Broker's tricks to get your money

I read in a post that brokers play tricks to get your money and I was wondering what sort of tricks, and how do you deal with them?

rsd886647 said:

I read in a post that brokers play tricks to get your money and I was wondering what sort of tricks, and how do you deal with them?

Click to expand...

Your post is under Spread betting.

1. Order delays and rejections. Sometimes your orders will be queued, if the market moves against you while your order was queued they will fill you, otherwise if the market moves in your favour they will reject you. This could happen on both your entry and exit orders.

2. SB firms will run stops. If the underlying market came close to stoping you out but didnt, they may still stop you out anyway. This is because the triggering of stops can be based on their quotes and not on the underlying market.

eg you have sell stop loss at 100. The underlying market goes 102. The SB quote is say 101-103 and should never really go below 101 bid, but they can quickly quote 100-102 for a split second just to run your stop if they want to.

3. Slippage on stop orders in fast markets.
When a market spikes sharply (100+ ticks in a few seconds), if this spike passes through your stop you will often get filled at the worst possible price. This can also happens when trading the real underlying market directly, but will happen much more often when dealing through the bookies.

::and how do you deal with them?

Dont use crap brokers. Use only brokers that do not execute trades for you, but forward them to a regulated exchange.

Stops most of those tricks dead on.

NetTecture said:

::and how do you deal with them?

Dont use crap brokers. Use only brokers that do not execute trades for you, but forward them to a regulated exchange.

Stops most of those tricks dead on.

Click to expand...

But this is spread betting, so it has nothing to do with crap brokers and regulated exchanges.

Jack Hughes said:

But this is spread betting, so it has nothing to do with crap brokers and regulated exchanges.

Click to expand...

Really?

Why?

I mean, what stops you from simply not spread betting if your provider tricks you?

Simple.

You want to bet on EUR/USD... use Forex or futures instead. S&P - same. Just dont spread bet.

This is the one thing I really never understood with spread betting: it replaces a very reliable platform with an unregulated bucket shop. Why do people do that?

NetTecture said:

Really?

This is the one thing I really never understood with spread betting: it replaces a very reliable platform with an unregulated bucket shop. Why do people do that?

Click to expand...

A couple of reasons:

1. Profits are tax free in UK

2. Not enough capital to fund a proper brokerage account.

dcraig1 said:

A couple of reasons:

1. Profits are tax free in UK

2. Not enough capital to fund a proper brokerage account.

Click to expand...

Both are void

Re 1: yes, but if you get screwed.... is that really tax free, or do you loose more than you would pay in taxes? This goes down to the core that yes, you may save some taxes by going to some booker instead of an exchange, but if he screws you constantly.... what is better? And some peopel seem to have tremendous problems with getting screwed, it seems No broker can scew you like that on an exchange - not without overcoming quite some pressure.

Re 2: small money small gain. Now, if I take EUR 50 to a casino to get entertainment, great, but I wont really make money there Funding for brokcerage accounts and intraday margins for some stuff is so low that any lower capital moves the "trading" to "fun" from "money making"

NetTecture said:

Both are void

Re 1: yes, but if you get screwed.... is that really tax free, or do you loose more than you would pay in taxes? This goes down to the core that yes, you may save some taxes by going to some booker instead of an exchange, but if he screws you constantly.... what is better? And some peopel seem to have tremendous problems with getting screwed, it seems No broker can scew you like that on an exchange - not without overcoming quite some pressure.

Re 2: small money small gain. Now, if I take EUR 50 to a casino to get entertainment, great, but I wont really make money there Funding for brokcerage accounts and intraday margins for some stuff is so low that any lower capital moves the "trading" to "fun" from "money making"

Click to expand...

I agree with you. Nevertheless I'm certain that those are the reasons for quite a few on this forum.

dcraig1 said:

I agree with you. Nevertheless I'm certain that those are the reasons for quite a few on this forum.

Click to expand...

Well, so my argument stands: if you are tired getting screwed by a bucket shop, then go to an exchange where things are ordered and there are proper ways to handle bad fills.

Yes, you may have to pay taxes, but then this is a decision what is more important to you - support your bankrupt country, or getting screwed by a bucket shop Remember, you are a trader, so you get screwed anyway

I want to trade individual equities. I have a very small amount of capital. I want to use a good broker. Any suggestions?

Margin and leverage

Many are too blinded by greed to realise that if you do not know what you are doing then Margin and leverage are ways to take your money a lot quicker. Though the returns are obviously better on winners, but the losers dig a deeper hole in you balance. Margin should only really be used if you an experienced trader. I dont know many(if any) brokerage allows the user to decide how much or whether they would like to use margin, it is just accepted as the norm.

What can u do about it? Use Money Management more effectively.