This weeks investors chronicle has a Buyer's Guide to spread-betting and CFD providers.
This quote is worrying
"One very active spread better is Chris Kobewka
As a better-than-average trader, he does not fit into the normal mould of a loser, and yet he still likes to bet small - between £1 and £10 a point. After placing a £2-a-point position with one leading company just after markets open every morning - and winning most of the time, at market opening times - he suddenly found that the spread-betting company no longer quoted Nikkei prices for the first five or 10 minutes of the trading session.
This account clearly presented a problem for the company concerned. Too small to hedge (as the Nikkei contract is bigger than £1 a point), the account was showing a consistent ability to win. The spread-betting company simply used its power to decide what prices to quote, and when, and then ceased to make a market during the time period concerned. Another firm stopped him trading via the internet after a large monthly gain. This highlights a fundamental problem with spread betting. Essentially, you are betting against the spread-betting company much of the time and, as demonstrated in this example, the behaviour of the company concerned suggests less than 100 per cent neutrality."
This quote is worrying
"One very active spread better is Chris Kobewka
As a better-than-average trader, he does not fit into the normal mould of a loser, and yet he still likes to bet small - between £1 and £10 a point. After placing a £2-a-point position with one leading company just after markets open every morning - and winning most of the time, at market opening times - he suddenly found that the spread-betting company no longer quoted Nikkei prices for the first five or 10 minutes of the trading session.
This account clearly presented a problem for the company concerned. Too small to hedge (as the Nikkei contract is bigger than £1 a point), the account was showing a consistent ability to win. The spread-betting company simply used its power to decide what prices to quote, and when, and then ceased to make a market during the time period concerned. Another firm stopped him trading via the internet after a large monthly gain. This highlights a fundamental problem with spread betting. Essentially, you are betting against the spread-betting company much of the time and, as demonstrated in this example, the behaviour of the company concerned suggests less than 100 per cent neutrality."