Best Thread Capital Spreads
Why does someone trade on a wrong price?
I'm referring to the people who were making lots of small wins.
Simple they trade on your system, back the trades off to the real market whilst you collect the spread. You make the difference between your spread and the real markets spread were they to win on the trade.
However your business model isn't based on that is it Simon.
The only fools here are those that trade with Capital Spreads.
JonnyT
I'm referring to the people who were making lots of small wins.
Simple they trade on your system, back the trades off to the real market whilst you collect the spread. You make the difference between your spread and the real markets spread were they to win on the trade.
However your business model isn't based on that is it Simon.
The only fools here are those that trade with Capital Spreads.
JonnyT
stevespray
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Simon, To say that all the other companies don’t auto accept is not entirely true. When an account is new several of the companies will ‘auto quote’ and ‘auto execute’ with no apparent human intervention. Human intervention only seems to appear once a customer attracts attention in some way.
Surely, if you have a pricing model + platform then you want you customer to be able to trade it. I sense that you are now saying (and I don’t wish to put words in your mouth) that there are times when you aren’t comfortable in accepting trades? You state that you will be ‘more comfortable’ once you have more people trading the platform. This kind of implies that there are more reasons than just ‘price’ for rejecting an order? Sorry to go on about this but it is important. By using the ‘delayed execution’ technique you are giving yourself an edge far beyond that of your pricing model. In effect every price you quote (in Binary Bet terms) is a set of odds based on a statistical model which you have built. These odds are only applicable for the moment at which the quote is produced. If you take 10 – 15 seconds to process an order then you can, in effect, look back at the price you quoted 10 seconds earlier and say something along the lines of “Even though the price was correct at the time something has happened since which means that it doesn’t make financial sense to accept it” (ie the underlying has moved). Isn’t this just the flip side of what you have stated about FX? It’s just that in this case you are the people with a 10 – 15 second advantage on the price feed.
I can see the point you make about ‘free lunches’ but isn’t this the ‘risk’ that you take on when you offer Binary Bets? To offer Binary Bets you have to offer a market at all times. Ironically you make this very point in your advertising. Implicitly, by executing orders in this manner, you aren’t technically ‘offering a market at all times’ since, unknown to the customer, there maybe times when you aren’t comfortable in accepting trades despite the fact that you are advertising a price. This isn’t the picture which you paint in your advert for Binary Bets.
Steve.
Surely, if you have a pricing model + platform then you want you customer to be able to trade it. I sense that you are now saying (and I don’t wish to put words in your mouth) that there are times when you aren’t comfortable in accepting trades? You state that you will be ‘more comfortable’ once you have more people trading the platform. This kind of implies that there are more reasons than just ‘price’ for rejecting an order? Sorry to go on about this but it is important. By using the ‘delayed execution’ technique you are giving yourself an edge far beyond that of your pricing model. In effect every price you quote (in Binary Bet terms) is a set of odds based on a statistical model which you have built. These odds are only applicable for the moment at which the quote is produced. If you take 10 – 15 seconds to process an order then you can, in effect, look back at the price you quoted 10 seconds earlier and say something along the lines of “Even though the price was correct at the time something has happened since which means that it doesn’t make financial sense to accept it” (ie the underlying has moved). Isn’t this just the flip side of what you have stated about FX? It’s just that in this case you are the people with a 10 – 15 second advantage on the price feed.
I can see the point you make about ‘free lunches’ but isn’t this the ‘risk’ that you take on when you offer Binary Bets? To offer Binary Bets you have to offer a market at all times. Ironically you make this very point in your advertising. Implicitly, by executing orders in this manner, you aren’t technically ‘offering a market at all times’ since, unknown to the customer, there maybe times when you aren’t comfortable in accepting trades despite the fact that you are advertising a price. This isn’t the picture which you paint in your advert for Binary Bets.
Steve.
capitalspreads
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Bintrader
what do you want me to say? There is no hedging available in Binary Betting .... if clients win off of us then we lose ..period. If clients lose we win.
With Spread Betting we can hedge or go with a position
I cannot argue any other way. Binary Betting is a straight odds bet on something happening. The same as betting on the gee gees. Only you are pitting your wits against the Binary company in the same way as you would be betting against William HIll or Ladbrokes. You can increase your odds by betting on a better price (say via Betfair) but in the end, overall, the only way the other Bookie/counterparty wins is by you losing (when I say 'you' I mean the total pool of bets).
The main difference is that the odds on a horse generally dont change that much but a Binary price can move massively in a second. Although if you want to have a graphic example of movements in play you might like to try to bet on a race 'in running' on Betfair whilst you watch the race on telly. It is virtually impossible to get your bet on at the price shown when something happens (i.e a horse falls) because the person on the other side pulls his/her bet price. All you get is the turning clock and a statement along the lines of 'sorry not available anymore'. Would you then ring up betfair and complain about it??? No you would accept that the price was pulled or that someone else was faster than you.
Towards the close of say an hourly bet the price can move 10 or 15 points when the futures merely pip 1/2 a tick. Our dealers can see the same thing that you, 'the punter' , can and are unlikely to hold a disadvantageous price open.
SO, YES, IN BINARY BETTING WE ARE IN THE SITUATION OF WANTING OUR CLIENTS TO LOSE. Sorry
Regards
Simon
Do IG get these kind of questions ?
what do you want me to say? There is no hedging available in Binary Betting .... if clients win off of us then we lose ..period. If clients lose we win.
With Spread Betting we can hedge or go with a position
I cannot argue any other way. Binary Betting is a straight odds bet on something happening. The same as betting on the gee gees. Only you are pitting your wits against the Binary company in the same way as you would be betting against William HIll or Ladbrokes. You can increase your odds by betting on a better price (say via Betfair) but in the end, overall, the only way the other Bookie/counterparty wins is by you losing (when I say 'you' I mean the total pool of bets).
The main difference is that the odds on a horse generally dont change that much but a Binary price can move massively in a second. Although if you want to have a graphic example of movements in play you might like to try to bet on a race 'in running' on Betfair whilst you watch the race on telly. It is virtually impossible to get your bet on at the price shown when something happens (i.e a horse falls) because the person on the other side pulls his/her bet price. All you get is the turning clock and a statement along the lines of 'sorry not available anymore'. Would you then ring up betfair and complain about it??? No you would accept that the price was pulled or that someone else was faster than you.
Towards the close of say an hourly bet the price can move 10 or 15 points when the futures merely pip 1/2 a tick. Our dealers can see the same thing that you, 'the punter' , can and are unlikely to hold a disadvantageous price open.
SO, YES, IN BINARY BETTING WE ARE IN THE SITUATION OF WANTING OUR CLIENTS TO LOSE. Sorry
Regards
Simon
Do IG get these kind of questions ?
Last edited:
capitalspreads
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steve
i cannot comment on your experience ... but i know from my own experience that Cantors just started to regect all my trades. IG now have a delay on filling me and reject a fair proportion and Fins just leave the timer whirring around whilst they decide whether to quote or not.
So please don't damn us without some comparisons. Yes we monitor the prices as we should .. you would hardly expect otherwise. But as I said in the previous message this is fixed odds betting not Spread Betting.
Simon
i cannot comment on your experience ... but i know from my own experience that Cantors just started to regect all my trades. IG now have a delay on filling me and reject a fair proportion and Fins just leave the timer whirring around whilst they decide whether to quote or not.
So please don't damn us without some comparisons. Yes we monitor the prices as we should .. you would hardly expect otherwise. But as I said in the previous message this is fixed odds betting not Spread Betting.
Simon
Phil Mibbutz
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Interesting stuff. Haven't had much experience with binaries, and none with CS, but the thing that worried me about the whole idea was that the spreadbetting co seemed to be the one deciding the result, ie Up or Down according to their quote, not the actual FTSE, or whatever. Betting on a two horse race running in someone else's imagination can't be sensible!
BroadSword
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capitalspreads said:
OK, so I accept that we're now talking about things that I wasn't refering to previously (binaries), but I think you'd either have to (a) have a tremendous edge over the MM or (b) be rather mad to want to trade binaries in this circumstance.
I've no interest in the Gee Gees as Simon would put it, but who would back a horse when the bookie could accept or decline your bet 15 seconds after they'd started? Who would back a horse where the trainer, jocky and race officials worked for the bookie?
Dont misunderstand me, Simon, I can sympathise with much of what you cite here, and the non-understanding of some critics, but this binary business is so far loaded in the MMs favour that to take it on, punters would have to either be phenominal short term punters (of which I have absolutely no interest whatsoever, by the way) or just plain stupid...
Let me ask you please...If a client repeatedly took a boatload of money off you trading binaries (where you say you cannot hedge) would you boot them out or would they merely produce a dent in what must be an overwhelmingly high % of losers' money?
Just curious really, cos I'm never going to get involved (don't have to!!) just wonder what your reply will do to your credibility index! LOL!
Full marks btw for continuing to post in what is clearly becomming a more demanding thread!
Regards,
Physicsman
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Futures Questions
Hello Simon,
Some questions on a totally different topic - might give you a bit of a breather! :cheesy:
Q1) If I wanted to trade (Spreadbet) some commodities that you currently don't make a market for, will you add them in a fairly short amount of time? That is, added to your electronic trading platform, so that I can see your live quoted spreads on the commodity. Additionally, get the charts to monitor the price movement of the underlying.
Rather not telephone trade, as I can't monitor continuously the spreads and don't have the charts to help in my trading.
Example securities are: US 2, 5 & 10 year Treasury Notes (bond futures), and Wheat (Hard Red Winter) traded on KCBOT (Kansas City Board Of Trade).
Q2) Will you quote more than just the front month contract? That is, can we trade not only the front month contract, but also say the next 3 dated month contracts in addition?
Thanks for answering - I look forward to your answers.
Hello Simon,
Some questions on a totally different topic - might give you a bit of a breather! :cheesy:
Q1) If I wanted to trade (Spreadbet) some commodities that you currently don't make a market for, will you add them in a fairly short amount of time? That is, added to your electronic trading platform, so that I can see your live quoted spreads on the commodity. Additionally, get the charts to monitor the price movement of the underlying.
Rather not telephone trade, as I can't monitor continuously the spreads and don't have the charts to help in my trading.
Example securities are: US 2, 5 & 10 year Treasury Notes (bond futures), and Wheat (Hard Red Winter) traded on KCBOT (Kansas City Board Of Trade).
Q2) Will you quote more than just the front month contract? That is, can we trade not only the front month contract, but also say the next 3 dated month contracts in addition?
Thanks for answering - I look forward to your answers.
capitalspreads
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firstly
Broadsword
I dont know actually, as we would look to adjust the prices to reflect our book and attempt to temp trades in on the other side to offset the positions taken by other punters. The problem with Binaries is that it is a purely mathmatical model which can be created by any reasonably competent individual. Our prices sit on the screen until altered by an underlying movement in the futures. BUT a fast finger can beat our price (and IG's and Fin Spreads) which is when the deal may be rejected and probably when IG or Fins would turn you into a delayed client if they felt that this was all you did.
I happen to agree with you ... a Binary price is around 3 to 5 points wide (which on average is about 8% of the price). You would have to be good to beat the odds. But alot of people like them as is shown by the numbers of people trading with IG and Fins. IG even mention in their accounts that trading volumes reduced in certain months because of heavy losses made by clients on binaries in the previous months! Included in this is the huge number trading on sports spread betting (where the actual spread is huge when you work it out). But we have received a large number of requests to put them up on our site and so after alot of work we have. If you dont like them you can just leave them alone.. it is just another market to trade on. And as I continually do remind people we are in business and whilst we offer a very good service that in many ways has helped to bring good, fair SB prices into the mainstream we do have to show a profit otherwise it would be back to two or three SB companies in a cosy little niche.
Physicsman
we do already quote the US T bonds and one of the Wheat contracts but some of the commodities are difficult for us because the relevent US exchanges have not given us permission to use their prices. I know that some of our competitors do quote them (so either they have more leverage than us or they just don't even ask) . We will always look at individual markets but you generally have to ask for them by e-mail so that we can respond on a case by case basis.
We cannot really offer further out contracts on most commodities because the liquidity is not available in many cases and they often never trade for weeks on end. Our rollover terms are very reasonable though.
Simon
Broadsword
I dont know actually, as we would look to adjust the prices to reflect our book and attempt to temp trades in on the other side to offset the positions taken by other punters. The problem with Binaries is that it is a purely mathmatical model which can be created by any reasonably competent individual. Our prices sit on the screen until altered by an underlying movement in the futures. BUT a fast finger can beat our price (and IG's and Fin Spreads) which is when the deal may be rejected and probably when IG or Fins would turn you into a delayed client if they felt that this was all you did.
I happen to agree with you ... a Binary price is around 3 to 5 points wide (which on average is about 8% of the price). You would have to be good to beat the odds. But alot of people like them as is shown by the numbers of people trading with IG and Fins. IG even mention in their accounts that trading volumes reduced in certain months because of heavy losses made by clients on binaries in the previous months! Included in this is the huge number trading on sports spread betting (where the actual spread is huge when you work it out). But we have received a large number of requests to put them up on our site and so after alot of work we have. If you dont like them you can just leave them alone.. it is just another market to trade on. And as I continually do remind people we are in business and whilst we offer a very good service that in many ways has helped to bring good, fair SB prices into the mainstream we do have to show a profit otherwise it would be back to two or three SB companies in a cosy little niche.
Physicsman
we do already quote the US T bonds and one of the Wheat contracts but some of the commodities are difficult for us because the relevent US exchanges have not given us permission to use their prices. I know that some of our competitors do quote them (so either they have more leverage than us or they just don't even ask) . We will always look at individual markets but you generally have to ask for them by e-mail so that we can respond on a case by case basis.
We cannot really offer further out contracts on most commodities because the liquidity is not available in many cases and they often never trade for weeks on end. Our rollover terms are very reasonable though.
Simon
Physicsman
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Hello Simon,
Thanks for your prompt reply. Good to hear that you ofer the US Treasury Notes at the 2, 5, & 10 year maturities. I did notice you already had the CBOT Wheat; shame you can't get the KCBOT Hard Red Winter Wheat. More precisely, shame on the US exchanges for not letting you use their prices!!
I'm rather surpised to hear that you won't offer the futures contracts other than the front month. It isn't the rollover charge that I'm trying to avoid. Rather, I have devised a scheme to replicate the (direct access) futures strategy of relative value trading (also known as spread trading), using spreadbetting as the trading vehicle.
To accomplish a intra-market (calendar spread), I need to take positions in for example, a March and September contract etc. A lot of these spread trades are recognised by the exchanges themselves (and most commodity brokers). You shouldn't have problems getting price quotes for them??
Thanks again for answering the questions.
Thanks for your prompt reply. Good to hear that you ofer the US Treasury Notes at the 2, 5, & 10 year maturities. I did notice you already had the CBOT Wheat; shame you can't get the KCBOT Hard Red Winter Wheat. More precisely, shame on the US exchanges for not letting you use their prices!!
I'm rather surpised to hear that you won't offer the futures contracts other than the front month. It isn't the rollover charge that I'm trying to avoid. Rather, I have devised a scheme to replicate the (direct access) futures strategy of relative value trading (also known as spread trading), using spreadbetting as the trading vehicle.
To accomplish a intra-market (calendar spread), I need to take positions in for example, a March and September contract etc. A lot of these spread trades are recognised by the exchanges themselves (and most commodity brokers). You shouldn't have problems getting price quotes for them??
Thanks again for answering the questions.
BroadSword
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Thanks, Simon for that very forthright reply 
Unless a punter had something very special, binaries (and sports for that matter) cross the line into entertainment gambling for me, rather than traditional SB where, for longer Term swings etc, it remains an excellent vehicle through which to trade a rigourously tested trading system.
I'll stick to the latter, I think! As you say, people can leave binaries alone if they so wish!
Ironically, you have through CS no doubt improved the slope of the playing field for SB clients - from the gamblers, thrill seekers through to people using it properly to trade real plans - with your competitive quotes...Who knows, IG may never had improved their spreads to their current highly competitive FX rolling spot bets, had CS and perhaps others not paved the way...
So, thank you for that!
Best regards,
Unless a punter had something very special, binaries (and sports for that matter) cross the line into entertainment gambling for me, rather than traditional SB where, for longer Term swings etc, it remains an excellent vehicle through which to trade a rigourously tested trading system.
I'll stick to the latter, I think! As you say, people can leave binaries alone if they so wish!
Ironically, you have through CS no doubt improved the slope of the playing field for SB clients - from the gamblers, thrill seekers through to people using it properly to trade real plans - with your competitive quotes...Who knows, IG may never had improved their spreads to their current highly competitive FX rolling spot bets, had CS and perhaps others not paved the way...
So, thank you for that!
Best regards,
stevespray
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Evening,
I agree Simon, a lot of people do like these Binary Bets and one of the questions that I would pose is quite simply ‘why?’. My guess is that certain people like volatility. I don’t think that it is any coincidence that the whole Binary Bet scene appeared just as the general market volatility of the ‘Tech Boom Bust’ died away in the early 2000’s. In my opinion the disappearance of that volatility left a huge vacuous void which the spread bet companies felt they could quickly fill. Interesting that you mention how a good run for a certain company lead to a short fall in its other business – Possible issues of ‘strangling the golden geese’ then? Does a company actually do better by encouraging customers to stay ‘in business’ or does it get better financial rewards by simply allow them to bust quickly?
Having quite a good knowledge of options I would suggest that the quieter markets are the markets which the spread betting companies prefer and as such this is perhaps when you do best since your pricing models are essentially more accurate more of the time. Once you watch the models and play around with a few bets you actually get a feel of days which might be good for the punter and, on the other hand, days which seem to favour the companies.
Your point about having to be good to win is a valid one. To my mind it all comes down to how you are looking to trade. Some people simply try to determine market direction and trade either swings or trend. This, as you pointed out, really represents bad value and I can’t see too many people have success with that type of method simply because the spread is ‘stealing’ too much value on each trade. I would suggest that if you are going to trade these products then you need a really good insight into how options work. Understanding that the price is made up from ‘Intrinsic Value’ +/- ‘Time Premium’ is the key here. It’s the key because this is where your model has massive weaknesses. The ‘Intrinsic Value’ is easy for you guys to work out, its simple statistics at the end of the day. It’s not so easy for you guys to calculate the value of the remaining ‘Time Premium’ and this I feel will always represent a big danger for you guys especially on those Daily and Hourly bets. All you can do is program a statistical average. If you get that wrong then it’s a double whammy when markets move suddenly as, for example, the hourly up / down bets move to very long odds. Moving to these odds essentially compounds your error and makes it considerably worse.
On that basis I can see why you are so keen to put yourself in a position where you can match customers who are effectively ‘backing’ and ‘laying’ the same event. Hopefully over time you’ll just, on average, pocket the spreads each time which, as you already pointed out, are considerable. Sounds like a good idea in principle. By saying that though you could almost take advantage of people who arbitrage. In effect you’ll have a group of people (who you aren’t paying) who will guarantee to keep your market in kilter. Purely out of my own interest, do you personally think that it is possible to have a market which doesn’t use an options based pricing model? Could you make a system which purely uses customers trading activity to determine price? I guess you’d have to be in a situation where you were executing many deals in a minute for that to work really effectively but given that the spreads are so big one wonders if there is room for a pricing system which works in that manner? Obviously that ‘delayed dealing system’ would have to go!
The question that I’ve got for the companies is the same one which I, and some one else asked earlier on. You’ve said that the customer winning means that you lose and most people who understand how Binary Bets work will have realised this. The question is about haw far the companies will go to ensure that a profit is made. There is clear conflict of interest here. If the customer could simply just trade the onscreen price then you obviously feel that he has a greater advantage than is currently acceptable and you’ve outlined reasons why yourselves and other companies act to protect yourselves. I’m not entirely certain that your ‘catching the next tick’ reason is that valid since the spreads are so big but I can see that given the right market conditions plus timing that a small advantage could perhaps be gained. I would say that, having studied the Binary Bets like I have, these times are pretty rare to the extent that you could wait all day on several markets and not find an opportunity. Overall the advantage that the companies get by effectively pricing a market using a considerable amount of hindsight is a far greater advantage than the ‘quick finger’ technique which you have outlined. So, in the end, you have a very wide spread (in percentage terms) combined with a pretty bias dealing method. Going back to the ‘quick finger’ method for a moment, You have suggested that people who have been placed on manual dealing might have been caught doing this. I would suggest that this is unlikely since, most of the time, the Binary Bet prices update several times per second. I think that it is far more likely that the companies just detect people who are simply ‘beating the odds’ and place them onto manual dealing because the companies know that manual dealing drastically increases the hidden costs of trading and therefore, since this is a ‘zero sum game’, any increase in the traders ‘costs’ are effectively ‘saved’ by the company quoting the market. So being placed onto manual dealing is a very simple process. If they see you beating short odds they just alter your dealing and wait to see how you get on against longer odds. Obviously, since it is the company who decides how long your order is going to take to ‘process’ it becomes pretty easy for them to ‘tilt the playing field’ until it is no longer viable. Of course the beauty of having several different accounts means that you don’t always have to trade out of the bet on just one account. This also saves trading costs but be sure to make certain that the expiry criteria are the same on all the accounts for the instrument in question.
Simon, out of interest, what would Capital do if you made regular losses on Binary Bets? Would you strive to improve the pricing model (and risk arbitrage), seek to drive away winning customers or simply stop quoting the markets? Would it be just a simple business decision?
Steve.
I agree Simon, a lot of people do like these Binary Bets and one of the questions that I would pose is quite simply ‘why?’. My guess is that certain people like volatility. I don’t think that it is any coincidence that the whole Binary Bet scene appeared just as the general market volatility of the ‘Tech Boom Bust’ died away in the early 2000’s. In my opinion the disappearance of that volatility left a huge vacuous void which the spread bet companies felt they could quickly fill. Interesting that you mention how a good run for a certain company lead to a short fall in its other business – Possible issues of ‘strangling the golden geese’ then? Does a company actually do better by encouraging customers to stay ‘in business’ or does it get better financial rewards by simply allow them to bust quickly?
Having quite a good knowledge of options I would suggest that the quieter markets are the markets which the spread betting companies prefer and as such this is perhaps when you do best since your pricing models are essentially more accurate more of the time. Once you watch the models and play around with a few bets you actually get a feel of days which might be good for the punter and, on the other hand, days which seem to favour the companies.
Your point about having to be good to win is a valid one. To my mind it all comes down to how you are looking to trade. Some people simply try to determine market direction and trade either swings or trend. This, as you pointed out, really represents bad value and I can’t see too many people have success with that type of method simply because the spread is ‘stealing’ too much value on each trade. I would suggest that if you are going to trade these products then you need a really good insight into how options work. Understanding that the price is made up from ‘Intrinsic Value’ +/- ‘Time Premium’ is the key here. It’s the key because this is where your model has massive weaknesses. The ‘Intrinsic Value’ is easy for you guys to work out, its simple statistics at the end of the day. It’s not so easy for you guys to calculate the value of the remaining ‘Time Premium’ and this I feel will always represent a big danger for you guys especially on those Daily and Hourly bets. All you can do is program a statistical average. If you get that wrong then it’s a double whammy when markets move suddenly as, for example, the hourly up / down bets move to very long odds. Moving to these odds essentially compounds your error and makes it considerably worse.
On that basis I can see why you are so keen to put yourself in a position where you can match customers who are effectively ‘backing’ and ‘laying’ the same event. Hopefully over time you’ll just, on average, pocket the spreads each time which, as you already pointed out, are considerable. Sounds like a good idea in principle. By saying that though you could almost take advantage of people who arbitrage. In effect you’ll have a group of people (who you aren’t paying) who will guarantee to keep your market in kilter. Purely out of my own interest, do you personally think that it is possible to have a market which doesn’t use an options based pricing model? Could you make a system which purely uses customers trading activity to determine price? I guess you’d have to be in a situation where you were executing many deals in a minute for that to work really effectively but given that the spreads are so big one wonders if there is room for a pricing system which works in that manner? Obviously that ‘delayed dealing system’ would have to go!
The question that I’ve got for the companies is the same one which I, and some one else asked earlier on. You’ve said that the customer winning means that you lose and most people who understand how Binary Bets work will have realised this. The question is about haw far the companies will go to ensure that a profit is made. There is clear conflict of interest here. If the customer could simply just trade the onscreen price then you obviously feel that he has a greater advantage than is currently acceptable and you’ve outlined reasons why yourselves and other companies act to protect yourselves. I’m not entirely certain that your ‘catching the next tick’ reason is that valid since the spreads are so big but I can see that given the right market conditions plus timing that a small advantage could perhaps be gained. I would say that, having studied the Binary Bets like I have, these times are pretty rare to the extent that you could wait all day on several markets and not find an opportunity. Overall the advantage that the companies get by effectively pricing a market using a considerable amount of hindsight is a far greater advantage than the ‘quick finger’ technique which you have outlined. So, in the end, you have a very wide spread (in percentage terms) combined with a pretty bias dealing method. Going back to the ‘quick finger’ method for a moment, You have suggested that people who have been placed on manual dealing might have been caught doing this. I would suggest that this is unlikely since, most of the time, the Binary Bet prices update several times per second. I think that it is far more likely that the companies just detect people who are simply ‘beating the odds’ and place them onto manual dealing because the companies know that manual dealing drastically increases the hidden costs of trading and therefore, since this is a ‘zero sum game’, any increase in the traders ‘costs’ are effectively ‘saved’ by the company quoting the market. So being placed onto manual dealing is a very simple process. If they see you beating short odds they just alter your dealing and wait to see how you get on against longer odds. Obviously, since it is the company who decides how long your order is going to take to ‘process’ it becomes pretty easy for them to ‘tilt the playing field’ until it is no longer viable. Of course the beauty of having several different accounts means that you don’t always have to trade out of the bet on just one account. This also saves trading costs but be sure to make certain that the expiry criteria are the same on all the accounts for the instrument in question.
Simon, out of interest, what would Capital do if you made regular losses on Binary Bets? Would you strive to improve the pricing model (and risk arbitrage), seek to drive away winning customers or simply stop quoting the markets? Would it be just a simple business decision?
Steve.
talkingcents
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Simon
I find Cap Spreads very user friendly platform and I favour it over my other provider.
The only reason I need the is cos you do not have a wider range of rolling trades.
Any plans to rectify that in near future if you id \i think you would get a lot of extra biz
I find Cap Spreads very user friendly platform and I favour it over my other provider.
The only reason I need the is cos you do not have a wider range of rolling trades.
Any plans to rectify that in near future if you id \i think you would get a lot of extra biz
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Quarterly share prices are quoted using two criteria, interest rates and dividends.
The forward price is reached by adding the interest rate cost of holding the bet from now to the expiry date and then subtracting any dividends due to go ex div between now and the expiry date.
So for XYZ plc, if the bet expires in 157 days, the interest rate, LIBOR, for that period (approx 5 months) is 4.6% and the share price is 255.5p. And there is a dividend due in 30 days of 7.4p.
The formula will be 255.5+(157 x 4.6 x 255.5 / 36500)-7.4
Or 253.2
In this case because of the dividend the forward price is actually lower than the current price. Once the dividend is out of the way the forward price will revert to being higher than the current price.
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I just cannot work out the above. I have seen some stocks when the your bid and offer price are both above the underlying price and some that they are both below. The spread varies continuously during the day, sometimes your price moves in sync with the underlying price sometimes widely out of sync, as if you make your own price loosely based on the underlying price. I have opened a small account with you in December to test your system. I’ve stopped out first thing yesterday (Thursday) morning by a spike in your price (had the same feel as being gunned by a market maker) that was not present in the underlying price (Brixton PLC) which makes me extremely uneasy about trading in a market when the other side can move the price if he chooses.
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I have just been looking at Yell chart of Friday, The underlying price started from about 560.7 and then went to 555 by 9am while yours (rolling daily) went as low as 539.5. i.e. for a 6 points change in the undelying price yours changed as much as 21 points!
Quarterly share prices are quoted using two criteria, interest rates and dividends.
The forward price is reached by adding the interest rate cost of holding the bet from now to the expiry date and then subtracting any dividends due to go ex div between now and the expiry date.
So for XYZ plc, if the bet expires in 157 days, the interest rate, LIBOR, for that period (approx 5 months) is 4.6% and the share price is 255.5p. And there is a dividend due in 30 days of 7.4p.
The formula will be 255.5+(157 x 4.6 x 255.5 / 36500)-7.4
Or 253.2
In this case because of the dividend the forward price is actually lower than the current price. Once the dividend is out of the way the forward price will revert to being higher than the current price.
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I just cannot work out the above. I have seen some stocks when the your bid and offer price are both above the underlying price and some that they are both below. The spread varies continuously during the day, sometimes your price moves in sync with the underlying price sometimes widely out of sync, as if you make your own price loosely based on the underlying price. I have opened a small account with you in December to test your system. I’ve stopped out first thing yesterday (Thursday) morning by a spike in your price (had the same feel as being gunned by a market maker) that was not present in the underlying price (Brixton PLC) which makes me extremely uneasy about trading in a market when the other side can move the price if he chooses.
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I have just been looking at Yell chart of Friday, The underlying price started from about 560.7 and then went to 555 by 9am while yours (rolling daily) went as low as 539.5. i.e. for a 6 points change in the undelying price yours changed as much as 21 points!
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Capital Spreads
Two questions if I may.
1 FTSE 100 Index March. - The trade information showed the day low/high at 5842 - 5875 but the information shown at the top of the relevant graph gave the day low/high at 5842 - 5871. Why the 4 point difference on the day high? Both of these readings were taken at the same time ie 15.45 to-day.
2 You do not appear to offer quarterly futures for the Dow, any reason for this?
Regards
bracke
Two questions if I may.
1 FTSE 100 Index March. - The trade information showed the day low/high at 5842 - 5875 but the information shown at the top of the relevant graph gave the day low/high at 5842 - 5871. Why the 4 point difference on the day high? Both of these readings were taken at the same time ie 15.45 to-day.
2 You do not appear to offer quarterly futures for the Dow, any reason for this?
Regards
bracke
My CapitalSpreads demo account was stopped out of Rolling Gold yesterday at a price of 295 :-0
Forgive me if i'm mistaken, but I don't recall gold trading lower than 557.90.
I hope the real account customers in gold weren't met with the same shock!
Forgive me if i'm mistaken, but I don't recall gold trading lower than 557.90.
I hope the real account customers in gold weren't met with the same shock!
Capital Spreads
FTSE 100 March & June Futures
I was watching your streaming chart for the above futures yesterday (Tuesday 28 February). At approx 17.30 there was a spike down of approx 45 points. The spike lasted approx 3/4 seconds and returned back to the prevailing level.
It would not have been possible to have gone long at the lower price because it lasted such a short time
1 What caused the spike?
2 Would the spike have taken out stops?
If your answer to 2 is yes it would appear to be a case of heads you win, tails we lose.
Regards
bracke
FTSE 100 March & June Futures
I was watching your streaming chart for the above futures yesterday (Tuesday 28 February). At approx 17.30 there was a spike down of approx 45 points. The spike lasted approx 3/4 seconds and returned back to the prevailing level.
It would not have been possible to have gone long at the lower price because it lasted such a short time
1 What caused the spike?
2 Would the spike have taken out stops?
If your answer to 2 is yes it would appear to be a case of heads you win, tails we lose.
Regards
bracke
