You're being disingenuous here. You don't provide the Spread Bet product - it all goes through IG or CMC. Neither of them will tolerate scalpers any more than Capital Spreads. You don't mind them because you're passing through all the execution risk. They'll still get turned off dealing through you.
Best Thread Capital Spreads
You're being disingenuous here. You don't provide the Spread Bet product - it all goes through IG or CMC. Neither of them will tolerate scalpers any more than Capital Spreads. You don't mind them because you're passing through all the execution risk. They'll still get turned off dealing through you.
brendansvest
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What do you classify as scalping?
capitalspreads
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jack
by 'real world' i mean buying or selling the 'real asset' rather than making a bet on it. . 'Real World' trading is using DMA or your broker
professionals (and by this i mean retail clients who are termed professional by deed of thier experience and trading styles, I do not mean Banks or Brokers) trading in the markets must pay a wide array of costs that are just not attached when considering spread bets. I am not talking about in/out merchants trading FX.
One of the very real advantages in spread betting is not the tax free status afforded to capital gains it is the fact that there is no "Stamp Duty, or commision" attached to your trades. Stamp duty is 0.5pc and commissions generally start at around £15 and go on up from there (on both sides of your trade). On CS the entire spread around the underlying market price in FTSE 100 stock is just 0.1pc (ie.0.05 pc above and below the bid/offer on the LSE)
On a trade in £50 (5000 shares) for a boring stock like Barclays at £3.50 would cost a buyer (if he paid only £15 comms) £102.50 in various fees/taxes. With CS he would pay just £8.75. To put this into perspective Barclays is traded on about a 0.5p bid/offer spread on the Exchange. Your various costs would add over 2p to the price. This far outweighs the benefit of being able to place your order within the spread on a DMA platform.
On the other point about the prices available on the FTSE future i would recommend that you actually spend some time and study how often the bid/offer is actually less than 1 pip (and, by the way, is actually tradeable in normal human reaction speeds).
My definition of a scalper is not someone who attempts to make small profits in a small period of time. It is someone who only ever trades when he can see that our price (on CS' platform) is marginally slower than on his DMA screen and continually takes advantage of it. I am really sorry if clients cannot get their heads around this. Every time a client trades with us he is making a bet (and so are we) the chances of either of us winning are about 50/50 (minus the spread which is, admittedly, in our favour). If a client only ever trades when he is guaranteed a profit (i.e. in terms of horse racing, managed to place a bet after the race has already been run) at our expense why should we accept his trades? If we acted like this and only ever allowed clients to make trades when the market has already moved in our favour the regulators would be breathing down our necks and the FOS would be fining us every other week.
The one undisputed advantage of DMA access is that you can (very occasionally) get filled on the bid or offer side without the market actually going through your price. But in reality this is not much of an advantage as, if you sit on bids/offers hoping to be filled.. in general (a) you will only get your fill if the market goes against you (!) and (b) if you are right and the market does go your way it will nearly always do so without having first filled you on your order!
Simon
by 'real world' i mean buying or selling the 'real asset' rather than making a bet on it. . 'Real World' trading is using DMA or your broker
professionals (and by this i mean retail clients who are termed professional by deed of thier experience and trading styles, I do not mean Banks or Brokers) trading in the markets must pay a wide array of costs that are just not attached when considering spread bets. I am not talking about in/out merchants trading FX.
One of the very real advantages in spread betting is not the tax free status afforded to capital gains it is the fact that there is no "Stamp Duty, or commision" attached to your trades. Stamp duty is 0.5pc and commissions generally start at around £15 and go on up from there (on both sides of your trade). On CS the entire spread around the underlying market price in FTSE 100 stock is just 0.1pc (ie.0.05 pc above and below the bid/offer on the LSE)
On a trade in £50 (5000 shares) for a boring stock like Barclays at £3.50 would cost a buyer (if he paid only £15 comms) £102.50 in various fees/taxes. With CS he would pay just £8.75. To put this into perspective Barclays is traded on about a 0.5p bid/offer spread on the Exchange. Your various costs would add over 2p to the price. This far outweighs the benefit of being able to place your order within the spread on a DMA platform.
On the other point about the prices available on the FTSE future i would recommend that you actually spend some time and study how often the bid/offer is actually less than 1 pip (and, by the way, is actually tradeable in normal human reaction speeds).
My definition of a scalper is not someone who attempts to make small profits in a small period of time. It is someone who only ever trades when he can see that our price (on CS' platform) is marginally slower than on his DMA screen and continually takes advantage of it. I am really sorry if clients cannot get their heads around this. Every time a client trades with us he is making a bet (and so are we) the chances of either of us winning are about 50/50 (minus the spread which is, admittedly, in our favour). If a client only ever trades when he is guaranteed a profit (i.e. in terms of horse racing, managed to place a bet after the race has already been run) at our expense why should we accept his trades? If we acted like this and only ever allowed clients to make trades when the market has already moved in our favour the regulators would be breathing down our necks and the FOS would be fining us every other week.
The one undisputed advantage of DMA access is that you can (very occasionally) get filled on the bid or offer side without the market actually going through your price. But in reality this is not much of an advantage as, if you sit on bids/offers hoping to be filled.. in general (a) you will only get your fill if the market goes against you (!) and (b) if you are right and the market does go your way it will nearly always do so without having first filled you on your order!
Simon
brendansvest
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I would classify a scalper as a very short term trader who will take advantage of a slow quote or a bad price. Nothing wrong with that in my opinion. The client is still taking the risk on board by opening the trade regardless of reason and I, as a broker , would encourage it.
capitalspreads
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brendanvest
as ns states you are merely an Introducing Broker of other SB companies. They pay you a percentage of the opening spread for every trade and you then pay a bit of this back to your introduced clients. You are not taking the risk any of the trades etc etc. As you make your money from every trade made (not from whether that trade is profitable or not) then of course you encourage your clients to attempt to scalp.
If one of your clients started to 'scalp' (no matter how we define this) then their SB provider would turn them to dealer acceptance.
Simon
as ns states you are merely an Introducing Broker of other SB companies. They pay you a percentage of the opening spread for every trade and you then pay a bit of this back to your introduced clients. You are not taking the risk any of the trades etc etc. As you make your money from every trade made (not from whether that trade is profitable or not) then of course you encourage your clients to attempt to scalp.
If one of your clients started to 'scalp' (no matter how we define this) then their SB provider would turn them to dealer acceptance.
Simon
brendansvest
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No, we don't take the risk on but I assure you the dealers who execute our business have no problem with short term trading or scalping. I traded futures for 15 years and advise my client to trade on a short term basis. If Capital Spreads have this policy that's your call but please don't assume that everyone works in this way.
capitalspreads
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it depends on who you call 'the dealers who execute your biz'... if they are FX or futures platforms then of course they dont mind as the trades will be put through to the liquidity providers and the operaters of the platform will also take their slice of brokerage.
If you are advising clients on SB platforms (with as tight spreads as CS) to attempt to take advantage of minor price errors then I am pretty sure that the indivdual clients will soon notice the difference.
But in any case the crucial point here is that you, as an IB, make money when your clients trade so, of course, you want them to trade lots of times on a short term basis.
It would be like me saying that I thought it was a good idea for all my clients to trade in our most volatile and widest priced instrument (the Brazialian Index springs to mind).
Simon
If you are advising clients on SB platforms (with as tight spreads as CS) to attempt to take advantage of minor price errors then I am pretty sure that the indivdual clients will soon notice the difference.
But in any case the crucial point here is that you, as an IB, make money when your clients trade so, of course, you want them to trade lots of times on a short term basis.
It would be like me saying that I thought it was a good idea for all my clients to trade in our most volatile and widest priced instrument (the Brazialian Index springs to mind).
Simon
brendansvest
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As I am sure you are aware, you can't advise on Spreadbetting. The advice is for customers trading CFDs who trade at touch and dont pay away a spread. The commissions we charge allow these client to scalp and our providers are happy to facilitate this business. Most of these "scalpers" trade on an ex-only basis so we dont advise them on their trades. The difference is that we are happy to facilitate our customers in this way where it seems other brokers/providers are not.
ffsear
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I see this as a form of arbitrage rather than scalping.
Quote from Mr Denham below
jack
by 'real world' i mean buying or selling the 'real asset' rather than making a bet on it. . 'Real World' trading is using DMA or your broker
professionals (and by this i mean retail clients who are termed professional by deed of thier experience and trading styles, I do not mean Banks or Brokers) trading in the markets must pay a wide array of costs that are just not attached when considering spread bets. I am not talking about in/out merchants trading FX.
I am not talking about in/out merchants trading FX.
Doesn`t this sum up the contempt you view clients with in this way
How about some of these issues from this thread link
http://www.advfn.com/cmn/fbb/thread.php3?id=16309354&from=1
I think people are rather too kind on this board ......It appears to me nothing has changed at this outfit
jack
by 'real world' i mean buying or selling the 'real asset' rather than making a bet on it. . 'Real World' trading is using DMA or your broker
professionals (and by this i mean retail clients who are termed professional by deed of thier experience and trading styles, I do not mean Banks or Brokers) trading in the markets must pay a wide array of costs that are just not attached when considering spread bets. I am not talking about in/out merchants trading FX.
I am not talking about in/out merchants trading FX.
Doesn`t this sum up the contempt you view clients with in this way
How about some of these issues from this thread link
http://www.advfn.com/cmn/fbb/thread.php3?id=16309354&from=1
I think people are rather too kind on this board ......It appears to me nothing has changed at this outfit
brendansvest
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Exactly, why shouldnt a trader be able to take advantage of a price difference/discrepency/bad quote?
Real vs not real is nonsense, if SB posted a price that you took, they have to honour what they quote. Their inefficiency should NOT be their clients' problem.
You quote
We accept
End of
I can't see how FSA allows this to take place. Does that mean that an SB firm can theoretically get out of any obligation to honour a trade?
You quote
We accept
End of
I can't see how FSA allows this to take place. Does that mean that an SB firm can theoretically get out of any obligation to honour a trade?
tar
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Not true , IG and CMC make alot more profits than CS , i think they can tolerate scalpers more than CS .
brendansvest
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This is correct, scalping isnt a problem. I have also had instances with CMC where they have made a bad quote and we have taken advantage of it.
tar
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Although i did the same with CMC ,but i meant by scalping : frequent short term trading .
The bottom line is , CS will put profitable scalpers on manual dealing because ( maybe ) they r taking advantage of a bad quote , even if they r not .
brendansvest
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So, CS penalises short term traders by putting them on manual dealing. Not exactly fair is it?
tar
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Ofcourse not fair , they dont want profitable frequent short term traders period . Because only few dozens of those scalpers will wipe out all CS's profits !!
brendansvest
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This is the reason we deal with the bigger providers is that they can absorb the potential losses by this style of trading. The difference with us is that if the client has a problem you have more chance of it being resolved via an IB because of the relationship we have with the provider.
gamma
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Was the whole point of your debate with Simon to advertise the services of your company?
