Best Thread Capital Spreads

[davecrom01]

Thanks for the feedback. I am awaiting my access to the simulator

No problem, Zuke.

I don't know if others can help me here, and I've had it explained to me a few times already - but I don't see how they can be DMA and still say that they guarantee fixed spreads. Sure, I get that they pass every trade through to the underlying market - but if that market has no-one looking to take the opposite side of my trade, how can the spread be fixed? Who takes the opposite side?

Thinking about it now, I suppose they could just not fill me.

Any ideas?

 

[gle101]

No problem, Zuke.

I don't know if others can help me here, and I've had it explained to me a few times already - but I don't see how they can be DMA and still say that they guarantee fixed spreads. Sure, I get that they pass every trade through to the underlying market - but if that market has no-one looking to take the opposite side of my trade, how can the spread be fixed? Who takes the opposite side?

Thinking about it now, I suppose they could just not fill me.

Any ideas?

I guess we are out of topic, but here goes.
The spread is not fixed, it is a wrap around the real market price, they add this wrap afterwards, so you actually buy at the real market price. The trick is by doing this, FB is categorized as a SB company, thus being tax free. IF you compare this wrap (commission) to futures (IB) commission, it will be more expensive. On the other hand as I said, you have it tax free.

 

[laptop1]

There is always seems to be delinquency when it comes spreadbet firms. We dont here much problems if any with DA.

 

[capitalspreads]

Sorry for the absence I have been rather tied up with other stuff

FX scalper

ummm forgive me for being a bit thick here but to accuse SB companies of making money only because of losers is a little discriminatory. In the past on this thread I have made no bones about the percantage winners and losers on CS. as of the end of last year (when i last did the full analysis) 79% of traders lost and 21% won. This sounds terrible doesn't it.

Until you realise that virtually exactly the same percentages permeate the 'private client' returns on DMA. FX and Futures markets. The CME (or maybe CBOT, cannot remember which) made a huge survey of private client trading on futures markets (not institutional, hedge fund, etc etc) and dicovered that 81% of retail clients lost money (slightly worse than clients on our platform!). Many investment bankers across the globe earn huge wedges, where do you suppose all this money comes from in the final analysis. Spread Betting companies are just more direct in that the client can see who he is trading with. This is virtually unique in the financial world as usually an 'investor' is trading via an exchange so the counterparty is hidden.

as all risk is taken, in the first instance, with the SB company it is not exactly rocket science to show that if the majority of clients won then the SB company would probably lose and therefore go out of business ! In exactly the same way that if the favorites win the races at Cheltenham then the Bookies are likely to go home out of pocket. They try to adjust the prices to reduce their exposures but in the end it is the punters skill against theirs which is the overiding factor. (have you ever been to the races and you look over the bookies pitches to find the best price for your nag of choice).

Our professional FX, Capital Forex, platform (which is widely regarded as one of the best and most liquid FX platforms on the planet) shows rather worse private client performance than our spread betting client ! and that is with incredible liquidity etc etc.

the filling of orders is a particular point with SB. If you place an 'order' with CS you will always be filled if 'our quote' reaches your level BUT on most occasions, in equities for example, when the underlying market spread widens horrendously with no actual trades going through we will ignore the fact that we could technically fill the order and just reset it. if you place a 'trade' with CS and the size you are trading in is above a preset size or you are designated as a 'dealer acceptance' client then the trade will go through to a dealer for confirm. Over major data releases there will be deal rejections but in normal trading environemnets nearly all trades (even if they are slightly against us) will go through.

My problem is that clients only ever remember the ones that go against them and hardly ever the ones that they get in their favour.

ce la vie


Simon

 

[davecrom01]

Thanks for the explanation in the message above.

As for your comment laptop, I wonder if that is because traders have less to blame when its DMA

WIth SB there is always someone else to blame...

 

[FXSCALPER2]

Hi Simon,

I have no doubt people do not win or lose because of who they trade with. I said this repeatedly on these forums. What I am saying is, given that you do not charge commissions, you have to make sure your clients lose on balance. It is obvious, really.

Hey, trying to trade the news with CS is a joke, eh? lol.

 

[lurkerlurker]

Gentlemen, please!

Hey, trying to trade the news with CS is a joke, eh? lol.

I'm going to stick my head above the parapet this time. Don't bother trading the news in the bucket shops, and if you do don't complain about it!

If you have a profitable method of trading the news which doesn't involve picking off a slow SB feed, then go trade on an ECN. You would be just as profitable there.

The problem with SB is that they quote a derived price, and in the interests of risk management they have to pay more attention to trades which go through at very volatile periods. This means that sometimes you will not get filled in the bucket shops when you would in the interbank or futures market.

When trading with a prop counterparty, the deal is either done or not. You know where you stand, and there is no intermediate party to screw you or suspect you are trying to screw them. There are many valid complaints against SB firms (and many areas they could improve on) but this is not one of them. Recognise the limitations and move on.

If you trade in size, I'm sure you could come to an arrangement with CS or another SB firm whereby they could work your orders in the market. Otherwise, recognise that SB is not for trading the news, and move on. No disrespect intended, but this neverending complaining about no fills over news is getting tiring, and is disrupting the discussion here.

 

[gle101]

Hi Simon,

I have no doubt people do not win or lose because of who they trade with. I said this repeatedly on these forums. What I am saying is, given that you do not charge commissions, you have to make sure your clients lose on balance. It is obvious, really.

Hey, trying to trade the news with CS is a joke, eh? lol.

Not always, CS executed my short today just after the interest rate news release, I had a nice ride.

 

[gle101]

I'm going to stick my head above the parapet this time. Don't bother trading the news in the bucket shops, and if you do don't complain about it!

here.

Yes I agree, sometime you get filled and others you won't get filled. Execution is slow, it can turn against you during that time. Calculate the risk/reward ratio when deciding.

 

[gle101]

Sorry for the absence I have been rather tied up with other stuff

FX scalper

ummm forgive me for being a bit thick here but to accuse SB companies of making money only because of losers is a little discriminatory. In the past on this thread I have made no bones about the percantage winners and losers on CS. as of the end of last year (when i last did the full analysis) 79% of traders lost and 21% won. This sounds terrible doesn't it.

Until you realise that virtually exactly the same percentages permeate the 'private client' returns on DMA. FX and Futures markets. The CME (or maybe CBOT, cannot remember which) made a huge survey of private client trading on futures markets (not institutional, hedge fund, etc etc) and dicovered that 81% of retail clients lost money (slightly worse than clients on our platform!). Many investment bankers across the globe earn huge wedges, where do you suppose all this money comes from in the final analysis. Spread Betting companies are just more direct in that the client can see who he is trading with. This is virtually unique in the financial world as usually an 'investor' is trading via an exchange so the counterparty is hidden.

as all risk is taken, in the first instance, with the SB company it is not exactly rocket science to show that if the majority of clients won then the SB company would probably lose and therefore go out of business ! In exactly the same way that if the favorites win the races at Cheltenham then the Bookies are likely to go home out of pocket. They try to adjust the prices to reduce their exposures but in the end it is the punters skill against theirs which is the overiding factor. (have you ever been to the races and you look over the bookies pitches to find the best price for your nag of choice).

Our professional FX, Capital Forex, platform (which is widely regarded as one of the best and most liquid FX platforms on the planet) shows rather worse private client performance than our spread betting client ! and that is with incredible liquidity etc etc.

the filling of orders is a particular point with SB. If you place an 'order' with CS you will always be filled if 'our quote' reaches your level BUT on most occasions, in equities for example, when the underlying market spread widens horrendously with no actual trades going through we will ignore the fact that we could technically fill the order and just reset it. if you place a 'trade' with CS and the size you are trading in is above a preset size or you are designated as a 'dealer acceptance' client then the trade will go through to a dealer for confirm. Over major data releases there will be deal rejections but in normal trading environemnets nearly all trades (even if they are slightly against us) will go through.

My problem is that clients only ever remember the ones that go against them and hardly ever the ones that they get in their favour.

ce la vie


Simon

Thanks a lot Simon for this post. There is a lot missing in this comparison. You have to look at the percentage of the amount of money invested, the numbers that are lost and won, and how this is divided between the group of losers and winners on both sides. Nevertheless, it makes interesting reading. I have myself said in a few posts that DMA is not the holy grail as many on this forum portrait it to be. However, one can ask a simple question, between the two platforms, SB or DMA, which one gives better "gambling" odds, mathematically speaking while trading? I am sure you agree about the outcome, there is no doubt that DMA gives better odds, that is, if you have the money to deposit, low cost commission, stakes to trade for, and the tax issue settled. Both platforms have a role to play, and it is a privilege to be able to choose between the two while planning and setting out a trading strategy.

There are many, myself among them, that give a lot of credit to the good sides of CS, this has been mentioned over and over again on this thread. Simon, could it be that you are having a way too negative outlook on some of the posts (this is understandable after so many years on this board)? Again, don't forget, our money is also at stake here, we also take a risk. So we have the right to ask, complain and comment on any issue that arise on this thread. Hopefully, and I am quite sure you are regarding these posts as a positive sign of committed clients, and an excellent way of giving and improving the companies support and service.

Simon, don't forget to get back to me about my questions posted earlier on this board.

 

[FXSCALPER2]

I'm going to stick my head above the parapet this time. Don't bother trading the news in the bucket shops, and if you do don't complain about it!

If you have a profitable method of trading the news which doesn't involve picking off a slow SB feed, then go trade on an ECN. You would be just as profitable there.

The problem with SB is that they quote a derived price, and in the interests of risk management they have to pay more attention to trades which go through at very volatile periods. This means that sometimes you will not get filled in the bucket shops when you would in the interbank or futures market.

When trading with a prop counterparty, the deal is either done or not. You know where you stand, and there is no intermediate party to screw you or suspect you are trying to screw them. There are many valid complaints against SB firms (and many areas they could improve on) but this is not one of them. Recognise the limitations and move on.

If you trade in size, I'm sure you could come to an arrangement with CS or another SB firm whereby they could work your orders in the market. Otherwise, recognise that SB is not for trading the news, and move on. No disrespect intended, but this neverending complaining about no fills over news is getting tiring, and is disrupting the discussion here.

Listen, I am not some newbie so keep your lectures to yourself. I have heard all that repeatedly for ages. I have always said your broker is not the reason for your success or failure but CS have absurdly slow fills.

It is funny when someone offers advice without knowing anything about who they are giving advice to. CS can definitely improve the speed of their fills and we should try and get them to do it. If you don't want to discuss or read about this issue, you can suit yourself.

 

[gle101]

Listen, I am not some newbie so keep your lectures to yourself. I have heard all that repeatedly for ages. I have always said your broker is not the reason for your success or failure but CS have absurdly slow fills.

It is funny when someone offers advice without knowing anything about who they are giving advice to. CS can definitely improve the speed of their fills and we should try and get them to do it. If you don't want to discuss or read about this issue, you can suit yourself.

Yes I agree CS has very slow fills. They just have to do something about it. I don't really understand why, as most of the time you get your price. Sooner or later CS will have to adjust, competition will see to that, and what about MiFID "Best execution" directive Simon?

 

[gle101]

The problem with SB is that they quote a derived price, and in the interests of risk management they have to pay more attention to trades which go through at very volatile periods. This means that sometimes you will not get filled in the bucket shops when you would in the interbank or futures market.

I don't agree, The SB company cannot have it all, when it comes to deciding, execution or not. The input you made and what they receive by you clicking on the quote, should be followed through. That is, if that input match the real market price (their wrap deducted) at that very instant, this whether the market is volatile or not. The SB industry is quickly changing and one will be amazed where it stand in a few years from now.

 

[jpu1978]

Hi Simon,

I have no doubt people do not win or lose because of who they trade with. I said this repeatedly on these forums. What I am saying is, given that you do not charge commissions, you have to make sure your clients lose on balance. It is obvious, really.

In theory spread betting companies make their money from the spread, so that is why they don’t have to charge commission. Win or lose they win, so shouldn’t care if clients win.

This is ‘in theory’

 

[davecrom01]

Quote from Simon : "79% of traders lost and 21% won"

I've made my points already in here about the slow speed of CS fills, so I won't re-gurgitate again. I have the power to move somewhere else if I can't trade a cerain system with CS. However, I would like just to comment on the above statistic - as it is something I personally try to remember, all of the time.

We are in a difficult game, ladies and gentlemen. By definition, even if everyone one who traded with CS posted here - 8 out of 10 traders would be losing funds. Out of those 80%, how many are capable of being objective about why they lose money? Not many I would imagine (although in here I would hope for a greater maturity, and do see it sometimes.). If you sat right on the floor with DMA, you would not see a difference in this statistic.

I've mentioned it before, but moving away from an SB firm to a DMA is more about removing the last person left to blame. There are people who move to DMA and then complain that "the market" or "the talking heads" or "the banks" are to blame for the market not doing what they expected. WHo knows, maybe I'll become one of them

Thanks to all for this great thread!

 

[davecrom01]

"In theory spread betting companies make their money from the spread, so that is why they don’t have to charge commission. Win or lose they win, so shouldn’t care if clients win."

Sorry, but they don't. They can't. For one good reason. The SB company has to do more than just that - because they are offering a fixed spread, to allow you to take either side of a trade. There are times when the SB company is offering you a price in one direction that the underlying market itself is not offering. Have a look at some DMA Market Depth during a major news release where the actual is miles away from the projected numbers. In these instances the world and his dog wants to go one way, and you can't get a fill. The SB company is still offering you the chance at 3 pips spread.

Of course, this is when they may choose not to fill you either.

 

[jpu1978]

"In theory spread betting companies make their money from the spread, so that is why they don’t have to charge commission. Win or lose they win, so shouldn’t care if clients win."

Sorry, but they don't. They can't. For one good reason. The SB company has to do more than just that - because they are offering a fixed spread, to allow you to take either side of a trade. There are times when the SB company is offering you a price in one direction that the underlying market itself is not offering. Have a look at some DMA Market Depth during a major news release where the actual is miles away from the projected numbers. In these instances the world and his dog wants to go one way, and you can't get a fill. The SB company is still offering you the chance at 3 pips spread.

Of course, this is when they may choose not to fill you either.

Is this not an issue with liquity on both sides of a trade and their need to limit their exposure rather than how they make their money?

 

[zuke]

Quote from Simon : "79% of traders lost and 21% won"

I've made my points already in here about the slow speed of CS fills, so I won't re-gurgitate again. I have the power to move somewhere else if I can't trade a cerain system with CS. However, I would like just to comment on the above statistic - as it is something I personally try to remember, all of the time.

We are in a difficult game, ladies and gentlemen. By definition, even if everyone one who traded with CS posted here - 8 out of 10 traders would be losing funds. Out of those 80%, how many are capable of being objective about why they lose money? Not many I would imagine (although in here I would hope for a greater maturity, and do see it sometimes.). If you sat right on the floor with DMA, you would not see a difference in this statistic.

I've mentioned it before, but moving away from an SB firm to a DMA is more about removing the last person left to blame. There are people who move to DMA and then complain that "the market" or "the talking heads" or "the banks" are to blame for the market not doing what they expected. WHo knows, maybe I'll become one of them

Thanks to all for this great thread!

Excellent point. The main reason I moved away from CS was because of the PERCEPTION that something untoward was going on with my account. That alone was enough to effect my trading. Imagine the scenario: You wait, wait, and wait until the perfect setup up comes and then click the buy/sell button. You then have to wait an inordinate amount of time to discover whether the trade will be "accepted" or not. Psychologically, you forget the times where this delay works in your favour (rarely happened to me, but some people say they have had this) and focus on the times where the market has moved 5 or 10 pips against you. "Those b******ds, they mist be monitoring my account!!" you cry. Paranoia sets in and you now have no confidence in the SB company, meaning that any future loss (irrespective of reason) gets attributed to "because CS were monitoring my account and didnt want me to win".

I find trading time consuming and requiring focus enough, without having to wonder whether I am being targeted and THAT is the main reason why I moved from SB and will soon be moving to DMA.

 

[lurkerlurker]

I find trading time consuming and requiring focus enough, without having to wonder whether I am being targeted and THAT is the main reason why I moved from SB and will soon be moving to DMA.

What about when the MMs or the pit locals run your stop? What about the guy on the floor who gives you slippage? What about bent brokers?


They slipped me again, I couldn’t get out
it went the wrong way, the news was leaked out
the broker is bent, the prices are wrong
they took all my rent, I’m short - it went long

Its not down to me, its me that they shaft
it isn’t my fault, the brokers? - they laughed
when I took the trade I knew I was right
but didn’t realise that my broker was shytte

I am a good trader, I know what to do
but my money is gone now - like crap down a loo
I know that I’m right – I’m right all the time
its the brokers who screw me, now I don’t have a dime.

Next week will be better, I’ll know what to do
I’ll go the right way next time, my broker is new
If I can just get and win a few days
I’ll be back on top with my superior ways.

And here i am now, ready and able
I’m long in the market, lots of cash on the table
its going my way, I cannot fail
but oh no, it's turning (i begin to wail)

It looked like a long - the news was all good
but it's going down, my guts feel like mud
I took the chance and its starting to rain
and I know it's those ******* brokers again!

(source)​

All joking aside though, I moved the minute I realised that they were rejecting orders where the price had moved in my favour and filling me on trades which had moved against me by a good deal more than the spread.

 

[brutusdog]

Excellent point. The main reason I moved away from CS was because of the PERCEPTION that something untoward was going on with my account. That alone was enough to effect my trading. Imagine the scenario: You wait, wait, and wait until the perfect setup up comes and then click the buy/sell button. You then have to wait an inordinate amount of time to discover whether the trade will be "accepted" or not. Psychologically, you forget the times where this delay works in your favour (rarely happened to me, but some people say they have had this) and focus on the times where the market has moved 5 or 10 pips against you. "Those b******ds, they mist be monitoring my account!!" you cry. Paranoia sets in and you now have no confidence in the SB company, meaning that any future loss (irrespective of reason) gets attributed to "because CS were monitoring my account and didnt want me to win".

I find trading time consuming and requiring focus enough, without having to wonder whether I am being targeted and THAT is the main reason why I moved from SB and will soon be moving to DMA.

Very well put Zuke,

i would add that i don't think its that they are monitoring accounts or messing with people but that their system / platform is very inefficient and slow.....like when the quote screen shows one price and the dealing box another it is possible to get filled at a better price than cs are actually quoting, it was up to 5 points out today and the market wasn't that fast at the time.