Help advice on managing the spread to achieve optimum entry

[Singhstyle]

Hi

I been using IG and have been stung a few times with the spread swing widely and with a heavy bias ( at one point it swung 18pts to a buy side )! that was the way i thgt it would go

Any advice on managing this as I appreciate they need to make cash but i get wiped out in terms of having a harder slog to go to make profits and that is after covering the spread. I am a not a ay trader but swing so understand that it is the cost of doing business but ...that much ?

 

[Liquid validity]

Instrument and time?
Guessing an FX pair with an already wide average spread around news release?
If its not frequent, just accept it, query it with IG or go elsewhere
with a DMA broker.

Be aware, some FX pairs do have hideous spread anyway.
Current MB spreads for:
USDNOK = 25
EURSEK = 29
USDDKK = 8.9

MB aren't alone there either, LMAX are broadly similar.
Depends on the liquidity of the instrument.
If its illiquid, wide fluctuating spreads are normal.

 

[Singhstyle]

Thanks this is for stocks on the NYSE. I would understand illiquid market but NY? Still working up to FX market !

 

[Liquid validity]

Thanks this is for stocks on the NYSE. I would understand illiquid market but NY? Still working up to FX market !

OK, NYSE, which stock and what time - trading in NY market hours?
Company or market news at that time?

 

[Singhstyle]

ION GeoPhysical Corp . during trading hours ! yeah i know !

 

[Liquid validity]

ION GeoPhysical Corp . during trading hours ! yeah i know !

OK, what time, and was it today?

 

[Liquid validity]

TBH just had a look with IG, perfectly normal.
Looks to be an illiquid penny stock.
Even though its around £5, that is considered penny stock,
right now price is completely stagnant, its illiquid.
DFB spread is 3, worst 'futures' spread is 7.

Nothing untoward, looks normal to me.
Wide spreads with that kind of stock is to be expected.
Stick to DOW 30
Dow 30 Companies - CNNMoney
Or top NASDAQ stocks that are liquid to avoid that.
https://indexes.nasdaqomx.com/Index/Weighting/NDX
If you don't want to trade the above, then spreads like these go with the turf

 

[Singhstyle]

thanks > much appreciated!

 

[lucas_king]

Hi

I been using IG and have been stung a few times with the spread swing widely and with a heavy bias ( at one point it swung 18pts to a buy side )! that was the way i thgt it would go

Any advice on managing this as I appreciate they need to make cash but i get wiped out in terms of having a harder slog to go to make profits and that is after covering the spread. I am a not a ay trader but swing so understand that it is the cost of doing business but ...that much ?

Hi,

It depends what you’re trading. If you’re doing indices or commodities for example, they make the price as they’re OTC instruments (I’m assuming you’re spread betting?). There’s pretty much nothing you can do about this.

However, if you’re doing shares or FX, you should look for a DMA solution (either conventional shares or CFDs, not available on spreadbetting in a true sense).

DMA (direct market access) means you deal in the underlying real market (e.g. London stock exchange). You’ll get better prices, and you won’t see silly spikes! I’ve moved on from spread betting. For all its tax advantages, it’s no good if it’s harder to make money.

Best thing to do is to Google ‘direct market access’ for more info.

 

[barneydunn]

Hi,

It depends what you’re trading. If you’re doing indices or commodities for example, they make the price as they’re OTC instruments (I’m assuming you’re spread betting?). There’s pretty much nothing you can do about this.

However, if you’re doing shares or FX, you should look for a DMA solution (either conventional shares or CFDs, not available on spreadbetting in a true sense).

DMA (direct market access) means you deal in the underlying real market (e.g. London stock exchange). You’ll get better prices, and you won’t see silly spikes! I’ve moved on from spread betting. For all its tax advantages, it’s no good if it’s harder to make money.

Best thing to do is to Google ‘direct market access’ for more info.

Any suggestions on a broker?

 

[lucas_king]

Any suggestions on a broker?

I really don't want to suggest brokers. As you'll find too many negative comments/ reviews. As, someone is winning money with IG and others are losing. Same case with moreover all the brokers. First thing first, make sure you always check the broker is it regulated by FCA? If you are looking to trade CFDs, I would suggest looking for a broker which offer DMA CFDs (direct market access). As the name suggests, these brokers will give you direct access to the market which means your trades will be executed directly onto the exchange (London Stock Exchange/Chi-X/BATS etc). With DMA, you will get the best possible pricing and the real underlying market prices.If you're new in trading you can go for Accendo Markets. They have really good trading materials and guides which are free . You can also try SAXO, IG. I love these brokers only because these guys offer me direct market access (better liquidity/pricing etc)

 

[barneydunn]

I really don't want to suggest brokers. As you'll find too many negative comments/ reviews. As, someone is winning money with IG and others are losing. Same case with moreover all the brokers. First thing first, make sure you always check the broker is it regulated by FCA? If you are looking to trade CFDs, I would suggest looking for a broker which offer DMA CFDs (direct market access). As the name suggests, these brokers will give you direct access to the market which means your trades will be executed directly onto the exchange (London Stock Exchange/Chi-X/BATS etc). With DMA, you will get the best possible pricing and the real underlying market prices.If you're new in trading you can go for Accendo Markets. They have really good trading materials and guides which are free . You can also try SAXO, IG. I love these brokers only because these guys offer me direct market access (better liquidity/pricing etc)

Ok, thanks for the indepth reply.

 

[mike.]

I’ve moved on from spread betting. For all its tax advantages, it’s no good if it’s harder to make money.

Hi Lucas, what eventually made you decide to move on, Im pondering with the same idea, but, i have had no issues at all with my sb broker, entries / exits, slippage, have been spot on, do the advantages of DMA outweigh in your opinion ?

 

[timsk]

Any suggestions on a broker?

Hi barneydunn,
Check out this FAQ: Can You Recommend a Data Feed, Charting Software & Broker?
Tim.

 

[timsk]

. . . do the advantages of DMA outweigh in your opinion ?

Hi Mike,
I've had lots of both. On the SB side, in the early days, accounts with CMC Markets, Finspreads and, currently, an account with ETX Capital. On the DMA side I've had accounts with IB, TradeStation and Infinity Futures.

The key difference is in sophistication. DMA is aimed at pro' traders and the serious end on the retail market. So, for example, if I remember rightly, there is something in the region of 50 different order types using IB! By comparison, Infinity is a comparatively simple platform (and really, really good, IMO) with far fewer order types. Even so, it had a DoM ladder and you can place your orders anywhere you want. SB platforms won't let you do that. Also, with Infinity, the service was exceptional, waaaaaaaaay better than any other broker I've ever used.

I'd say that if you're scalping and wanting to utilise intra-day tools and techniques, then DMA is the way to go. If pin point entries close to the current price with tight stops aren't essential and your typical trade lasts for, say, 15-20 minutes or more, then the SB route may suit you fine. It entirely depends on your trading style and requirements. Spreads are an obvious issue and will vary from instrument to instrument. I've not checked recently, but SB spreads on U.S. equities used to be horrendous, untradeable on any time frame in some cases. Also, the variety of instruments available to trade may be an issue. Just look at what you can trade on IB compared to any SB broker. Then again, how many people want to trade some obscure company listed on the Botswana stock exchange?

On top of that of course you have to decide whether or not you believe in the conspiracy theories that all SB firms are crooks out to fleece you for every penny. However, based on your comments, I assume you don't hold that view!

Tim.

 

[mike.]

cheers Tim, very helpful as usual, I have a reasonably sound strategy and i only trade forex majors, As you mentioned I am happy doing what i do, Yes, the spread can often be wide but, it's my choice whether to trade it with a 10 pip spread, and if ive done my analysis right, hit a my target on top of the spread, or ill look elsewhere at another pair. If i was to progress then i was wondering if i should go DMA ? My biggest obstacle is getting time to trade with a full time job and long hours.

 

[mike.]

cheers Tim, very helpful as usual, I have a reasonably sound strategy and i only trade forex majors, As you mentioned I am happy doing what i do, Yes, the spread can often be wide but, it's my choice whether to trade it with a 10 pip spread, and if ive done my analysis right, hit a my target on top of the spread, or ill look elsewhere at another pair. If i was to progress then i was wondering if i should go DMA ? My biggest obstacle is getting time to trade with a full time job and long hours.

Just to add, I dont class myself as a scalper, I am willing to hold on all day to a trade if i think it will run, but sometimes my target ( or set limit order ) is hit in a very short time, looking like a scalp.

 

[timsk]

Just to add, I dont class myself as a scalper, I am willing to hold on all day to a trade if i think it will run, but sometimes my target ( or set limit order ) is hit in a very short time, looking like a scalp.

Sounds good to me Mike.
Ultimately, this issue of SB Vs DMA is a bit like dark chocolate Vs milk chocolate. The only real way for the question to be answered to the complete satisfaction of each trader is for them to try both! You can listen to any amount of well argued posts in favour of sticking with your SB firm but, in the back of your mind, you'll always wonder if you've made the right choice. That nagging doubt will always be there: am I missing out on extra profits, better fills and more sophisticated risk and money management techniques etc? I say give 'em a shot. You can demo trade most DMA platforms, so you can at least get a feel for which one you like.
Tim.

 

[lucas_king]

Hi Lucas, what eventually made you decide to move on, Im pondering with the same idea, but, i have had no issues at all with my sb broker, entries / exits, slippage, have been spot on, do the advantages of DMA outweigh in your opinion ?

Hi Mike,

Sorry for late reply.
I think it really depends on your size and strategy. If you’re playing with small amounts, you’re more likely to get a fill (of course, it’s all based on underlying market liquidity). If you’re trading ‘large’ amounts and the size isn’t there, you can’t get the price – and that’s where, in my experience, the SB providers cream a bit off the top by giving you worse fills than you’d get DMA.

Of course, ‘size’ is relative to the asset you’re trading.

I’d say do what works for you. I still have my SB account, and although I mostly use DMA CFDs, the SB account is handy to have.

It might be worth trying DMA CFDs, see how you get on.