Why do brokers do this?

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AspiringTrader.

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Just curious as to why brokers, well mine anyway(small spread bet account) wont allow me to place a limit order long or short within 40 points of the current price. Same with stops too, i cant trail a stoploss placement to any where within about 25 points of the price.

why is this?.... i can obviously achieve all this manually but it makes it too difficult to set a limit order sometimes and too hard to trail a stop to break even.

Cheers AT
 
HI, may be problem with broker?Try to use other one, there are a lot of brokers now you can find the good one with good conditions to you;)
 
Hi Aspiring Trader,
Unfortunately what you are experiencing is a natural part of using Spread Betting as your chosen method of trading. Rather than paying a standard broker a commission to trade, a spread betting broker wraps it's spread around the market price, and you will not be able to trade within the actual spread being charged for your particular security.
Hope that helps?
Regards, Matt.
 
TradeSelector said:
Hi Aspiring Trader,
Unfortunately what you are experiencing is a natural part of using Spread Betting as your chosen method of trading. Rather than paying a standard broker a commission to trade, a spread betting broker wraps it's spread around the market price, and you will not be able to trade within the actual spread being charged for your particular security.
Hope that helps?
Regards, Matt.
Click to expand...

So you're saying his broker charges a spread of 40:LOL:
 
I don't spreadbet (regular forex brokers won't do what you're seeing) so this is only a guess, but I suspect it's a function of their risk management system in that they fear a rapid swing would knock you out of your position and unbalance their net exposure faster than they could offset it.
 
Rhody Trader said:
I don't spreadbet (regular forex brokers won't do what you're seeing) so this is only a guess, but I suspect it's a function of their risk management system in that they fear a rapid swing would knock you out of your position and unbalance their net exposure faster than they could offset it.
Click to expand...

Why does a bucket shop need to offset a trader's loss? Unless it's a margin call of course. Offsetting +ve trades yes. Losses are just coming out of the traders account. Two kmore possibilities: one they don't want 'scalpers' and two if you're the typical punter using your stop as your exit it forces you to take a bigger hit than you may want. Or is that being cynical?
 
These shops look to profit from the spread, not take directional risk. The reason for not wanting scalpers is what I noted before - the quick in and out runs the risk of creating exposures they don't want in too quick a fashion for their system to effectively hedge/offset.
 
nunrgguy said:
Why does a bucket shop need to offset a trader's loss? Unless it's a margin call of course. Offsetting +ve trades yes. Losses are just coming out of the traders account. Two kmore possibilities: one they don't want 'scalpers' and two if you're the typical punter using your stop as your exit it forces you to take a bigger hit than you may want. Or is that being cynical?
Click to expand...

This is to stop scalping i think.
 
AspiringTrader. said:
Just curious as to why brokers, well mine anyway(small spread bet account) wont allow me to place a limit order long or short within 40 points of the current price. Same with stops too, i cant trail a stoploss placement to any where within about 25 points of the price.

why is this?.... i can obviously achieve all this manually but it makes it too difficult to set a limit order sometimes and too hard to trail a stop to break even.

Cheers AT
Click to expand...

My SB allows me to put an order very close. You should check around because 40 points is useless. There again, mine does not do trailing stops which I find a bind, but I can live with that.
 
Sorry for the late reply,

But i rang my broker a while ago and they said because it's a micro account they can guarantee absolute no slippage on closing out a position or limit orders, this being why they have such a large point margin for stops/limit on current price. which Seems absolute BS considering I've pretty much been sneakily slipped in the form of getting an Error message saying " Dealer desk currently down, please try again later. " When opening/closing a postion in extreme volatility (ie Better than expected data or so on) until about 0 - 10 seconds later when the initial spike slows, but already moved 40Pts!.

They did say i can upgrade to their MT4 platform as long as i have $3,000 capital to start with allowing me to place stops and limit orders as close to current price as i like, but they don't guarantee NO slippage. But on the upside the spread is down to 2pts from 4 on most majors.

Cheers,
AT.
 
AspiringTrader. said:
Sorry for the late reply,

But i rang my broker a while ago and they said because it's a micro account they can guarantee absolute no slippage on closing out a position or limit orders, this being why they have such a large point margin for stops/limit on current price. which Seems absolute BS considering I've pretty much been sneakily slipped in the form of getting an Error message saying " Dealer desk currently down, please try again later. " When opening/closing a postion in extreme volatility (ie Better than expected data or so on) until about 0 - 10 seconds later when the initial spike slows, but already moved 40Pts!.

They did say i can upgrade to their MT4 platform as long as i have $3,000 capital to start with allowing me to place stops and limit orders as close to current price as i like, but they don't guarantee NO slippage. But on the upside the spread is down to 2pts from 4 on most majors.

Cheers,
AT.
Click to expand...

If they are snobby about the size of your account why don't you have a look at a SB firm?
Lots of us use them. Of course, it depends on what your instrument is. I use FT mostly, which has a 1 point spread and you can start as low as 50p per point. If you go for shares, I'm not sure about spreads but you can try them out for a few hundred
to open an account.

No trailing stops, though

BTW, I have no shares in this outfit. Neither, commisions! :LOL:
 
Splitlink said:
My SB allows me to put an order very close. You should check around because 40 points is useless. There again, mine does not do trailing stops which I find a bind, but I can live with that.
Click to expand...

Wow, won't let you trail your stop at all?

I'd kick my broker in the dick if i couldn't trail my stop, at least even by 25pts.
 
Splitlink said:
If they are snobby about the size of your account why don't you have a look at a SB firm?
Lots of us use them. Of course, it depends on what your instrument is. I use FT mostly, which has a 1 point spread and you can start as low as 50p per point. If you go for shares, I'm not sure about spreads but you can try them out for a few hundred
to open an account.

No trailing stops, though

BTW, I have no shares in this outfit. Neither, commisions! :LOL:
Click to expand...

Thanks, i might have a look now.. at least to compare with my current situation anyway.
Do you have any recommendations for a SB firm?
 
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