At £1000+ Per Point, Which SB Company is Best for Intra-day Trading ?

[jkplay]

All interesting comments. I'd say that most SB cos will be delighted to take £1000pp bets, so long as you consistently lose. If there's any chance you know what you're doing (which I assume is the case), life will soon become very difficult! They'd soon spot what was going on if you tried splitting positions across accounts, too.

Interesting view. Why would they want to annoy somebody that gives them £2000 (FTSE example) in spread for every trade they place. I think you will find trading that size you will get a dedicated trader ,putting your orders straight in the market, and get all the schmoozing that a high roller should expect.

If it's in the market then I would bet money on them doing it for you.

JK

 

[fibonelli]

At £1000pp bet on, say, the FTSE100 gives a notional exposure on the bucket shop of £6.3 million.

It would be reasonable to put forward the argument that a bucket shop would make it very difficult for a client to succeed on a bet at £1,000pp. The dedicated trader would be your friendly "refer to dealer", endless requotes, frozen platform and other nonsenses.

Furthermore, the FTSE100 book of the bucket shop would in all likelihood be heavily out of balance requiring the bucket stop to go into the real market to buy an instrument to hedge its position in the event of the high roller making a successful trade eg a swing trade over a period of days or weeks.

The economics of a bucket shop is totally different to a broker acting as agent.

Therefore, a spread income of £2,000 on the bet pales into insignificance when you look at the total market exposure of £6.3million to the bucket shop, which it needs like a hole in the head.

 

[lurkerlurker]

Interesting view. Why would they want to annoy somebody that gives them £2000 (FTSE example) in spread for every trade they place. I think you will find trading that size you will get a dedicated trader ,putting your orders straight in the market, and get all the schmoozing that a high roller should expect.

If it's in the market then I would bet money on them doing it for you.

JK

Perhaps this comment from Simon Denham, MD of Capital Spreads will give you some idea:

"As an example we had a big sell order in the FTSE and [the dealers] tried to sell the futures only to miss the price twice (of course they, as with you, are not sure for a few seconds as to whether they got the trade which added to the losing move). By the time they got the hedge on the market was 4 points lower and the trade book £2000 worse off. The client still got the trade we got the loss."

(source)​

 

[jkplay]

At £1000pp bet on, say, the FTSE100 gives a notional exposure on the bucket shop of £6.3 million.

It would be reasonable to put forward the argument that a bucket shop would make it very difficult for a client to succeed on a bet at £1,000pp. The dedicated trader would be your friendly "refer to dealer", endless requotes, frozen platform and other nonsenses.

Furthermore, the FTSE100 book of the bucket shop would in all likelihood be heavily out of balance requiring the bucket stop to go into the real market to buy an instrument to hedge its position in the event of the high roller making a successful trade eg a swing trade over a period of days or weeks.

The economics of a bucket shop is totally different to a broker acting as agent.

Therefore, a spread income of £2,000 on the bet pales into insignificance when you look at the total market exposure of £6.3million to the bucket shop, which it needs like a hole in the head.

''There are those that do and those that don't - he who doesn't will study, learn and then preach like they do'' - JKPlay

 

[jkplay]

Furthermore, the FTSE100 book of the bucket shop would in all likelihood be heavily out of balance requiring the bucket stop to go into the real market to buy an instrument to hedge its position in the event of the high roller making a successful trade eg a swing trade over a period of days or weeks.

Thats right, I think that anyone trading that size would go straight into the market i.e the SB firm don't care if they win or loose and just pocket the spread and will want to pocket the spread of such a large client on an ongoing basis.

JK

 

[fibonelli]

Thats right, I think that anyone trading that size would go straight into the market i.e the SB firm don't care if they win or loose and just pocket the spread and will want to pocket the spread of such a large client on an ongoing basis.

JK

The cost of acquiring the hedge through paying broker commission and/or premium and/or market spread and/or slippage would substantially reduce the spread income or even exceed the spread income.

It's not in the interest of bucket shops having clients trading extremely large size where they have to continually hedge the position which costs money. Simple really.

 

[jkplay]

The cost of acquiring the hedge through paying broker commission and/or premium and/or market spread and/or slippage would substantially reduce the spread income or even exceed the spread income.

It's not in the interest of bucket shops having clients trading extremely large size where they have to continually hedge the position which costs money. Simple really.

0.5 spread on the FTSE100 futures - most SB's charge 2. Their commission would be a little under 1.5 x stake including broker fee's.

Simple really

I suggest you read my first response to your post and think before you try to preach.

The only way you will find out is by trading £1000pp yourself fibonelli - or at least pretending too and see what they say.

JK

 

[lurkerlurker]

The cost of acquiring the hedge through paying broker commission and/or premium and/or market spread and/or slippage would substantially reduce the spread income or even exceed the spread income.

It's not in the interest of bucket shops having clients trading extremely large size where they have to continually hedge the position which costs money. Simple really.

Agreed. For this sort of size, futuresbetting or similar only should be used. I would shudder to think about having a position this size in UK bucketshops! They could take ages to find you a quote over the phone, or not let you cover on the web platform, or take all day to pick up the phone, or tell you that they can't make a price in that size and will have to work the order, all the while you are losing a few £k per second of Other People's Money!

 

[fibonelli]

0.5 spread on the FTSE100 futures - most SB's charge 2. Their commission would be a little under 1.5 x stake including broker fee's.

Simple really

I suggest you read my first response to your post and think before you try to preach.

JK

and no slippage?

 

[lurkerlurker]

Guys, the question this thread was started to ask has been answered pretty comprehensively. Can we please leave it there? fibonelli raises an interesting point - at least with DA spreadbetting or pure DA you can use a market order to get out - if a bucket shop requotes you or declines a trade you are stuck until they let you out.

 

[jkplay]

Does any of this really matter??

Are either of you looking to trade £1000pp? I think it would certainly cause paranoia if it is not within your means and every move down would cause you to come up with all sorts of conspiracy theories. Believe it or not £1000pp is like £10pp to some people.

I think this is an issue not many people need to worry about and if they are looking to do it then they should get on the phone to the SB's and not on the web.

JK

 

[fibonelli]

0.5 spread on the FTSE100 futures - most SB's charge 2. Their commission would be a little under 1.5 x stake including broker fee's.

Simple really

I suggest you read my first response to your post and think before you try to preach.

The only way you will find out is by trading £1000pp yourself fibonelli - or at least pretending too and see what they say.

JK

I'm far too sensible to trade at £1000pp let alone at a bucket shop . i also don't do deception.

 

[ian]

Guys, the question this thread was started to ask has been answered pretty comprehensively. Can we please leave it there? .

 

[jkplay]

I'm far too sensible to trade at £1000pp let alone at a bucket shop . i also don't do deception.

You mean you don't have to capital to place a £1000pp bet and backtesting has become a way of life these days?

I would rather do it though a UK firm than one avoiding FSA regulation in Gibraltar. Also I could never keep that kind of money with any institution that isn't regulated by the FSA - all about risk/reward ratio with that one I suppose.

The people that trade that size do so because it is the only size that makes trading worthwhile. Why would a multi millionaire trade £10pp when it will make no difference to their capital?

Like lurker says this has been answered.

JK

 

[just_pondlife]

1000 a point!!!

Can you send me your system? Im doing a quid a point and would like to up my anti!

 

[TheMoneyMachine]

this is nonsence i traded a fraction of this and was requoted frequently.
putting orders in is different and the only way to go if youre spreadbetting but they obviously think highly enough of you to let you trade their money would they listen if you explained that for at least some of the trades it makes a lot more sense to use other sources?

tightstops

I can ensure you £1K+/point in the major spot currency pairs does not cause any abnormal execution problems.

I haven't the faintest what the rest of your reply means, could you please clarify?

Regards

TMM

 

[leu04jam]

I would agree with that. I work for a mid sized bank and the fx guys have about 400million in stops at 1.50 on eurusd. Imagine Goldmans, Lehmans, JPM etc etc. 1K+ is a drop in the ocean at certain levels/barriers.

 

[tightstops]

leu04jam you clearly arent aware we are talking about cmc spread betting. the moneymachine im assuming you are and i can assure you you will not get normal execution unless at that paticular level they give you a different platform or some other device that avoids the punter being requoted every other trade. just to clarify being requoted frequently is abnormal execution.
the last part that you seem to have misunderstood was a suggestion to trader33 (sorry cant be sure on who started the thread now)to encourage his backers to rethink trading that kind of size (if he trades at market) with a spread betting company paticularly cmc

 

[stevespray]

I have a couple of friends who deal in some pretty large volumes with a couple of the better known firms. Their relationship is completely different to that of the ‘£10 Per Point Dow Punter’ who is, to all intents and purposes, betting against the house.
When you start trading in the kinds of volumes being discussed the firm will realise that you are no mug and, put simply, they won’t want to bet against you. They will instead become your ‘tax efficient broker’. They will be looking to earn their money purely on a commission basis relating to how much they can tack onto the market spread. Dealing certainly will not be ‘automatic’ or ‘instant’. In all probability it won’t even be a case of delayed quotes – the most likely scenario is that the firm will allow you to trade providing that they have time to ‘work your order’ into the underlying market. This normally consists of you issuing your instructions (whether you want limit orders / a minimum or maximum price / or just an order executed quickly at the best available price). All this will reduce trading efficiency so there is no hope of trading that size and holding tight stops with a view to exiting quickly if you stop gets pinged. Dump that size straight into the market and your average price per contract will be miles away from the price at the moment that you pressed the button. Once your deal is ‘done’ and the order ‘worked’ your dealer will phone you back with the price and it is entered onto your account.

Your best bet (no pun intended) will be to negotiate with the individual firms and see who is prepared to offer what. With deals that size one imagines that they will be happy to invite you in for a sit down meeting to discuss your requirements.

As someone has already mentioned, you could of course just use one of those ‘direct access spreadbetting’ merchants. Again, with that volume your fee’s could be individually negotiated so your commission per contract was pretty small. When I enquired a couple of years back the commission per side per contract was well over double that of IB direct access (effectively adding well over 1 dow point to the spread on the leg in and another point on the leg out). The other downside is that you will have to work the order into the market yourself.

In many ways IB can not be beaten. If you are just running a ‘test’ in the early stages then you should look into setting up an offshore holding company and then carry on using IB. IB have forms for this. Once you know whether the system is working you can then look into migration to a spreadbetting firm.

Steve.

 

[Jack o'Clubs]

The other downside is that you will have to work the order into the market yourself.

Good post. My only comment would be that what you see as a downside, I see as an upside, even if you really trust your broker. At big size, I'd want complete visibility on how my order was going into the market, and that's best achieved by doing it yourself.