binary rejecting bets yet again

[stevespray]

Rhymester…..

I have discussed this issue, at length, with several experienced IG Index customers. There is pretty much a general consensus. The facts that you have stated appear correct. Many people have suffered similar sharp practise surrounding dealings. Most people suggest that there are certain dealing patterns (ie the trades you make) that get picked up. Most commented on are shorter term ‘scalps’ (just trading the binaries for a few points and then closing). It appears that, without warning, you account can get switched to ‘manual dealing’. This basically appears to introduce a delay in execution where, as you have pointed out, the price will more than likely move one way or the other. The rest is down to simple financial choice on IG’s part. In effect they are increasing the spreads by an unspecified amount and therefore the odds of you successfully trading are greatly reduced because, in effect, they are making a market after the event. In section 5.4 of the T&C IG appear to agree that they will only reject quoted prices in certain conditions. These conditions are stated to be ‘set out’ in section 5.5. The price moving in the timeframe after the order has been placed is not listed as a reason for price rejection. I have challenged IG on this issue and they have stated to me that there are other terms or conditions which are not listed in the customer agreement. They then go on to suggest that it is these other terms or conditions which allow themselves to reject any deal at anytime. If this interpretation is correct then there is clearly a conflict of interests between IG Index and its customers which is not being managed. It appears that IG Index are at liberty to introduce delays in execution and then base their decision on subsequent price movements. Of course they deny this but there is so much evidence to the contrary from some very experienced market dealers.

In my opinion, if you notice that your trades are taking far longer than normal to be executed then you are most likely being manually dealt with. If this happens then you would be foolish to try and trade. In such a situation the playing field is so far from level that you would have very little chance of success over an extended period of time.

Steve.

 

[Rhymester]

In my opinion, if you notice that your trades are taking far longer than normal to be executed then you are most likely being manually dealt with. If this happens then you would be foolish to try and trade. In such a situation the playing field is so far from level that you would have very little chance of success over an extended period of time.

Steve.

Thanks Steve...

I'm coming to the conclusion that the best chance of success is to set a relatively modest daily target and to STOP when it is reached... my big losses have nearly always come when I got over confident and greedy. One thing though... do you think an account is permanently set to manual dealing or does it start off automatic each day and then move over depending on the size and quantity of trades on the day?

Rhymester

 

[stevespray]

Rhymester…..

Personally I have no exact knowledge of what causes an account to go to manual dealing. A compliance officer has informed me that it is possible for a dealer to request that their system send all orders from a particular customer to him. When you dig around a little it all gets rather confusing. Quite often it is hard to get a straight answer to a straight question when speaking to the company.

It appears that all submitted orders are price checked as soon as you submit them. This is automatic and is carried out by their computers at the moment that your order is received. If your price is incorrect you should get a rejection within a second or so. From comments I have drawn from compliance it appears that once an order is sent for manual dealing a second price check occurs (by now of course an un-specified period of time has passed).

Some months ago I asked the Financial Ombudsman to investigate what I feel was a clear case of sharp dealing practice which breached the terms and conditions. Since that time IG Index have informed the Ombudsman that orders are not queued. In the case of my refused bet it took IG Index almost 40 seconds to decide that it wasn’t in their interests to let me close a bet on Dow for over £3,000. On the basis that they say that orders are not queued, but passed immediately to dealing staff, it would appear that the dealer in question sat looking at my order for 40 odd seconds while he decided if they were going to accept my instruction to close. Needless to say, in that 40 odd seconds, the market did eventually move away from my order level and he was able to reject my instructions on the grounds that the price wasn’t valid anymore. A clearer case of abuse you will not find. On that morning in question my account had been moved to manual dealing for some reason. Compliance initially stated that they would tell me why my account had been moved onto manual dealing but later declined to reveal why.

The Ombudsman’s investigations are still ongoing. They seem rather confused and are very busy so progress can be slow. It is interesting that in the dealing guide it is stated that “For you own protection you should establish a quote before giving your instruction” (or words to that effect). On that basis, I would have to ask how obtaining a quote protects you if IG Index can accept or reject instructions regardless of what is written in section 5.4 and 5.5 of the T&C.

Steve.

 

[Rhymester]

Steve...

Well they certainly seem to have all the cards stacked in their favour.. it will be interesting to see how you get on with your complaint.

Here are two occasions that I've lost money with them that you might like to hear about...

One was because a stop-limit was allegedly triggered even though the 'low' figure showing for the day was higher than the stop. I was told that the figures are just a guide and not to be relied on.

The other was when I placed a trade and the dealing area went grey as usual... then my computer froze. When I managed to get back on-line my bet was a winner but had disappeared. They actually admitted to having received my bet but said that there had been a delay between me sending it and them receiving it so it had been rejected.

I have also had cause to chase up winning bets that have disappeared from the open bets area but not appeared in the transaction history - it's always winning bets that go missing - they have always rectified this but I'll never know if they would do so without being reminded.

Rhymester

 

[Scripophilist]

The problem you will always face with all bets is that gambling bets are not legally enforceable. The bookie has the right to reject them but once accepted its difficult to squeak out of an obligation. That said I got a bet authorised recently with a bookie and three weeks later I am still waiting for a payout. Would be much better if we get the volume up on the exchanges then there is not doubt on settlement.

 

[stevet]

stevespray

whilst i am definetly on the side of the bettors - there are issues with pricing that could easily cause a 40 second delay before a bet was accepted

the spread bettors only offer trades based on the underlying futures contract and their own pricing algorythms - and for a simple example, if only one contract was showing as available at the bid and/or ask on futures - that of course would devalue the apparent ask bid pricing - and they would be nuts to give a price based on that

spreadbettors are only offering OTC contracts based on the real contracts - why not just trade the real thing or you just have to accept that in order for the spreadbettors to not screw themselves - they have to screw you

 

[stevet]

Rhymester

was the low figure that you could see off their own system and specifically for the product you were betting on?

if it was - you should get them to confirm why the low figure that triggered the stop was different to the one that they show on their system - their system is not pencil and rubber - its electronic and there can only be one low level - the same one that shows as their low - should also be the same one that triggers the stop - so get them to confirm if there are two lows that their system produces - one for the stop and one for the read out

and if there are two - i guess you are screwed - but they might answer why there are two?

and if there is one - ask them to send you the money they owe you!

presumably the bet they cancelled due to the "delay" was because your computer sent it when you restarted it or it unfroze and by then the price had moved away from the orginal level?

Steve...

Well they certainly seem to have all the cards stacked in their favour.. it will be interesting to see how you get on with your complaint.

Here are two occasions that I've lost money with them that you might like to hear about...

One was because a stop-limit was allegedly triggered even though the 'low' figure showing for the day was higher than the stop. I was told that the figures are just a guide and not to be relied on.

The other was when I placed a trade and the dealing area went grey as usual... then my computer froze. When I managed to get back on-line my bet was a winner but had disappeared. They actually admitted to having received my bet but said that there had been a delay between me sending it and them receiving it so it had been rejected.

I have also had cause to chase up winning bets that have disappeared from the open bets area but not appeared in the transaction history - it's always winning bets that go missing - they have always rectified this but I'll never know if they would do so without being reminded.

Rhymester

 

[stevespray]

Scrip……

I was under the impression that financial spreadbets were enforceable by law. If this is correct then it cuts both ways. Most of the spreadbet companies have a clear wording which states that your losses are not limited purely to the balance which is in your account.
With this in mind there has to be a point where the flip side is also enforceable.

I would agree that there is clearly a grey area which surrounds the quoting of prices. At the end of the day there has to be a set of rules drawn up which the spreadbetting companies, as market principles, must follow. At present most appear to state that a quoting of a price doesn't constitute an offer to enter into a bet at the quoted level. This quite simply is unfair and places them at a terrific advantage over their customers because they can simply introduce a small delay in dealing which gives them a second sight in deciding which way the market is moving.

I agree with you. The markets would benefit far more if people traded directly with the exchanges. However, and there is always a however, the spreadbetting companies still appear to offer enough incentives to induce people to trade with them even though punters are at a much bigger disadvantage regarding spreads and dealing procedures.

SteveT…..

I understand what you are saying with regard to the underlying futures markets, some times bids and offers can be thin. But having said that, we need to consider that IG’s Dow, at the time of my dispute, was quoted (out of hours) on a spread of 10 points. This 10 points represents very large depth of market in either direction in the real markets. I would also suggest that if the spreadbetting companies were going to try and use depth of market as a reason for bet refusal then they would have to make that aspect of their markets more transparent to their customers. You also need to consider that have the right to vary their markets away from and, more than, the underlying. The moment that they reserve the right to act in such a manner then they almost lose the right to use depth in the underlying as an excuse to refuse a trade as implicitly they are pricing their markets in a manner which they think is beneficial to themselves at that particular moment in time. If they are allowed to quote a customer a price, then subsequently obtain knowledge of a customers trading intentions, without having to honour that price then they are obviously gaining another huge advantage over the customers because they are essentially ‘testing the market’ without the obligation to fill customers at quoted levels. Having ‘tested’ the market they can then move the market to a level which again financially benefits them. The customers must have a quote which they can rely on full stop. You need also to remember that IG don’t obligate themselves to deal with orders in a given timeframe. I would also suggest that a dealing time of 40 seconds on a futures based product is completely unacceptable.

It is almost like the spreadbetting company thinks that it has a right to make money. Sure they offer a service which is slightly different from that of a traditional broker but essentially the service which they offer is one where they undertake an element of risk by, for the most part, betting directly against the customer. Ie they market make. In essence what they are doing is attempting to is to use a number of factors, which includes dealing practices which result in rejected orders, to limit that risk in a manner which is simply not available or allowed in the ‘real’ exchanges. In the real exchange, if someone hits your bid or ask they are filled period. There is no dealer acting as ‘supervisor’ who allows you a second choice if and when your advertised bid or offer gets hit. With that in mind, it is one of my legal representatives opinions, that any contract which the spreadbet companies make you sign which allows them to do this would be practically unenforceable on the grounds that it would be easy to demostrate that such a contract would be hugely biased in favour of the spreadbet company.

I might have to argue your point about the spreadbet companies ‘simply offering OTC contracts based on the real contracts’. The word ‘based’ is open to interpretation. Obviously any market is ‘based’ on an underlying. However, these parallel market makers have the right, as I have previously mentioned, to vary away from the underlying. They do this based on other factors available to them such as sentiment, TA and current customers positions and flow of orders. On that basis, trading ‘the real thing’ may give differing results.

Steve.

 

[Bintrader]

Hi Rymester

If you try my simple test in my post 17-08-2004, 03:47 PM (binaries only) that will give you a a way of checking the level of delay on your account. If this returns fairly quickly but not instantly then you are probably in my category b) of traders. If you ever get into category c) you are in trouble, although it is still possible to make money.

I have also found an increasing level of rejected bets on IG - quite simply if the market moves in my favour the price is 'no longer valid' - if it moves against me the bet is accepted. I'd love to know for sure if there is actually any manual intervention or if it's just a feature built into the software.

Rhymester

 

[steve34]

Hey,...........
this again seems to be ongoing situation with IG i have been using binaries for over six months and find I have had to develop 3-4 different stratergies which I use for short period of time I have been hit bad in the past losses of over 8k in one trade when they have picked up on patterns and what was succesful suddenly and (maybe im paranoid) turns against me then lo and behold I cant get out of my position and have to phone through!!!!!!!!!!!!!!!!!
so guerilla warfare I use 2-3 companies and rotate my methods of trading and to date things are working well spreading there loss and my gain.

 

[Scripophilist]

The only resonable way I have found of using IG is to use them to hedge else I can't rely on positions not completing it would kill me.

 

[Rhymester]

Had cause to phone IG's customer services:

Tried to close out a p[osition but it moved another 10 points away from me - bet not accepted "price no longer valid".

Resubmitted bet - price moved sharply - 40 points in my favour - after clicking mouse - bet accepted!

I was told that it was due to high volatility and that my bet had been passed to manual dealing.
They claim that bets are only rejected based on them moving too far away from the original price and (wait for this...) "THEY DON'T KNOW IF IT'S A WINNING OR LOSING BET - IT'S PURELY BASED ON THE DIFFERENCE" :!:


Rhymester

 

[stevespray]

They may not know if the bet is a winning or a losing one but they still know that the price you clicked can be bettered (ie like your claim of 40 points) or whether it's worse (ie the 10 points). There is a documentry on IG Index done by one of the TV stations. When an order comes for manual dealing they just check the market is still were the quote was, they then get the choice to either except or decline.

Interestingly their response defies logic. One would have logically thought that it would be better to leave order execution to the computers when markets got busy and volatile, this way several orders could be carried out in a split second without the need for dealer intervention which is clearly time consuming.

The introducing of this small delay, between submission and execution, which occurs when orders are sent to manual effectively gives IG Index an advantage. The dealer is able to use subsequent price movements in his choice as to whether deals are accepted or not. This is clearly an advantage in a fast market or in times of higher volatility so the question has to be asked...."Why don't you just let your computers handle the orders and thus because orders will be handled much quicker the chances of the price moving between order submission and execution would be much much less ?"

I think that it might be fair to suggest that there is only a few reasons why they might want to 'slow' the handling of orders in that way.

Steve.

 

[stevet]

stevespray

you forget an important point with regards to spreadbetting companies - that is, that they know they offer both a inferior price and inferior order execution propostion in relation to real markets

yet customers keep rolling up - and like most gamblers, these customers know they are only going to lose anyway - so better to be able to blame it on the spreadetting company than on yourself

so spreadbetting companies are offering a very valuable ( and expensive) service to all the gamblers out there who just KNOW that every loss they make is the spreadbetting companies fault and not their own

 

[stevespray]

stevet......

I agree and disagree with your points. Spreadbetting companies may offer a service but, as is the nature of market participation, they have no right to make a profit. In order to make a profit they have to be more skilful than their customers. The skill is suposed to be in the making of their markets and subsequent advertising of the spread which customers trade on. Apparently this is not enough of an advantge for them. They try to further gain an advantage by messing with the execution procedure. Of course, from the customers point of view, we are unable to calculate the real risk involved in these alterations to execution procedure. Of course the website advises us that "the price we see is the price we get"....Are they then not obliged by law to provide that service......I think so. Check with the Office of Fair Trading if you dont believe me.

I understand what you mean about people who lose money. They may indeed look at everyone but themselves and therefore there is a danger in having threads like these. However, I feel that there are clearly posts here, and on other sites, from people who are not that niave.

Steve.

 

[donaldduke]

I read that Nasdaq market makers up until the mid 90s were able to back away from quoted prices.
The SEC changed the order handling rules and put an end to that practice.

I doubt there are similar rules for SB companies here in the UK.