Binary bet restrictions ?

[feenix]

I can understand that SB companies are not worried how much their clients win or lose because they can cover their exposure in the underlying markets. But in the case of binaries (and here I'm talking about IG and Binarybet.com), they are not able to hedge their risks and rely on 2 way trade to make their profits. Just, for the sake of example, a punter developed a system that produced regular week in, week out profits, has anybody got any feel as to what the attitude of the companies might be, such as limiting the punter's stake to below the normal max of £100 or even to refuse him trading ?

 

[stevespray]

Feenix…

In order to answer your question you would need to consider the type of company that you are betting against.
In the case of ‘Binary Betting’ there are two distinct types of markets available. The first type is a company which simply acts as a ‘market place’ – It provides a place where customers can bet against each other – this type of company makes its money by skimming off a percentage of your trade size, almost like a fee for transacting.
The second type of company is a ‘market maker’. They generally operate by pricing their markets through a mathematical algorithm with a number of variable inputs such as current underlying price and current customer positions. In essence they bet directly against the customer. They take the view that their pricing model takes a small amount of ‘value’ off the customer each time they trade. The law of large numbers therefore predicts a small but steady profit over an extended period of time.

Let’s take your suggestion about a customer who develops a winning strategy. We could ask ourselves the following question….. “Which of the two types of company stands to lose if a customer has a winning run?” I would suggest that your winning run would not effect the first type of company which we discussed. They do not take a position against a customer and are in fact ‘market neutral’ at all times. They make their money by facilitating trade and on that basis it would not be in their interest to hinder customers trading activities.

This is not so of the second type of company. In the second type of company they act as your counterparty. If you win then they lose. In essence you imagine that you are purely betting against their pricing algorithm. If other posts on the subject are to be believed then it is naïve to think so simplistically. As well as acting as market maker the company is also in control of execution procedures. This presents potential conflicts of interest which I imagine is the basis of your post. My personal view is that certain market makers attempt to gain an advantage by not executing trades immediately. In some cases deals are routed for manual dealing when computers could just as easily execute the trade in an instant. There is a reason for this type of manual dealing. The companies know that during the delay, which is the nature of manual dealing, the market will carry on moving. This effectively gives the company an element of hindsight with regard to its previously quoted prices. If the price has moved in a manner which favours the company (reduced your profit / increased your loss) then it makes financial sense to reject your order even if your order was valid when you submitted it. Of course, when the boot is on the other foot, and the price moves further in your favour it makes financial sense for the company to accept your order because they know full well that rejecting your order would lead to you re-entering the order on even more favourable terms.

You should research some of the threads already made on this subject. In my opinion there is a common central theme – when customers become successful they find that their ability to deal instantly, at the quoted price, is removed. Instead they find that deals take 30+ seconds to be dealt with and subsequently they suffer a massive and unacceptable increase in the number of orders which get rejected when prices move against them. So, to answer your question – Do certain companies ‘take action’ against successful clients? My answer would have to be a resounding ‘Yes’ – they screw with your execution procedures which, in effect, increase your dealing costs to a point where it is not feasible or safe to carry on.

I hope this helps answer some of your questions,
Steve.

 

[feenix]

Hi Steve,

Thanks a lot for your most informative and useful post.

Cheers, Feenix

 

[Clement Attlee]

The reality is that IG and Binary Bet.com on a regular basis restrict access to their online platform to traders who are showing big profits. They appear to have some sort of screen where they screen out large profit makers even if the profit maker is showing huge P/L swings.

An exchange like Tradesports.com or binexx.com will never restrict your access because you are making money. TS is the best bet as they have the most liquidity and smallest order input delay.

 

[stevespray]

Mr Attlee - Would you like to state your connection with Tradesports?

Many thanks,
Steve.

 

[Clement Attlee]

Steve, I'm just a heavy trader over there that's all.

 

[nutter punter]

An exchange like Tradesports.com or binexx.com will never restrict your access because you are making money. TS is the best bet as they have the most liquidity and smallest order input delay..

You are joking? Binexx are not an exchange their prices are fed by a market making programme. When they first started it was so easy to make money out of them that loads of us did. As a result they widened their spreads, infast markets pulled their bids/offers and in other cases slowed the system down so that you could not lift or hit prices as advertised.

This is why they have no volumes now and they are basically a joke !

Tradesports gives the initial impression that it is liquid but it is definitely not as their means of calculations of volumes is iffy at best.

If you want to trade decent size just stick it on Betfair. I have lost count of the number of times that people have stuck up a 5 grand bet and it has dissapeared in a split second. No other exchange will even go near that sort of bet as they are all seeded by market makers.

PS all of the above applies to hourly FTSE where the most fun is to be had.

 

[feenix]

Hi Nutter Punter

I read your post with great interest. You appear to be very experienced at the binary game. But for a novice like myself I'd be grateful if you could spell out more fully what you mean by the expression 'seeded by market makers'

Many thanks, Feenix

 

[nutter punter]

In Binexx case it means although they would love you to belive it is a proper exchange like Betfair where punters play against punters, Binexx does not have sufficient players. Therefore almost all their prices are produced by a market maker or market making programme. As a result; if for instance you think a particular market is going up and you lift their offer, you are trading with their market maker. As a result he will now skew his prices or reduce his offer size. In extreme cases he will **** himself and pull all prices. You will have no possible out and you will have to let the trade run until its natural conclusion.

Binexx have so few customers that I would bet at least 98% of the trades you might engage with them will be with their market maker and not with another exchange player.

If I were you and you want to trade hourly FTSE do it on Betfair. For other trades maybe use Binarybet but the problem with them is if you are succesful they will go out of their way to stop you getting the price you want or the volume you require.

 

[feenix]

Thanks for the explanation. I'm currently trading the hourly FTSE's on Binarybet and I'm quite comfortable with the way that works for the time being. But I'm only trading quite small amounts at the moment and your advice might come in useful if and when I'm trading larger amounts.

 

[nutter punter]

Feenix I would suggest using Betfair as opposed to Binary for hourly bets. The reason is that Binary have a very wide spread particularly around the equilibrium level of 2.00. If you want to trade inside that area you might as well post it on Betfair where 9/10 times you will get a fill. Make sure you take into account the Betfair commsion but overall you will be much better off.