Does anyone here work for a SB company?

[tommog]

Hello all!

I was wondering if anyone here actually works for a spread betting company? What are they like to work for? Many people talk of spread betting companies as bookies and i would like to know how do spread betting companies look upon consistant winners? How do you price your markets? Do you really not fill orders as promptly for your bigger clients? And any other questions you probably aren't allowed to answer. It would be interesting to hear an "insiders" view of the industry.

cheers

 

[Airthrey Capital]

I am amazed at the huge amount of suspicion and cynicism that is aimed at the spreadbetting companies by many posters on this site.

Spreadbetting companies are strictly regulated, and have neither the time nor the means to implement half the "scams" that they are accused of.

I can only assume that the criticisms aimed at them come from people who have lost money and fail to understand / admit that the losses come from their own poor trading skill / knowledge / discipline.

One only needs to read the postings by Capital Spreads on this site to realise that there are people with integrity working within the business.

However, one can shout until one is blue in the face that spreadbetting companies do not implement "dodgy" practices.

But like all unsuccessful traders, they fail to listen and fail to admit their own trading weaknesses.

Now instead of moaning, go away and re-think your trading strategies.......

 

[TheBramble]

Spreadbetting companies are strictly regulated, and have neither the time nor the means to implement half the "scams" that they are accused of.

..and the other half...?

Seriously though BL, you're right I am sure - some failed SB traders will blame the SB rather than their own poor system, money or risk management.

But it has to be said, there are instances where SB prices have spiked without any similar movement in the underlying and it has happened far too often for it to be purely technical in nature. The question of poor fills (no fills) when the market is moving in the punters favour also occur more regularly than one experiences or hears about with regular brokers. Not to mention the situations where bets are refused. It's unlikely all of these instances are down to out-and-out lies or sour grapes from c*rappy traders.

I think there is cause, at least, to keep an open mind to the possibility of shenanigans from the SBs. They certainly have the ability to carry out all the tricks they are accused of. Whether they do or have done in all cases cited is quite another matter.

 

[henry766]

i'm with blairlogie on this one, think it's true in life too , incompetence far more common than conspiracy!!

 

[andrewmooton]

well.....i've had a similar conversation with a poster on moneytec called bunnygirl. She is a very successful fx trader who trades with deal4free spreadbet. She tells me shes been with them for 4 years and any problems shes had with them have always been sorted. If they were so bad then she'd have left them by now. Thats good enough for me.

 

[henry766]

another reason they get bad press is because they have more clients than some , as people don't shout about ok service so much as they do bad you can get a disrepresentative view on boards like these, i've been caught out with thier spread widening on me occasionally , but it's generally tighter and cheaper than others , just have to be a little carefull is all!!

 

[CityTrader]

I'm with Blairlogie on this one,. There are way too many conspiracy theories out there - the only problem I've had, is with CityIndex refusing point blank to honour a phone trade - and accordingly, I have never dealt with them again.

There are a lot of SB'ing companies out there ( 6? 8? never actually counted) Don't only use 1- open accounts with 2 or 3. Find the one that suits your style the best, and if you think 1 of them's conspiring to part you from your money? use another one. I think you'll find it's your own lack of accountability rather than the SB'ing companies or the markets conspiring to do it....

 

[Buk]

good posts Blair/City Trader.....maybe another reason why you don't get too many peeps shouting the odds in defense of the SB's/positive account balances is cos they'd attract a shed load of doubters/flamers??!!

I think those who trade regularly (via all avenues) can testify to fast tricks & spoofing now & again - after all, it's the business we're in....but again, if your strat(s) are tight & your finger quick, it shouldn't do too much harm.

 

[Denny]

Spreadbetting

I do think SB companies are getting a bad press here. SB companies operate on a wider spread than a conventional broker, obviously, and this is their commission. If you look at conventional brokers the spread at some times during the day, especially on lightly traded companies, can move dranatically. Therefore SB companies just follow suit as they would have to if they want to make money.
I honestly feel it is more likely to lose out with a conventional broker due to scams by market makers. Just look how many stoplosses get triggered because the market maker can see the orders waiting to be filled and therefore lower prices for a short while to buy in stock at a low price. The conventional brokers I am sure welcome this as every trade makes them money.

Just check ADVFN for trades and you will be amazed how the spreads on some FTSE 250 companies widen sometimes for apparently no reason.

I do not work for a SB company nor have any vested interest in them except for being a punter with IG Index & capital Spreads.

Denis

 

[stevespray]

Denny....Market Makers can not see stop losses. The only sides of the markets which are visable are the two order books. That is 'bids' for stock below the market and 'asks' for stock above the market. These are effectively 'limit orders'. Stop orders are completely different. These orders are not held at exchange but by your broker. If you stop gets triggered then your broker just submits a market order to close your position at the prevailing level.
It could of course be argued that the spreadbetting firms have access to you stop loss levels becuase they encourage you to set stop losses with them. In truth this could be a hidden advantage for them when it comes to making their prices. If they know that certain people will be doing something at a certain level then it can become financially beneficial for the SB co to ensure that their market does or doesnt trade at that level.

Steve.

 

[CityTrader]

I.
I honestly feel it is more likely to lose out with a conventional broker due to scams by market makers. Just look how many stop losses get triggered because the market maker can see the orders waiting to be filled and therefore lower prices for a short while to buy in stock at a low price. The conventional brokers I am sure welcome this as every trade makes them money.



Denis

I have to be honest, I'm surprised this conspiracy theory ( AKA " a bad workman blames his tools" ) didn't come up earlier.
Like Stevespray says, a Market maker can NOT see the stop loss orders. If a broker chooses to leave a stop loss with him, then that's down to their relationship, but it's extremely unlikely. And even then, it would only be in SEAQ,. AIM or OFFEX. No dis respect Denny, and after all, we are all learning to some degree, but surely you should understand the basic workings of the markets you are trying to trade?

Be lucky..

CT

ps if we follow your scam idea to a logical next step, what would there be to stop the predatory instituions (who do run the market )buying large amounts of this given stock, when the market maker has only lowered his price to try and buy some retail punters 500 shares from a stop loss? sounds like a recipe for disaster....

 

[Denny]

Spreadbetting

My post was intending to stick up for SB companies, not a whinge about blaming anyone because I do rather well trading fulltime on the markets. I tend to trade more medium term so knowing how stop orders are initiated are rather irrelevant to me because I only use automatic stop orders whilst spreadbetting. With my longer term trading I certainly use a stoploss but not an automatic one rather by a disciplined approach based on the closing price which I always adhere to. This stops one getting stopped out due to erratic movement of prices.

Denis

 

[gullible]

good posts Blair/City Trader.....maybe another reason why you don't get too many peeps shouting the odds in defense of the SB's/positive account balances is cos they'd attract a shed load of doubters/flamers??!!

I think those who trade regularly (via all avenues) can testify to fast tricks & spoofing now & again - after all, it's the business we're in....but again, if your strat(s) are tight & your finger quick, it shouldn't do too much harm.

Buk,
agree with everything you have said. However, with CMC at times even with fastest finger your attempted trade will only be accepted if it is going against you. Actual experience not once, twice, thrice but several times:-

Once the mouse is clicked the order screen is frozen, no more trades can be placed, may eventually go through only if price as moved against me, Otherwise a re-quote.

Mouse clicked, order screen stays yellow, theoretically giving me a option to cancel the order as well as an option for CMC to refuse the trade. If the price moves against me try to cancel -no luck trade accepted. Otherwise the screen stays yellow till the inevitable re-quote.

Trade accepted, subsequently cancelled -reason bad price. Only the opening trade cancelled, closing trade stays valid. Had to have a 10 mins discussion before no profit/loss situation was restored- only on one occasion.

CMC, as market makers, told me that they will not accept an order for 1000 Abbey National (FTSE 100 CO) as there were no buyers. Placed limit order, price reached the limit order - no fill. When queried got a similar response, however, all of a sudden got filled, and guess what within seconds the price moved in the right direction by several pence. Forget the details, but it was about 10 to 15 pence.

Finally, the above tactics were experienced with 80, 25, 5 and even 1 Dow contract.

None of the above is made up or is sour grapes actual practical experience.

 

[Buk]

yep, fair points Gullible....sorry, I was referring to the currencies in my blurb on that post, and on hindsight, it's a different environment altogether.

I can appreciate (& empathise with) your frustration, but honestly can't comment or share the occurances you speak of, cos I don't trade shares/indices etc......

I'll butt out of this conversation it's apparently aimed at a different arena, apologies for insinuating these situations aren't 'the norm' as I'm not really qualified to judge the daily ins & outs in that particular camp!!.....all the best mate

 

[LION63]

What gullible describes happens regularly with CMC and there is no point in pretending that it does not. Sadly it seems that the more successful the trader is, the more it happens (shares and indices). Traders can only talk about their own experiences and with CMC it is not a case of seeking to place the blame elsewhere. IG Index on the other hand do not carry out such practises (in my experience) but their spreads/charges are much higher. The problem with Capital Spreads is that they only accept relatively small trades (based on comments posted by other members) so the best thing is to have a few accounts and use them for different types of trade.

 

[wisestguy]

tommog ,

if my own experience is anything to go by , SB co's look badly upon consistent winners , no good for their profits and particularly their dealers egos .

Gov. regulation rarely amounts to much . they still have a lot of leaway to srew up your trading if they so wish . give you one example - if you constantly use stop orders with an accompanying stoploss order and you keep winning doing this , then finspreads will put the brakes on that . at least that's what happened to me a couple of years ago.

IG are even worse , I won't begin to get into them , PM me if you want details.

I have taken legal action agaisnt 2 firms and come out tops against 1 of them .

good thing the net , at least we consumers can alert one another to the stinkers out there .

 

[bbcdancer]

I used to work for a spreadbetting company and having looked at all SB'ers accounts, I can hand on heart say thay over 85% SB'ers lose money. Yes you could say SB companies make their money on the spread but if you know that 85% of your clients lose money, then is there a need to buy a futures contract on the real market to back them? Simply wait for your punter to slip up and pocket their money. Especially with punters that bet with less than £5 a stake. The transaction cost of backing a £1 staker SB in the real markets makes it economicial unprofitable to sustain in terms of resources of time and money.

 

[jklondon]

I used to work for a spreadbetting company and having looked at all SB'ers accounts, I can hand on heart say thay over 85% SB'ers lose money. Yes you could say SB companies make their money on the spread but if you know that 85% of your clients lose money, then is there a need to buy a futures contract on the real market to back them? Simply wait for your punter to slip up and pocket their money. Especially with punters that bet with less than £5 a stake. The transaction cost of backing a £1 staker SB in the real markets makes it economicial unprofitable to sustain in terms of resources of time and money.

I agree with you on the transaction cost of hedging all transactions - and thats why SBs like IG dont hedge all trades but have allow themselves to take an exposure on instruments (upto a limit) but surley you can rely on clients losing i.e take the other side of the trade yourself?! I think the 85% means that at the end of the year 85% of them will have less equity than they started with and a key reason is frankly lack of Money Management...

 

[stevespray]

JKLondon, I would agree with you re money management – Many people see the massive leverage offered by the spread betting companies as an advantage – in most cases it is certainly not an advantage, it is purely a way of encouraging a customer to take an exposure beyond their capitalisation. The net result can almost be described as ‘inverse money management’ – in other words the money management is so poor that failure is almost a certainty.

BBCDancer – Your comments reflect those of other contacts that I have within the world of spread betting. I’ve discussed a number of issues with them at length. I’ve said many times before that, to a certain degree, the evolution of spread betting is very similar to the evolution of the ‘Bucket Shops’ on America’s East Coast in the late 1800’s. In essence these shops would hedge very little if anything. They knew that their ‘products’ offered such huge leverage. The net result was that the punters had the odds stacked massively against them – a small move in the market against the punter would often result in the loss of his / her entire pot. A number of the books written about Livermore mention how the bucket shops acted to protect their interests when he started to make money from them. Is it any different today? Widening of the spreads and delays in order execution are tricks which were played by the bucket shops 120 years ago. If we are honest then we know that, in this computer driven world which we now live, it is possible to execute customer’s orders electronically in a fraction of a second. Ask yourself why many of these companies still route certain orders or customers through a manual dealing procedure? Most of these companies are fully aware that an introduction of a delay gives them a chance to observe movements within the market which were subsequent to the order being placed – of course they can then use these ‘subsequent movements’ to determine the financial viability of the submitted order.

In my own opinion the spread betting companies have their uses but I’m far from convinced that it is possible to remain profitable in the longer term by using them. Like Wisestguy said, when you do find a way of making money from them they’ll just claim that you are taking advantage of them is some way and they’ll alter how they deal with your orders.

Steve.

 

[marben]

Hi,

Let me add my own experience with Deal4Free (CMC) to the pot.

I have been trading regularly with CMC for 8 months now. I have completed about 100 trades with them. After a few experiments I now trade exclusively in FTSE100 stocks, swing trading over a period of days, not "day trading". I always place stop losses on my trades. My CMC account is now about £15,000, backed by £100,000 of trading capital. My average margin per trade is about £1,000.

After this time my overall profit exceeds £7,000, with my maximum profit or loss on any one trade being about £1,500. For the last 3 weeks I have also used Level 2 to monitor what's happening in the underlying markets and improve my entry/exit timing.

Since having L2 I have been amazed how faithfully CMC's spreads match the L2 spreads. Usually they are the same, within a fraction of a second. Sometimes CMC does shave 0.25 to 0.5 points on the L2 spread but not on most stocks.

In practically all cases my stops have been honoured at the level that I set (I can only think of maybe 2 or 3 trades where I got a worse price).

I try to open or close trades when prices are NOT moving fast and get my requests honoured at the requested level. The times I get re-quotes are when prices ARE moving fast and/or the market is thin.

Overall I am happy with CMC's service and have not found any evidence of "shenanigans".

Having said that, I don't think I'd use spreadbetting for day trading. If you REALLY need instant response then you'd better have direct access and capital to match.

Cheers,

Mark