Best Thread Spreadbetting, the myths and what is the reality?

[SimonK]

When it comes to these sorts of thoughts over underhand tactics of a spread betting company, things like this cannot stay secret forever, people inside IG spreads have to know whats going on and that will always make its way externally via whistle blowing and unhappy emplyee's etc etc etc. This sort of expsure would bring down any spread betting company for sure and the fact nothing does ever materialise that has substantial fact is probably proof in itself that they are albiet having issues via software and human error but not pure manipulation?

Not really. They may have been asked to sign a non-disclosure agreement.

 

[kwickwool]

Imagine IG or any spread betting company taking an employee to court because they whistleblowed on underhand tactics to expose them? Imagine the press?, it just would not happen. Not really related but McDonalds now never take anyone to court over liable claims as they are always onto a loser, same thing, IG would have nothing to gain and everything to lose.

 

[Black Swan]

ok, maybe I shouldnt have called it a trend, as it depends on your timeframe. But it was an out of the ordinary move at an unexpected time, i.e not during a scheduled news announcement. I still reckon this caught IG unawares.

I agree that generally the IG platform is stable, but I have seen it go down after huge moves before.

Saying that, I still made money from them yesterday

You could be right bud, it may have caught them "unawares", 'kin weird (the downtime)that's for sure, maybe it was a maintenance issue scheduled for today that got brought forward? I could ask but....
I used to get freaked/upset re. platform problems, now I just accept it as a price to do business. Naturally I felt it worse when operating on 3-5min tfs, (utterly pointless on reflection) now operating on 2-4hr tfs nothing is quite as hyper-critical; cost of spread, downtime, perfect entry, exit...etc..
I didn't make money from IG yesterday, tbh I traded like a total tw@t, everything 'behaved' as of normal, (in the markets) except me.

 

[Black Swan]

When it comes to these sorts of thoughts over underhand tactics of a spread betting company, things like this cannot stay secret forever, people inside IG spreads have to know whats going on and that will always make its way externally via whistle blowing and unhappy emplyee's etc etc etc. This sort of expsure would bring down any spread betting company for sure and the fact nothing does ever materialise that has substantial fact is probably proof in itself that they are albiet having issues via software and human error but not pure manipulation?

There is/are no underhand tactics...

 

[montmorencyt2w]

With all due respect bud who identifies this trend (swing), you? Looks perfectly tradeable (and was, on a 2hr TF) to me. If you're trading off dailys that's what happens; the longer trend has to change someday and it's hardly ever 'gentle' is it? and it (Cable) had been on quite a downward trajectory since mid late Nov so was arguably ready for a change in direction/sentiment...

There are infinite numbers of these types of, as you term it "parabolic", moves throughout the year and I've gained from many of them on several pairs. If it was an issue they'd never be able to take non farm trades or interest rate trades period. In conversation with IG you can always pick up the phone if you can't trade from the platform.

Having said that I was pissed of with the serious amount of downtime yesterday, but that was a once in a year event for me...be v. concerned if it happened often....

From discussion I've seen in another forum, I'd got the impression that those big moves were essentially an end-of-year low-volume issue.

I noticed some odd things happening on Tradefair during the last few days, with certain FX markets going "closed" in the middle of the trading day. May not be anything suspicious, but it made my "hmmmmometer" register.

 

[Jack Hughes]

It's hard to believe that a company like IG would be caught out by a 'parabolic' or any other move in the market. The only way I could imagine them losing much would be if an index or currency gapped hugely when all their clients somehow were trading in the same direction with guaranteed stops.

Years ago SB platforms used to crash and go out of action at the least excuse (especially FatSpreads), but they couldn't get away with that now, whether it's deliberate or not. Possible the Dec 31st problem was just the result of most of IG's employees being drunk or absent, or both, and who could blame them?

 

[SimonK]

From discussion I've seen in another forum, I'd got the impression that those big moves were essentially an end-of-year low-volume issue.

I noticed some odd things happening on Tradefair during the last few days, with certain FX markets going "closed" in the middle of the trading day. May not be anything suspicious, but it made my "hmmmmometer" register.

I have noticed that IG's prices sometimes show the orange "telephone dealing" symbol when prices move hard and fast. It seems to be some sort of fail-safe mechanism.

Again, just an observation from using the platform for 4 years.

In answer to those who think a broker couldnt rig a platform in their favour, I kindly refer you to Metatrader 5.

tbh, I'm not that bothered as I am consistently taking money from IG. It's just an interesting discussion topic.

 

[Ambrose Ackroyd]

I changed from trading US stocks with Interactive Brokers to trading forex with SB companies more than a year ago now.

I have encountered no more problems with SB companies than I encountered with IB.

I use IG Index, Dealing Desk and now ETX Capital ( free £100 credit to your account when you sign on ) and have not had any really earth shattering problems. Just the general day to day nigglers that you get anywhere.

There is no doubt that SB companies have improved massively over the past 5 years or so and I believe that a lot of the myths ( bad ones mostly ) surrounding them are just that.................myths.

You have to remember also that a significant part of the British population enjoy complaining about almost anything and it is somewhat of a national sport to complain, even though no problem actually exists.

 

[Black Swan]

I changed from trading US stocks with Interactive Brokers to trading forex with SB companies more than a year ago now.

I have encountered no more problems with SB companies than I encountered with IB.

I use IG Index, Dealing Desk and now ETX Capital ( free £100 credit to your account when you sign on ) and have not had any really earth shattering problems. Just the general day to day nigglers that you get anywhere.

There is no doubt that SB companies have improved massively over the past 5 years or so and I believe that a lot of the myths ( bad ones mostly ) surrounding them are just that.................myths.

You have to remember also that a significant part of the British population enjoy complaining about almost anything and it is somewhat of a national sport to complain, even though no problem actually exists.

I agree with yours and Simon's posts. Interesting you mention the UK complain mindset, sadly we love to moan but usually just shrug our shoulders and move on, too busy being worried' debt slaves'...

I might have mentioned this before but sometimes we lose sight of what a great opportunity this business is, especially as a start up. Look at the gamble folk take in setting up shop in the high street, or increasingly online without an edge/point of difference.

Compare that to the relatively low level of risk you can start trading in forex etc. were once you've begun to feel competent/confident you can capitalise yourself with a fraction of what it would cost to rack out a new greengrocers, and that's before you part with; rent, deposits, wages, insurance, stock...

Most businesses fail, those that succeed generally take 100K of start up capital the same in working capital and 3 years to break even meanwhile during that time you've engaged yourself as an unpaid revenue collector for the government...

You can be 'in the game' and profitable inside 2 years for a total outlay of ten grand...no brainer..

 

[meanreversion]

On the one hand, some businesses have extremely high barriers to entry yet are almost guaranteed to become profitable, e.g. opening and running a new branch of McDonalds. Other businesses have a very low barrier to entry, yet the profit is far more uncertain, e.g. trading. I've known many people who've started businesses over the years and the typical start up cost is (at the very minimum) £50k. It takes years to get things going, as Black Swan points out.

If you approach trading as a start up business, then you need to keep costs low and preserve capital/minimise cash burn rate. Furthermore, it is a medium to long term endeavour, so don't attempt to get rich in a hurry.

As for whether all these 'nasty' spreabet companies are trying to rip you off... I'm not so sure about that. Most banks have built their own dealing platforms to push to their larger clients.. the platform shows 2 way rates and will either hedge on an IB system (e.g. EBS in FX) if it can, or run risk itself within predefined parameters. If markets start to gap, the position usually gets dumped on the spot trader, but these shocks are not that frequent.

Spreadbet companies make money on volume and hidden charges (like roll fees). Volume is a big deal for them, which is why they rebate third party vendors (e.g. banks who white label the product and sell it to their clients).

 

[Jack Hughes]

On the one hand, some businesses have extremely high barriers to entry yet are almost guaranteed to become profitable, e.g. opening and running a new branch of McDonalds.

... Or starting a spread bet company, perhaps?

 

[gle101]

... Or starting a spread bet company, perhaps?

I think it is a very tough business to enter today, not much room for mistakes when it comes to internal risk management, considering the tight spread offered today. Fierce competition and clients that just want get off your back.

 

[Jack Hughes]

I think it is a very tough business to enter today, not much room for mistakes when it comes to internal risk management, considering the tight spread offered today. Fierce competition and clients that just want get off your back.

Yeah, I bet Simon Denham and his cronies cry all the way to the bank.

 

[vergis92]

Having tried most SB providers in the last seven years or so, my thoughts are:



1. They stop hunt

No, only as much as the real market does, in that there are always 'magnetic' levels with lots of orders being fired off.

2. The slippage took me out

In the real market this is always a possibility. In the SB world, where you're only trading their quoted price (as they all stress) slippage only happens because it's artificially added by the software when prices move quickly. They could instantly fill at exact prices if they wanted to, but then they'd lose out on their hedges in the underlying market (if they really have a hedge). IMO, they mostly add as much slippage as they think they can get away with, which, as Dante says, was too much in the case of VDM.

3. The platform froze

This used to happen a lot, especially with Fatspreads, but whether it was deliberate or not, they can't get away with it now everyone has fast broadband and decent computers.


4. They closed my account due to not liking me winning

Never won enough to find out(!), but they certainly try to make life difficult for those who trade short term (unless they lose, of course).

They accused me of cheating

I've never understood this, particularly the accusation that customers who have a faster price feed are cheating.

They only want losers

To maximise their profit, they'd be stupid if they didn't want a constant stream of new clients who almost invariably lose and don't need to be hedged. At the other end of the scale, it would be useful to have some exceptionally good traders who consistently win, and could be both hedged and shadowed.

Winning traders are most welcome as long as they are predictable and therefore easier to hedge, the only traders that may cheat SB firms are daytraders trading on extreme volatile news days, these only may cause a loss to the firm, but people like me being smooth, swing traders never cause a loss.

Also on manupulation of price quotes not all SB firms are the same, you can check the reviews on them.

 

[montmorencyt2w]

Winning traders are most welcome as long as they are predictable and therefore easier to hedge, the only traders that may cheat SB firms are daytraders trading on extreme volatile news days, these only may cause a loss to the firm, but people like me being smooth, swing traders never cause a loss.

Also on manupulation of price quotes not all SB firms are the same, you can check the reviews on them.

My emphasis - Cheat?

It's not cheating to trade the news on volatile days is it?

 

[Omoh101]

If the news is available in public domain (which it is), then how can it be cheating to trade the news?

 

[Jack Hughes]

If the news is available in public domain (which it is), then how can it be cheating to trade the news?

It's only cheating if you make a profit.

 

[piphead]

I use interactive investor and a couple of days ago I hit a stop loss when the neither the market or the graph (provided by them) got to that price
And in response to some of these threads- How can you cheat???

 

[montmorencyt2w]

I use interactive investor and a couple of days ago I hit a stop loss when the neither the market or the graph (provided by them) got to that price

They will probably say that their charts are only "indicative".
It is probably worth querying just to see what they say, but don't necessarily expect to get anywhere with it.

Ultimately, you trade on their prices, not the market.

 

[Omoh101]

".....Ultimately, you trade on their prices, not the market.

What is the alternative for financial spread betting :?: