Who Pays? Who Plays?

ive read quite a few posts about Market Makers, what i would like to know is which brokers out there make their own markets and which actually buy the underlying.

I dont see how you could trade cfds when you are 'playing' against the house. A broker could always manipulate the price especially if they dont follow actual prices.

From what i gather so far CMC are market makers, and IG and City actually put together buyers and seller. Everyone recommomends diffrent brokers, but most dnt seem to pay attention to this.

So which brokers out there are playing games? and who's seriously investing money?

alemcodon said:

ive read quite a few posts about Market Makers, what i would like to know is which brokers out there make their own markets and which actually buy the underlying.

I dont see how you could trade cfds when you are 'playing' against the house. A broker could always manipulate the price especially if they dont follow actual prices.

From what i gather so far CMC are market makers, and IG and City actually put together buyers and seller. Everyone recommomends diffrent brokers, but most dnt seem to pay attention to this.

So which brokers out there are playing games? and who's seriously investing money?

Click to expand...

The important thing is that the price feed reflects the movement of the underlaying asset, combined with a good execution model. Almost all CFDs are offered by Market Makers. There are some CFDs offered by the exchange itself. I guess, in this case there can be a problem of liquidity.

I just stumbled upon one funny chart (see attachment). One of the mentioned companies had Antofagasta opened at 1567 on 6th of November.

That may give you an idea how it works.

P.S. Now I think that even if you have no stop order to be run they still can close your position on grounds of margin requirements etc. You short at £500 market goes down to £480 and you have -£1000 per point on your account because they closed you at £1500

maxima said:

I just stumbled upon one funny chart (see attachment). One of the mentioned companies had Antofagasta opened at 1567 on 6th of November.

That may give you an idea how it works.

P.S. Now I think that even if you have no stop order to be run they still can close your position on grounds of margin requirements etc. You short at £500 market goes down to £480 and you have -£1000 per point on your account because they closed you at £1500

Click to expand...

Hi

thanx for the info but im still kind of confused.

Is that chart from IG, i want to invest in CFDS but im extremely paranoid about brokers playing games. I had an account with waterhouse in the past and lost quite abit of money with spikes in the prices.

I feel as though i got ripped off and i want to change broker, there seems to be considerable debate amongst everyone as who is the better broker. I read some posts saying IG and CIty Index are not market makers, and others that say they are.

If a broker is a market maker, then surely they only profit if i lose, therefore they can have spikes and close any potentially profitable trade (another thing i experienced at waterhouse).

is there any broker that actually invests the remaining margin in a stock how CFDS are SUPPOSED to work.

I am sure that all of them are making price themselves. However I believe that fluctuation (from the underlying) is smaller and smaller as competition and common sense pressure increase with time.

I am sure that all major players can be asked to refund if you got caught in moves like on the picture.

I was curious and went through 3 demo accounts with major guys and the only one had like to like chart on that stock. But I am sure if I got through 10 stocks I will find differences anyway.

Hence if you want to trade CFDs you can do it with names you can 'somewhat' trust. You shouldnt trust your own money at 100% to anyone (spreadbet or regular broker).

The only note is that you have to know the rules using SB and CFD providers. If you scalp you will be bounced eventually. So dont complain.

P.S. isnt Waterhouse a proper borker? How come you had spikes and were out of profitable trade?

dont get it...

I have to admit.... I had an account with one of the mentioned guys opened a year ago. I was very tempted to discover the truth, so I paid few quids to subscribe for a month of LSE L2 data. I also have LSE native feed. I compared prints between the CFD prints and the LSE prints. They were identical - I checked many times through the day. I used to use IB and their data was much worse although they are real brokers.

Perhaps my scepticism was not appropriate. Although they have spikes I am sure the days of blatant prices manipulating and shaking people off their money are over.