Best Thread Capital Spreads

[Phil Mibbutz]

However, I don't agree with you on the fact that SB wouldn't exist if there wasn't for a bias against the trader. They profit from the spread, and that should be sufficient to keep the business running and even attract additional traders on grounds of fair play. The manipulation days is over for the SB industry, if they don't listen to he signals coming from EU, they are in for severe regulation by the same.

The spread is the bias I was referring to - the underlying market spread, plus the SB's cut on top of that, which can be manipulated/massaged by rejecting trades that immediately go against 'the house'. Still, I think it's naive to believe that SB companies hedge everything and only profit from the spread.

 

[arabianights]

"no suggestions of impropriety"

Where's this 1.1 million pound error in your accounts?

 

[gle101]

The spread is the bias I was referring to - the underlying market spread, plus the SB's cut on top of that, which can be manipulated/massaged by rejecting trades that immediately go against 'the house'. Still, I think it's naive to believe that SB companies hedge everything and only profit from the spread.

Ok, sorry for that, I now understand what you mean. The SB don't need to hedge everything, only what is not balanced out by the book.

 

[bracke]

Capital Spreads

You have not replied to my post 5175 which was:

Ref revised trading platform. Two problems.

1 Page showing prices - When I zoom to increase the size, the outside of the page does but the centre part with the prices does not.

2 Charts - All of my s/r lines, trend lines ,etc have gone.

I would add that that all of the screens which show prices, account suumary, trading history,etc do not 'zoom' The outer part of the page does but the central portion does not. I did not have this problem prior to the changes you have made. I use Internet Explorer.

Regards

bracke

 

[capitalspreads]

phil

the spread on top of the market? mmmm.... the vast majority of our trades are in nine major markets (index/currency/commodity) the spreads we quote in these markets are quite frequently less than the spread available in the 'real market'. We have, probably, one of the most liquid FX feeds in the world and yet in recent times the spread on GBP/USD has been well wider than the 3 pips we quote in CS ... FTSE futures are hardly ever tighter than 1 - 1 1/2 points in anything more than a contract or two... the natural spread in the S&P is 2.5 when you add comms for trading there is about room for a small wafer against our spread of 4....

equities... we quote 0.1 pc around the real price (o.o5pc above and below) for FTSE 100 stock. Commission on an equity deal is more than this ...let alone stamp duty ... funds for margin etc... hedging every position is only profitable IF we were quoting far wider spreads that we currently do.

We have stated time and again (on this thread) that we do not hedge clients .. we hedge overall position risk. We will allow risk to build up to a predetermined level (on an indvidual market and group of market basis) and then start to hedge when these limits are broken. Even if a client traded in the exact market size of a contract it would be impossible to hedge profitably against the spreads that we quote. Not only this BUT the vast majority of our books are one client being long against another being short, it s only the 'ecsess' that concerns us.

We are in the position of being 'the market' rather like the government never insures public buildings because they are the 'actuarial curve'. We only 'insure' excess risk, not all of it, as we would merely be paying vast sums in brokerage fees to no effect whatsoever.

I realise that no matter what i say some people will always believe every wicked witch of the east story they hear.

Simon

 

[tar]

Tight spreads doesnt mean anything if it is not tradeable ...

 

[bracke]

I have noticed to-day whilst trading that the depth of colur on the trading ticket (red and green) changes each time the price changes. If you click when the colour is lighter the trade is not taken or at least mine were not. It is very disconcerting because you do not know for certain if your trade has been taken.

Yes, you can look at the profit/loss indicator at the bottom of the page but in the past when a trade was taken unknown to me the profit/loss did not change for some time. When I enquired I was informed that I should check my emails for trade confirmation.

Be careful.

Regards

bracke

 

[Phil Mibbutz]

Tight spreads doesnt mean anything if it is not tradeable ...

Spot on, tar.

re. hedging, or lack of it, this at least proves that the old line about SB companies 'wanting clients to win' is complete bollox. What I don't really understand is why scalpers mostly trading small size should be excluded, if most markets tend to 'self-hedge' because punters are always betting in different directions?
Perhaps 'scalping' is just SBspeak for 'winning'?

 

[PipStar]

Spot on, tar.
re. hedging, or lack of it, this at least proves that the old line about SB companies 'wanting clients to win' is complete bollox. What I don't really understand is why scalpers mostly trading small size should be excluded, if most markets tend to 'self-hedge' because punters are always betting in different directions?
Perhaps 'scalping' is just SBspeak for 'winning'?

You have a point though. If the markets tend to self-hedge like Simon seems to indicate then why exclude some traders just because of their trading style? Probably because scalpers have a higher success rate and in any case some of the consistent winners need to be stopped.

 

[ns1000]

If the markets tend to self-hedge like Simon seems to indicate then why exclude some traders just because of their trading style?

Because scalpers are in and out for a pip or two in a few seconds, generally before a position has any chance of being hedged. This is especially bad if the price feed is slow as it renders their positions are unhedgeable, and hit CS's bottom line directly.

 

[Phil Mibbutz]

Because scalpers are in and out for a pip or two in a few seconds, generally before a position has any chance of being hedged. This is especially bad if the price feed is slow as it renders their positions are unhedgeable, and hit CS's bottom line directly.

But if they're not hedging, or the market is already self-hedging, why should it matter much? Not sure about scalpers having the highest win rate, either. I thought swing traders generally did best overall?

 

[PipStar]

Because scalpers are in and out for a pip or two in a few seconds, generally before a position has any chance of being hedged. This is especially bad if the price feed is slow as it renders their positions are unhedgeable, and hit CS's bottom line directly.

They are hedging in house my friend, not on the actual market. And they hedge against someone who has taken the opposite trade in their books. In any case, they dont hedge individual positions at all except when its above their risk tolerance and that's what Simon from CS said if you read his previous posts.

It's all smoke and mirrors. They claim inabiliy to hedge whenever it suits them which is when they want to slow down a winner. A large 100 pip per point position may need hedging I can understand not our measly 1-5 pounds bet. And to be fair,it's not only CS but all of them spreadbet outfits.

 

[ns1000]

They are hedging in house my friend, not on the actual market. And they hedge against someone who has taken the opposite trade in their books. In any case, they dont hedge individual positions at all except when its above their risk tolerance and that's what Simon from CS said if you read his previous posts.

It's all smoke and mirrors. They claim inabiliy to hedge whenever it suits them which is when they want to slow down a winner. A large 100 pip per point position may need hedging I can understand not our measly 1-5 pounds bet. And to be fair,it's not only CS but all of them spreadbet outfits.

Your missing the point. They don't like scalpers because the trades are not hedgeable, whether in house or not. Someone who consistently takes two points in a second or two hits the bottom line. Whether or not this would take them over their position limit is immaterial; if all clients behaved like this, they would have to change their hedging strategy.

I don't understand what you mean about smoke and mirrors - it seems pretty straightforward to me. They want business that they can hedge if need be. They don't want anything they can't. A scalper can lift a price and be out of the market faster than a dealer can hedge, hence the 'referred to dealer' scenario. On average, it's a known cost that makes the client unprofitable. Sure, some may lose, but overrall if they cannot hedge or cannot hedge profitably they have to assume that the p&l would be better off without the client's business. Not all scalpers will make money, but the technique relies on getting on the back of a moving market. By the time a dealer tries to hedge, either the client is out for a profit, or the dealer is left to hedge at a worse price. Sure it might whipsaw around which would ultimately leave a swing trader with a loss, but scalpers don't trade like that; they pick off the bank which is last to move its price, and get out for a pip or two.

 

[JP1966]

Why would any short term trader, making decent money and presumably trading relatively full time, want to use a spread bet account and not an ECN type set up anyway.

Unless the only reason they were using a platform was because it was not upating prices as quickly as the underlying market?

 

[ns1000]

Why would any short term trader, making decent money and presumably trading relatively full time, want to use a spread bet account and not an ECN type set up anyway.

Unless the only reason they were using a platform was because it was not upating prices as quickly as the underlying market?

Three reasons

i) (As you say) Slow prices
ii) No tax
iii) Because ECNs have pulled their feeds. Banks don't always like scalpers either; pulling feeds from an aggregator like Currenex does happen, and will leave you with sh!t liquidity.

 

[JP1966]

Three reasons

i) (As you say) Slow prices
ii) No tax
iii) Because ECNs have pulled their feeds. Banks don't always like scalpers either; pulling feeds from an aggregator like Currenex does happen, and will leave you with sh!t liquidity.

But if you trade frequently its not tax free anyway. And work out the difference in spread - pay the tax.

I agree ECNs aren't perfect but there would always be more liquidity via an ECN than any providers own platform, I should imagine.

 

[gle101]

Simon, my compliments to the recent upgrade of the new platform, great work. User predefined stop loss and limit, what can I say. I have been promoting this for a couple of years and finally you have adopted it. Almost all trading windows is movable, nice feature. I am looking forward to CS transforming to this platform.

 

[tar]

Simon, my compliments to the recent upgrade of the new platform, great work. User predefined stop loss and limit, what can I say. I have been promoting this for a couple of years and finally you have adopted it. Almost all trading windows is movable, nice feature. I am looking forward to CS transforming to this platform.

ofcourse u r talking about DD platform not CS's ...

 

[gle101]

ofcourse u r talking about DD platform not CS's ...

Yes.

 

[tar]

Three reasons

i) (As you say) Slow prices
ii) No tax
iii) Because ECNs have pulled their feeds. Banks don't always like scalpers either; pulling feeds from an aggregator like Currenex does happen, and will leave you with sh!t liquidity.

u cant scalp like professionals with marketmakers or spreadbetting firms in the long run , u should use DMA or futures contracts like Euro FX the spread there 1 pip most of the time and 0.5 pip for RT commissions, and u can be the best ( bid and offer ) . When u get bigger u will scalp with biger size = 10 standard lots and more , and u cant do this with a SB firm or a MM ...