It's so unfair...shut the (expletive deleted) up!

[trader_dante]

Took a trade with tradefair the other day got stopped out for 58 point win at 9.11 on the usd/chf at 1.0477

Luckily i was using metatrader to see the position as both spikes, which didnt even occur and were in fact minutes ahead of the stop being executed, did not take place on their graph.

I took a snap shot of the screen and after a night of searching for the names of the directors of tradefairs holding company and phone numbers i rang the help desk in the morning expecting to give them some right abuse but unfortunately the phone was answered by a nice sweet girl who couldnt have been more apologetic and quickly got a dealer to reinstate the position but the question is if i hadn't noticed would they have done so ? (the trades still going strong) my guess is NO!

I've had this many, many a time. They will always reinstate. Always. But they have to be aware its happened in order to do so.

It always pays to have another feed. MetaTrader is good for this but you can always check highs and lows with other free charting providers on the web.

 

[leovirgo]

Hey everyone, I'm sorry if I caused any offence with the title.

And I apologise if I come across as arrogant - It really wasn't my intention. The fact of the matter is I will never be able to get too big for my boots because the market humbles me on a regular basis...

I just keep seeing posts all over T2W complaining about how unfair it is that the SB firm went down during a bit of news or it's so unfair that the spread suddenly widened...or how unfair it is that you traded on a price 600 ticks out from the underlying but the company wouldn't let you keep the profit...this and that...and I am just trying to say that most of these things happen in the real market.

Markets close at the most inopportune times (e.g. Eurex went down during the last surprise interest rate cut) and spreads widen dramatically. I nearly had a heart attack when I started futures trading and saw how thin the Cable ladder gets sometimes for no apparent reason.

As for prices spiking. There have been situations where a fat finger causes a huge blip down...you buy at the lower price...it comes all the way back and you close out for a huge profit...then you find the exchange reverses the trades so you never bought at the lower price and you find yourself suddenly short and massively offside. How is that for fair?

Yes, I know DM is more transparent and perhaps SB firms need better regulating but I also know that it is easy to blame the SB broker when you lose or something inconvenient happens and not take responsibility. There comes a point when you have to stop moaning and do something about it. If you can't make money with Capital Spreads, don't trade with them! If you find that you HAVE to trade with an SB firm but they won't let you win as a scalper, don't scalp!

I really am sorry if I've come across in the wrong way but I just think this is a big boys game and you can't whine when things go wrong, you have to overcome problems by changing game plans or thinking outside the box.

I'm sorry if anyone out there now has a disagreeable opinion of me but being helpful to people only ever got THEM so far. Sometimes you have to give a reality check.

Well said TD. And the mods have done their job by removing offensive word from the title.

I respect all good traders, who try to help newbies and wannabies, and TD is definitely one of them - unlike some posers who have never contributed anything useful and indirectly promoting SBs.

 

[TWI]

A simple process of running a system back through time and then gradually increasing slippage costs will show the truely devistating effect of this on long term performance. Unless you are trading positions that on average win a far greater number of ticks than they lose then I think that spreadbetting is not your ideal platform. The best way to complain about SB firms is to move your account, everything that I read about the bad experiences is what you sign up to with these companies.

 

[Phenyo]

Thank you for that which you have shared TD, I am on many levels a newbie and understand that which you were sharing. In essence taking upon a more proactive approach to that which we do and in light of the probability of challenges we may face.

 

[viclondon]

In the last couple of weeks I have been reading a lot of (maybe all) threads about DA brokers and SB firms as I want to open a couple of trading accounts and need advice about which way to go.
I will probably be avoiding SB after the huge amount of bad press and complaints I have read here about practically all of them. I have decided to go with IB and Tradestation.
I certainly may be wrong and would appreciate if someone will correct me, but my conclusions after weeks of reading are:
- SB firms give the possibility of trading to people largely undercapitalised. The advantage of being tax free is largely offset by higher spreads, several sorts of tricky games they play and price manipulation.
Worst than that in most cases they do not allow constant winners to trade, and/or make their life as difficult as possible.
Their business model does not allow them to be competitive with DMA brokers and they can only rely on customers who keep losing; they coudn't make a profit if they should hedge their positions (remember they would have to pay taxes on their wins on the real market)
-Regarding DA brokers, I have hardly read any complaints at all regarding dishonest behaviours, the only problems reported generally regards occasional malfunction of their platform; other times people ask for higher margins (not a good idea at all IMO) or the possibility to take smaller positions.

As I stated above this is the impression one gets reading this forum and I think there must be a lot of truth about the debatable image of SB firms, as too many people are reporting abuse.

Finally I believe that the main interest of a forum is to warn users from possible scam, so I don't really agree with the idea that people should stop moaning if they get rip off by SB

 

[trader_dante]

- SB firms give the possibility of trading to people largely undercapitalised. The advantage of being tax free is largely offset by higher spreads, several sorts of tricky games they play and price manipulation.

It really depends how you trade, what markets you trade and how you trade to be honest mate as to what route you should go down.

- Worst than that in most cases they do not allow constant winners to trade, and/or make their life as difficult as possible.

I don't think is really true.

You need to be careful who you are taking advice from.

You say you see a lot of posts about it but just bear in mind that its often the losers who moan.

- Their business model does not allow them to be competitive with DMA brokers and they can only rely on customers who keep losing; they coudn't make a profit if they should hedge their positions (remember they would have to pay taxes on their wins on the real market)

They make money through their spreads mate so they would still make a profit regardless of whether they hedged, I believe.

-Regarding DA brokers, I have hardly read any complaints at all regarding dishonest behaviours, the only problems reported generally regards occasional malfunction of their platform; other times people ask for higher margins (not a good idea at all IMO) or the possibility to take smaller positions.

LOL. Forget about "reading" about dishonest behaviour. Open a DA account and see if you think its any fairer than spreadbetting when the market suddenly closes or the spreads suddenly widen, or you cant get out, can't get a guaranteed stop, need to put up a large amount of margin, the exchange goes down, someone fat fingers etc etc.

Half the reason people are so misinformed is because they haven't traded in the direct market. Give it a go alongside SB and see what you think.

 

[viclondon]

It really depends how you trade, what markets you trade and how you trade to be honest mate as to what route you should go down.



I don't think is really true.

You need to be careful who you are taking advice from.

You say you see a lot of posts about it but just bear in mind that its often the losers who moan.



They make money through their spreads mate so they would still make a profit regardless of whether they hedged, I believe.



LOL. Forget about "reading" about dishonest behaviour. Open a DA account and see if you think its any fairer than spreadbetting when the market suddenly closes or the spreads suddenly widen, or you cant get out, can't get a guaranteed stop, need to put up a large amount of margin, the exchange goes down, someone fat fingers etc etc.

Half the reason people are so misinformed is because they haven't traded in the direct market. Give it a go alongside SB and see what you think.

I will keep your advice in mind and will try to give a chance to a SB firm alongside the two DMA brokers so that I can compare in real life.
I have had a lot of experience with DMA brokers in the past, although not in this country and must say have never experienced any of the "tricks" reported by SB clients.
I still keep reading threads to decide wich SB to try; I will post my experience after a few weeks, hope will be positive

 

[viclondon]

They make money through their spreads mate so they would still make a profit regardless of whether they hedged, I believe.

This is really the major point: I don't think that SB firms play their dirty tricks because they are all bad guys, it is just their business model that does not allow them to have winning customers, at least under a theoretical point of vue.
You certainly have a lot of experience with SB so can give me a different answer, but in theory this is a situation:
- Let's assume that a SB firms has only winning customers, 1,000 customers winning an average of 100k a year. That makes £100mm of turnover.
Let's assume they charge in spread twice as much as the average DMA broker does in spread and commission. Let's say the average customer spend 4% of his wins in spread (including winning and losing trades).
The SB firms will of course have to hedge all the positions on the market, otherwise will go bankrupt. Their income will be £100mm*0.04 = £4mm, minus the cost of his own transaction in the market for hedging: £100mm*0.02 = £2mm. Still £2mm left which should be enough to pay expenses and some profit in the case of a very small firm.
The problem is that in front of £100mm outgoing for customers' wins, they will show at the end of the year £100mm of taxable market wins (since they would take the exact trade as the customer). Assuming 40% tax braket, the postion of the SB firm will be: -100+(100-40)+2= a loss of £38mm before general costs.
- On the other hand a DMA broker in the same position will have just an income of £100mm*0.02=2mm before costs, as customer' wins (or losses) do not affect their books.

This is the impression I have based on the way their business work; if I am wrong please let me know and explain.
Thanks

 

[TomTom]

trading is trading, however when you trade through a SB Firm, you get an adiquate platform & low margins, indeed there quotes are squered but for a person with a small ish trading account SB is the best way to learn the business.
Trading through DMA is much easyer and is much cheaper in the long run plus you get to trade at real market prices, you decide wheather its a goo or bad thing,
Example the guy woke up to finf gold went through its stops over night only to find his SB quotes were shy of $2 of the underlieing instrument.
In this case The SB firm would of had much heaveyer longs so squered the price lower, other wise the guy would have been stopped out.
Worth considering ehh squered prices that are been $2 squered on a small price that has a range of $2-$10 a day , god only knows who people make money.

 

[ccclarette658]

This is really the major point: I don't think that SB firms play their dirty tricks because they are all bad guys, it is just their business model that does not allow them to have winning customers, at least under a theoretical point of vue.
You certainly have a lot of experience with SB so can give me a different answer, but in theory this is a situation:
- Let's assume that a SB firms has only winning customers, 1,000 customers winning an average of 100k a year. That makes £100mm of turnover.
Let's assume they charge in spread twice as much as the average DMA broker does in spread and commission. Let's say the average customer spend 4% of his wins in spread (including winning and losing trades).
The SB firms will of course have to hedge all the positions on the market, otherwise will go bankrupt. Their income will be £100mm*0.04 = £4mm, minus the cost of his own transaction in the market for hedging: £100mm*0.02 = £2mm. Still £2mm left which should be enough to pay expenses and some profit in the case of a very small firm.
The problem is that in front of £100mm outgoing for customers' wins, they will show at the end of the year £100mm of taxable market wins (since they would take the exact trade as the customer). Assuming 40% tax braket, the postion of the SB firm will be: -100+(100-40)+2= a loss of £38mm before general costs.
- On the other hand a DMA broker in the same position will have just an income of £100mm*0.02=2mm before costs, as customer' wins (or losses) do not affect their books.

This is the impression I have based on the way their business work; if I am wrong please let me know and explain.

in general if a big client places a trade and it immediately goes his way we will lose money..
Simon

Slippage is not just encountered during busy times, in fact the worst times are when the prices are not moving very fast in the actual market but the SB prices do not keep up, and in fact, the worst time is after hours as I have expressed in a previous post.

For spreadbetting, with the games played by the spreadbetter companies aganst the public betting their pennies, crystal balls are needed, because you need to have extra pairs of eyes all the time.

Exactly, and if you had gone long at the very absolute bottom and be requested additional margin without cause you would not like it. Nor would you like it when holding your position in the inevitable rise you recieved telephone calls to persuade you to close it. Nor would you like it, on picking the absolute top and on paper to be more than £30,000 in the money to be made to wait and wait, only to be closed out at a lesser figure, and all these carbunkles that beset traders who are consistently winners, until you get really bored and move on.

:idea:

 

[glyder]

I think spreadbetting is a good way to get the feel for real trading with only small money on the line. But the spreadbetter firms definitely do play games. Read their ToB, parts of it allow flexibility for forms of price setting (or manipulation,) at their discretion, esp out of market hours but inside them too. Quite how they get away with this in terms of 'best ex' rules I don't know. But even at the best of times (which this is not), I somehow get the feeling the regulators give SB firms more leeway as they think spreadbetting customers are gamblers who have only themselves to blame for whatever trouble they encounter, whereas they see sharetraders as respectable types or widows & orphans requiring more protection.

However, having said that once you know what their game is you incorporate it as a part of the market action and adjust your trading accordingly. You can win, for a time at least. Higher time frames are easier. Always open , and use, accounts with more than one firm. Several times I have complained about losses where I felt they had unfairly tampered with price and they have given me the 'benefit of the doubt' as they called it.

I have read that FuturesBetting - Financial Spread Betting Homepage are a different kettle of fish cos they hedge every trade, and never delay or repeat quotes or orders,but I haven't explored that avenue yet.

Of course I take on board TD's points that DA is tricksy in its own ways too. It seems its all a part of the game.

 

[TheGoose]

LOL. Forget about "reading" about dishonest behaviour. Open a DA account and see if you think its any fairer than spreadbetting when the market suddenly closes or the spreads suddenly widen, or you cant get out, can't get a guaranteed stop, need to put up a large amount of margin, the exchange goes down, someone fat fingers etc etc.

Half the reason people are so misinformed is because they haven't traded in the direct market. Give it a go alongside SB and see what you think.

Guys, I work at Spreadex

I really do laugh when I see posts complaining about SB firms closing winning accounts. We have never closed a genuine winning account in the time I have been here, 7 years.

If you become a consistent winner on large size, we still might not even hedge - I accept trades all the time selling £100 when there is one lot on the bid. For the clients who deal in large size on the phone, then we hedge and apply a standard charge.

Take a look at the quote above, try DA, you will encounter these problems and then you are not likely to complain about the provider and will learn how the real market works,

Ian

 

[donaldduke]

I day trade both SB and DA and am profitable at both.
At this stage my DA winnings are almost 10 times the size of my SB winnings.
The reason is simply the SB firms will not let winning day traders trade decent size, you just cant do it. On the other hand if you are loser you can day trade all the size you want. (This might not apply to long term traders, but defintely day traders who need fast online execution will have this problem).

Example.
If i trade an SB account in my wifes name side by side with my own, two windows opened on the same PC. My orders will get rejected her identical orders for the same size will fill no problem. If i switch to her account and stop using mine it will only a matter of time before her account gets the same treatment.

Even at a Casino the max bet size is set the same for everyone!

I trade DA on futures instruments that all have FIFO order handling rules. Those markets are fair to every player.

Spread Betting is just licenced scamming, always has been and always will be. The goverment are in on the racket as they take their cut as betting duty and corporation tax.

I think it is important to highlight the scams that go in the spread betting industry.
When you walk into a Casino, at least everyone knows that the roulette table is stacked against them. Spread betting companies resort to all sort of hidden dirty tricks on day traders similar to a casino resorting to using a magnet under the roulette table.

The SB regulators turn a blind eye to this stuff as its not out in the open and they believe that all SB punters will lose in the long run anyway.

 

[TheGoose]

All kinds of hidden tricks, like what?

What is your idea of decent size? shares, indices, currencies, commodities?
If a client wants to buy 100,000 BP shares is it that unreasonable to ask them to call in and give a limit?

Ian