely get discussed.

Spreads are large and variable. Swaps are huge in both directions, and some brokers cap or adjust them. Maximum leverage is often lower than on majors. Margin requirements can change with little notice, particularly around political events.

Execution is also different. Liquidity is concentrated in a few providers, and during stress the quotes can stop for seconds. Orders may be rejected, or filled at prices far from the last visible quote.

The trading hours matter too. The offshore market is active during European and Asian hours, but the real depth comes during Istanbul's working day. Overnight, the pair can jump on thin volume with no warning.

Scalpers drawn by the big range need to account for all of this, and for the fact that a 100 point move may cost 20 points to enter and exit.

Weekend risk deserves a separate mention. Political announcements about monetary policy or elections in Turkey have often arrived outside market hours, and the pair can open the next session with a gap of hundreds of points. Stop orders fill at the first available price after the gap, so the loss isn't limited by the stop level.

Brokers sometimes respond by raising margin requirements on the pair just before such events, or by restricting new positions. A position that was fine on Friday might face a margin call on Monday through no change in price.

Then there is swap. Because the interest differential is large, the daily charge for being on the wrong side is significant. Even a trade held for only a few hours, if it spans rollover, pays a visible amount.

None of this makes the pair impossible to trade. It makes the cost side more complex than for majors, which is why a separate cost model for it is worth building.

Has anyone traded lira pairs long enough to know whether the costs and the surprises are worth it?

[Amanhasnoname]

I traded USDTRY on and off for about a year and in the end the costs won. The range looked amazing on paper, but my average round trip worked out to something like a fifth of the move I was aiming for, and that was on a broker with reasonable conditions. On quieter days the spread alone made scalping pointless.

The part that really put me off was the execution during stress. Twice I had orders rejected during a sudden move, and once the quote simply froze for several seconds while the pair was clearly moving elsewhere. When it came back, my stop filled a long way past the level. That's not a broker being shady, it's just how thin the liquidity gets.

I also got hit by the margin change you mention, before an election weekend, where the broker raised requirements and I had to close a position I'd planned to keep. My conclusion was that it's a pair for people who build a separate cost model and size very small, not for normal scalping rules borrowed from majors.