Direct access advantages over spread betting?

[qmpma1]

Hi,

I am fairly new to trading and am currently trading the GBP/USD (scalping, in and out within a minute) making on average 5-10 points a day from a few trades (obviously betting a reasonable amount per point). I use Worldspreads which offers a 1 point spread and instant execution on the current Buy/Sell price

Is there any advantage in me looking into direct access rather than spread betting? I expect the margin would be higher (for example I can currently trade £25/point with £3750 as they require £150 for every £1/point) and also I would have to pay tax on my winning... Is there an upside to direct access trading?

Thanks in advance for comments.

 

[FXSCALPER2]

The simple answer is 'no'. I have time on my hands, so let me compare a very good ECN I use (IFX) with CMC (SB) for you.

1- With the ECN the spread for GBPUSD is mostly (but not always) 1 pip. At odd times (read out of London and NY) it can widen to 4 pips, for example. The 1 pip spread is obviuosly variable because you are trading direct access and the spread is not fixed. You pay about $20 commission per round trip per lot. With CMC, you get 3 pip fixed spreads and of course pay no commission. In terms of cost, therefore, you are no better off trading with an ECN. (If WS allow you to actually trade with a 1 pip spread from 8-4, they are far and away better than an ECN)

2- With the ECN you get slipped and stops get missed regularly (not by much most of the time but you don't get the price you want). Trying to trade using market orders during news releases can be suicidal. With CMC, you almost never get slipped and are almost always stopped at the price you want. During news, the platform may freeze or trades rejected. (I guess the same is true for WS)

3- The margin requirements are more or less the same (at the time of writing) for both.

4- You have to wire the money and pay the wire transfer when you deposit as well as when you withdraw and (much more importantly) you can end up recevieng terrible exchange rates.

I did trade with MBtrading/IFX and it is mostly hype. However, you get a lot of cool order functionality with those guys. Cheers.

Hi,

I am fairly new to trading and am currently trading the GBP/USD (scalping, in and out within a minute) making on average 5-10 points a day from a few trades (obviously betting a reasonable amount per point). I use Worldspreads which offers a 1 point spread and instant execution on the current Buy/Sell price

Is there any advantage in me looking into direct access rather than spread betting? I expect the margin would be higher (for example I can currently trade £25/point with £3750 as they require £150 for every £1/point) and also I would have to pay tax on my winning... Is there an upside to direct access trading?

Thanks in advance for comments.

 

[qmpma1]

The simple answer is 'no'. I have time on my hands, so let me compare a very good ECN I use (IFX) with CMC (SB) for you.

1- With the ECN the spread for GBPUSD is mostly (but not always) 1 pip. At odd times (read out of London and NY) it can widen to 4 pips, for example. The 1 pip spread is obviously variable because you are trading direct access and the spread is not fixed. You pay about $20 commission per round trip per lot. With CMC, you get 3 pip fixed spreads and of course pay no commission. In terms of cost, therefore, you are no better off trading with an ECN. (If WS allow you to actually trade with a 1 pip spread from 8-4, they are far and away better than an ECN)

2- With the ECN you get slipped and stops get missed regularly (not by much most of the time but you don't get the price you want). Trying to trade using market orders during news releases can be suicidal. With CMC, you almost never get slipped and are almost always stopped at the price you want. During news, the platform may freeze or trades rejected. (I guess the same is true for WS)

3- The margin requirements are more or less the same (at the time of writing) for both.

4- You have to wire the money and pay the wire transfer when you deposit as well as when you withdraw and (much more importantly) you can end up recevieng terrible exchange rates.

I did trade with MBtrading/IFX and it is mostly hype. However, you get a lot of cool order functionality with those guys. Cheers.

Many thanks for your detailed reply. I thought the short answer maybe no. WS charge 1 point between 8-4 (and it is mostly instant fills unless they have a problem and it switches to referral- - but then they do re-quote before they fill you), outside of that it is 3 (more standard for spread betters). During news releases there can sometimes be issues, although if I trade around the news I tend to trade on the retracement, which is more predictable and after it has calmed down a bit, so its not too bad. Thanks again.