Let me take an example. Capitalspreads is owned by London Capital Group Ltd.. LCG licenses the software platform and hardware (servers) to many other companies who like to set up a SB operation. In fact LCG is still responsible for clients funds.
have a look at Futuresbetting.com, they are not bookies as they hedge 100% of our trades. Larger size than most other SB firms...
Phil Mibbutz
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All they're trying to do is make more money, so it's probably one of the least suspicious things about SB.
yakatan
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OK thanks, I get it now. It is almost like a franchise, only the name you give your SB is different to that of the parent.
So I suppose I could license my platform from LCG and call it Loseyourmoneyrealquick!
Yes, besides LCG will own the name, so I guess they will not allow you to freely name the SB.
correction...they KNOW (90%+) are going to lose it, and more besides.
Especially with a bank of computers to help accelerate the process.
Spreadbetting companies are bookies with lots of computers.
See my earlier thread "where are all the spreadbetting millionaires?"
And I do not mean Stuart Wheeler
yakatan
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I read your thread and posted something there. Does Options express hedge the clients positions or do they use the same model as SBs?
mTraderk2a
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I have IG Index, but recently opened GFTuk. The dealbook platform is quite advanced, but what really got my attention with GFTuk was the tight spreads. Better than IG Index.
I have only just got started with it. So if someone has more experince with them, then please make a comment.
I have only just got started with it. So if someone has more experince with them, then please make a comment.
Yes I would open a live SB account with them, if it wasn't for the huge account deposit. Little bit too much to my liking, in order to test them out.
mTraderk2a
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I opened one with £500 sterling, which is not the normal amount. Ask they should open it.
Ok, they might have reduced the deposit for the live account.
Is that for the standard account, not just for trading FX?
Yakatan...OptionsXpress are a direct market access broker, allowing you to trade in the real market, not the phoney spreadbetting market. They do not hedge client positions because they are neutral, so they do not have to
This is not a "phoney" market. Yes SB's are Markets makers, but the movement of the price feed reflect that of the underlying asset. The same goes for most of the CFDs. In percentage how many lose trading options, do you think?
yakatan
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gle101,
I think what Pippppin is saying is that the prices quoted by SB firms is at the discretion of the SB firm hence phoney market. SB firms will say that they follow the market as closely as they can what is important to note is that they are not obligated to quote you the market price because as you say they are Market Makers hence have the freedom to quote their own price. If you are in a trade making a killing and want to close the trade you are at their mercy, you can't sell into the wider market and get a competitive quote. They can quote you whatever price they want, re-quote you, freeze your platform out etc. I'm not saying they all do all the time but the set up is such that it is too easy money for them not to do it.
What do you think?
No, I don't think this a description that fits on how the SB market is operating today. The price they quote must reflect the movement of the underplaying asset. They cannot as you say, quote any price they want. This is also the intent of the MiFID financial directives, which most SB companies have today signed up for. There is of course cases, when a SB does not behave accordingly, by not following the rules applied by the industry. Sure, they play games at times, and as you say, make it very hard to exit a trade or give too many re-quotes, freezing and such. But by large it has been an improvement over the past years, and I think this will continue as competition is increasing. SB, being market makers, one must include risk of misuse in your personal risk management profile, by having a backup if something goes entirely wrong. This includes for example, being able to hedge your position at some other SB. Also applying trading disciplines as, restrain from yourself trading when the risk is increased, such as during important news releases.
gle101....firstly, OptionsXpress do not just offer options - they enable traders to trade options, stocks and futures - directly in the market. You are right - I am sure many traders lose trading options. But they are trading a regulated market - it is the trader vs. the market. Not the phoney world of spreadbetting.
I would like to believe that spreadbetting companies have improved due to competition - but my own experience suggests not. They make the majority of their profits by winning the vast majority of bets their clients place ie transferring the money in a clients account into their own, by fair means or foul.
Yakatan - you have a good understanding of the the process!
Well, every trader has to find its market and platform to trade. Whether it is the futures, options, CFDs or Spread betting. All these has its advantage and disadvantage depending on your experience and level of entry. I can understand you have had some bad experience trading with SB, but this doesn't make it a "phony" market. You must understand the platform and market you are trading, whether it is DMA or SB.
yakatan
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In the first half of your post you disagree with my evaluation of SB methodologies and in the second half you seem to agree. My contention was that they have a lot of leeway to not be above board when they don't have to be and as a consequence clients lose money and confidence unnecessarily and this is the whole crux of the matter . I think the second half of your post agrees with my contention.
Overall, clients don't lose money at SB because of the so called bias against you. They lose money because traders don't apply proper risk management, as a vital part of a trading strategy.
