Good and bad spread betting companies

[fleetwood]

Hello all
Im a bit of a noob to trading so ive just been going from one trading firm to another picking up the free money having a little play and then moving on. Anyway I'm running out of firms that I can swindle out of money so i guess I'm going to have to start learning how to trade.
So which companies are worth sticking with and which ones should I sack off??? Im asking this cos ive heard some trading companies manipulate the prices and some dont.

Thanks alot fleet

 

[ZEPPO]

"Im asking this cos ive heard some trading companies manipulate the prices and some dont"-you heard bad, then; all companies manipulate their prices, it just happens that some do it less than others.
For example, IG Index has got a very good reputation, while CMC a very bad one.
A word of warning: forget about scalping, or you won't last long.

Eduardo.

 

[fleetwood]

Thanks zeppo are there any more checking out or avoiding.
Im guessing you have a dma account zeppo??

 

[Shakone]

It is actually hard for them to manipulate their prices a lot during market hours. Because sooner or later they have to come back towards the actual market price, and so if they deviate too much then someone could take a position with one spreadbet company and take a position with another, and make risk free money when prices return to the real market prices. Hopefully there are people out there that look for that opportunity to keep them honest. But don't be surprised if they move it a point or two that the market never really moved to stop you out.

 

[montmorencyt2w]

It is actually hard for them to manipulate their prices a lot during market hours. Because sooner or later they have to come back towards the actual market price, and so if they deviate too much then someone could take a position with one spreadbet company and take a position with another, and make risk free money when prices return to the real market prices. Hopefully there are people out there that look for that opportunity to keep them honest. But don't be surprised if they move it a point or two that the market never really moved to stop you out.

Kind of argues for wider stops, doesn't it; at least slightly wider than "expected".

 

[ZEPPO]

"Im guessing you have a dma account zeppo??" - er, no, you're guessing wrong again, I wouldn't touch dma with a bargepole; that's because there are still some morons who are responsible for the "fat finger" syndrome and don't want to be caught out.
What I do is to trade off daily charts, use guaranteed stop loss, and put them as far as I can, to avoid having them run by the spreadbetting company.
Then I use my own (mental if you will) stop losses, much smaller, from my charts, not theirs, and manage my trades from there.
I use IG Index; I was tempted to use CMC, but after some awfull reviews decided against it.

Eduardo.

 

[Block_king]

paddypowertrader (I know not many people on the site would use them but still) have been in my experience total s**t. Their platform suddenly breaks down for no reason whatsoever and the customer service is poor. However I'm sure other people have had good experiences but In my opinion they are ****.

IG Index and Capital Spreads have better reps - loads of people have more than one account so that you can compare spreads during the day, and hopefully inform us if one of them are messing about.

 

[fleetwood]

Thanks for the replies guys.
Shakone u read my mind thats what I was planning to do. But seems like that may not really be possible. doh.
Zeppo thanks for the reply although I didnt understand what u said about dma.
Looks like ig index is the way to go.

 

[shadowninja]

Yep, IG all the way.

 

[Black Swan]

A word of warning: forget about scalping, or you won't last long.

Eduardo.

Why? Run out of cash, or get kicked out into the long grass/phone dealing of so called undesirable customers? How do you define a scalper; what is the difference (in your view) between a scalper and a day trader? For example; taking fifty pips out of cable this morning inside 40 minutes, is it a scalp or day trade?

 

[timtech]

Mind the Platform

Thanks for the replies guys.
Shakone u read my mind thats what I was planning to do. But seems like that may not really be possible. doh.
Zeppo thanks for the reply although I didnt understand what u said about dma.
Looks like ig index is the way to go.

I think one important aspect is the trading platform. Some are very slow and by the time the deal goes through you have lost your price. They take their time, especially when the price is going against you. Of them all, I have found ETX Capital the easiest to use, but different platforms suit different people.

 

[ZEPPO]

Why? Run out of cash, or get kicked out into the long grass/phone dealing of so called undesirable customers? How do you define a scalper; what is the difference (in your view) between a scalper and a day trader? For example; taking fifty pips out of cable this morning inside 40 minutes, is it a scalp or day trade?

I would call that a trade; a scalp would be in my opinion a trade which lasts seconds; spreadbetting firms don't like that for some reason, but that is them, not me.
It would be better to trade the real thing if you are a scalper - wheter stocks, futures or FX; that's my opinion for what it is worth.

Eduardo.

 

[ZEPPO]

Thanks for the replies guys.
Shakone u read my mind thats what I was planning to do. But seems like that may not really be possible. doh.
Zeppo thanks for the reply although I didnt understand what u said about dma.
Looks like ig index is the way to go.

I guess you mean the "fat finger" syndrome; that's when some "trader" confuses Pennies with Pounds, sending the price of the share suddenly tumbling, used to happen a lot with dma, as you access the market directly.
I've seen massive spikes in the price of shares because of this.
Just in case I'd rather not play that game.

Eduardo.

 

[new_trader]

I guess you mean the "fat finger" syndrome; that's when some "trader" confuses Pennies with Pounds, sending the price of the share suddenly tumbling, used to happen a lot with dma, as you access the market directly.
I've seen massive spikes in the price of shares because of this.
Just in case I'd rather not play that game.

Eduardo.

If you were S/B and had a STOP at those "fat finger" spikes they would be hit just the same. Do you honestly think that S/B companies are acting in your best interest and protecting you from price spikes? You gave up DMA because you didn't have a clue about what is what and what is not. Stop talking nonsense. DMA is professional and S/B is for kids betting pennies.

 

[Splitlink]

I can't believe that fat finger spikes are caused by "pounds instead of pennies" traders, as Zeppo suggests. More likely to be fast fingered, professional traders in city offices putting one zero too many on the trade. If there are any left.

 

[trader_dante]

If you were S/B and had a STOP at those "fat finger" spikes they would be hit just the same. Do you honestly think that S/B companies are acting in your best interest and protecting you from price spikes? You gave up DMA because you didn't have a clue about what is what and what is not. Stop talking nonsense. DMA is professional and S/B is for kids betting pennies.

Agree with new_trader on this to an extent. If you had a stop in with an S/B company and there was a fat finger, you would be hit regardless. However, with an S/B company you can have a guaranteed stop - a luxury you certainly do not get in the direct market.

Also, S/B providers are a little "fairer" despite what people say. Take, for example, a fat finger in the market place. Lets say the price of the Bund goes down 300 points in a blip due to a fat finger. Now lets take two traders:

Trader A sees it blip down on S/B and buys it at the low.
Trader B is using direct market access and also sees it blip, acts instantaneously and buys it at the low.

The market rallies back 200 of the 300 points almost instantly and both traders close out for a quick 200 points profit. As soon as they do, the market then rallies another 100 points to where it was before the blip.

Then, as often happens, the exchange (Eurex in this case) takes action and cancels all trades that took place below a certain value (e.g. anyone that bought or sold within 175 ticks off the low gets their trades cancelled).

What is the outcome for the two traders?

Trader A with the S/B company gets his trade cancelled in all likelihood so he is flat. In some cases, if done at low size, he may even get to keep his profit, if the fat finger went under the radar.

Trader B, finds that because of the action by the exchange he is now actually 100 points offside on his position. That is because, his BUY was cancelled by the exchange but his SELL TO CLOSE wasn't. Therefore he finds himself net short and 100 points offside. And what's worse, whoever fat fingered short, has got to close to mitigate risk, so the market is now likely to rally hard as all the participants figure this and make the poor ******* pay up.

Just one of the dangers of direct market.

There are many others. Infact, there is a lot more danger than with an S/B company.

Just as a final aside - I don't agree with New_Traders post that spread betting is for kids playing with pennies. I am sure that for the most part it might be but it actually makes a lot of sense to use SB'ing if your style warrants it. If you are swing or position trading for example, I cannot work out why anyone would want to be in the direct market. The spreads are almost as narrow now on S/B and the lack of commissions and Tax for UK residents is a huge bonus, not to mention the guaranteed stops to save against overnight gapping in volatile markets etc.

I think that direct market is really only a must for scalpers or day traders that do a large number of round trips. Anyone else would be mad not to S/B in my opinion.

 

[Splitlink]

Agree with new_trader on this to an extent. If you had a stop in with an S/B company and there was a fat finger, you would be hit regardless. However, with an S/B company you can have a guaranteed stop - a luxury you certainly do not get in the direct market.

Also, S/B providers are a little "fairer" despite what people say. Take, for example, a fat finger in the market place. Lets say the price of the Bund goes down 300 points in a blip due to a fat finger. Now lets take two traders:

Trader A sees it blip down on S/B and buys it at the low.
Trader B is using direct market access and also sees it blip, acts instantaneously and buys it at the low.

The market rallies back 200 of the 300 points almost instantly and both traders close out for a quick 200 points profit. As soon as they do, the market then rallies another 100 points to where it was before the blip.

Then, as often happens, the exchange (Eurex in this case) takes action and cancels all trades that took place below a certain value (e.g. anyone that bought or sold within 175 ticks off the low gets their trades cancelled).

What is the outcome for the two traders?

Trader A with the S/B company gets his trade cancelled in all likelihood so he is flat. In some cases, if done at low size, he may even get to keep his profit, if the fat finger went under the radar.

Trader B, finds that because of the action by the exchange he is now actually 100 points offside on his position. That is because, his BUY was cancelled by the exchange but his SELL TO CLOSE wasn't. Therefore he finds himself net short and 100 points offside. And what's worse, whoever fat fingered short, has got to close to mitigate risk, so the market is now likely to rally hard as all the participants figure this and make the poor ******* pay up.

Just one of the dangers of direct market.

There are many others. Infact, there is a lot more danger than with an S/B company.

Just as a final aside - I don't agree with New_Traders post that spread betting is for kids playing with pennies. I am sure that for the most part it might be but it actually makes a lot of sense to use SB'ing if your style warrants it. If you are swing or position trading for example, I cannot work out why anyone would want to be in the direct market. The spreads are almost as narrow now on S/B and the lack of commissions and Tax for UK residents is a huge bonus, not to mention the guaranteed stops to save against overnight gapping in volatile markets etc.

I think that direct market is really only a must for scalpers or day traders that do a large number of round trips. Anyone else would be mad not to S/B in my opinion.

That's an interesting insight into a situation that I am not experienced enough to know a lot about. My, only, argument for SB trading is that I have had no problems with mine.

Split

 

[Black Swan]

Agree with new_trader on this to an extent. If you had a stop in with an S/B company and there was a fat finger, you would be hit regardless. However, with an S/B company you can have a guaranteed stop - a luxury you certainly do not get in the direct market.

Also, S/B providers are a little "fairer" despite what people say. Take, for example, a fat finger in the market place. Lets say the price of the Bund goes down 300 points in a blip due to a fat finger. Now lets take two traders:

Trader A sees it blip down on S/B and buys it at the low.
Trader B is using direct market access and also sees it blip, acts instantaneously and buys it at the low.

The market rallies back 200 of the 300 points almost instantly and both traders close out for a quick 200 points profit. As soon as they do, the market then rallies another 100 points to where it was before the blip.

Then, as often happens, the exchange (Eurex in this case) takes action and cancels all trades that took place below a certain value (e.g. anyone that bought or sold within 175 ticks off the low gets their trades cancelled).

What is the outcome for the two traders?

Trader A with the S/B company gets his trade cancelled in all likelihood so he is flat. In some cases, if done at low size, he may even get to keep his profit, if the fat finger went under the radar.

Trader B, finds that because of the action by the exchange he is now actually 100 points offside on his position. That is because, his BUY was cancelled by the exchange but his SELL TO CLOSE wasn't. Therefore he finds himself net short and 100 points offside. And what's worse, whoever fat fingered short, has got to close to mitigate risk, so the market is now likely to rally hard as all the participants figure this and make the poor ******* pay up.

Just one of the dangers of direct market.

There are many others. Infact, there is a lot more danger than with an S/B company.

Just as a final aside - I don't agree with New_Traders post that spread betting is for kids playing with pennies. I am sure that for the most part it might be but it actually makes a lot of sense to use SB'ing if your style warrants it. If you are swing or position trading for example, I cannot work out why anyone would want to be in the direct market. The spreads are almost as narrow now on S/B and the lack of commissions and Tax for UK residents is a huge bonus, not to mention the guaranteed stops to save against overnight gapping in volatile markets etc.

I think that direct market is really only a must for scalpers or day traders that do a large number of round trips. Anyone else would be mad not to S/B in my opinion.

TD could you offer up any opinion on the "behind enemy lines" thread/post with regards to the SB firms? TIA

 

[ZEPPO]

If you were S/B and had a STOP at those "fat finger" spikes they would be hit just the same. Do you honestly think that S/B companies are acting in your best interest and protecting you from price spikes? You gave up DMA because you didn't have a clue about what is what and what is not. Stop talking nonsense. DMA is professional and S/B is for kids betting pennies.

Of course that spreadbetting companies don't give a damn about the trader! They are nothing more than glorified bookmakers, FSA be damned!
I didn't give up DMA; I never used it in the first place! Not after what I saw; were I to put orders for shares, I'd do it through a broker without using DMA, although I would use the screen to see what is going on.
Also I do not spread bet on shares, only on indices - less room for fiddles, although they do their best; they wouldn't be offering 24 hours service otherwise.
Does this still seeems like nonsense to you?
I do agree that DMA is for professionals though - so don't use it! ( I doubt professionals would visit sites like these as they have better things to do with their time, unlike you it appears).

Eduardo.:cheesy:

 

[montmorencyt2w]

For what it's worth, I can think of an author, reasonably well known I think, who says he makes most of his trading income these days from spread betting. He is high-profile enough and presumably successful enough not to be missed by the "observers" in the firms he uses. However, he is essentially a position trader, I would say; absolutely not a scalper.