Is 25pt bias typical at D4F ??!

rjay

Active member
I just started trialling D4F after seeing good things about them here, but there Dow quote (or "US30") is routinely 25 pts or more away from reality ... and then it returns to normality after a while. This is during the middle of the day, with no adverse market conditions.

Is this normal ?? If so, why all the good press for them ?? Do people here use TA on the D4F price or the "real" price ??! What a nightmare ...
 

mmillar

Guest
rjay,

Biased from what? There are two things here that people confuse - an Index and a Future. What most people look at and is quoted in the press is the Index - but you can't trade an index. What D4F are quoting you is the Future. The future and the Index are (almost) always different.

For info on how to trade these you should start with Chartman's posts.

Cheers
 

sidinuk

Established member
does this 'bias' that you talk about happen to be around 2.30 to 2.40pm? If so it's just the cash index (which opens at 2.30) catching up with the futures (which are open nearly 24h).
 

rjay

Active member
mmillar said:
rjay,
What D4F are quoting you is the Future. The future and the Index are (almost) always different.
Cheers

OK - but why is it called CASH not FUTURE ??!

Also, I'm comparing D4F's prices to other SB companies and they are way out sometimes ...
 

rjay

Active member
sidinuk said:
does this 'bias' that you talk about happen to be around 2.30 to 2.40pm? If so it's just the cash index (which opens at 2.30) catching up with the futures (which are open nearly 24h).

Hi,

It happens intermittently throughout the day ...
 
That difference is just the fun of trading with SB companies.

Some take offence at it being called a bias, but it most definitely does happen all the time (the difference between the cash price and the SB company price), so you just have to make sure that you allow for it in your trading strategy.

You sound as if you were surprised at the difference. Trading isn't an easy game at the best of times, so you may need to go back to paper trading knowing about the 'difference' in prices to see whether your strategy needs to be changed. It's far easier to do this until you are familiar with when it happens, and how you can trade round it.

There are no poor SB companies around, only punters. The SB companies make their money by being better than the majority of punters. Theirs is a business, and they're in business to make money.

Yeah, I hate 'em too! :cheesy:
 

Helenqu

Established member
I think the thing to be aware of is if the way the spread moves about gets in the way of your trading then you are most likely trading too close to the action for spreadbets. You need big stops and long timeframes to make SB indices work properly.
 

mmillar

Guest
rjay,

The 'cash' IS the 'future' with a few points difference. There are a lot of posts around with 'discussions' on this subject.

If you can see D4F's prices different to other SB's then don't complain about it - arbitrage it :cheesy:

Cheers
 

darrenf

Well-known member
Ive never really understood how you can arbitrage SB's although I've seen it referred to a few times.

What I understand about arbitrage is the simultaneous buying and selling of a position and exploiting the difference between prices and pocketing the difference as profit.

Surely, if you open a long position with one SB company and a short with another, you just end up with two open positions? Even if you then immediately close them, you still end up paying the spread on both SB's. ie a loss.

Can someone explain how you can arbitrage SB's?
 

ZigZag

Active member
rjay. Tou spotted what we all did when we first started. Trading the DOW it is essential to monitor live prices with the SB prices.
If the real price is not within the SB spread let it go. Better still if you want to trade U.S. indices monitor the S&P which you will find ,in your words, less of a bias.Good Luck
 

a320

Established member
Skim & MMillar are right, you should incorporate the bias in to your trading strategy.
Spread Betting companies often give You easy points in the pot if you use the bias in your favor!
I admit hits harder and risker to do this on indices, but on individual stocks especially Nasdaq ones the spread betting companies are at the same disadvantage to MM tricks as everyone else and their price reflects this. So if you know the MM mischief, the bias is a gift :LOL:
But if you get to good, you go on manual fill for your ill gotten gains :(


Cheers a320
 

mmillar

Guest
ARBITRAGE

darrenf & be-positive,

You first assume that two SB companies (A & B) have their prices in line most of the time. Assume that they both have a spread of 2.

The 'real' price is 100. Company A's price is 99/101. Company B's price is at 99/101.

Then the market moves up rapidly.

The 'real' price is at 120. Company A keeps an accurate track on the market and their price is 119/121. But Company B has lagged behind and their price is 109/111.

You Buy from Company B at 111 and Sell from Company A at 119. You are now overall flat and have no risk no matter which way the market moves.

The market keeps going up and the 'real' price settles at 150. Company A's price is 149/151 and Company B has now caught up and is also at 149/151.

You now Sell from Company B at 149, making yourself flat with them. You make 149-111=38 points.
You now Buy from Company A at 151, making yourself flat with them. You lose 151-119=32 points.

Therefore, you have made 6 points. The only risk is the timing.
 
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mmillar

Guest
rjay,

Can I just ask which other SB companies you are looking at?

Thanks
 

jpwone

Well-known member
Myself and another trader look for these arbitrage opportunities between two of the SB companies. In the last year on the Dow cash I could probably count on one hand the number we have spotted and each time the arbitrage opportunity has been one or two points. It has never been worth the risk of doing it as a bad fill on one half of the opening trade would blow it out of the water.

A couple of times a week if you are quick you will find significnat differences between the actual and the SB quote. Forget the open as these are normal but you will find they crop up occasionally in the normal trading day and quite often towards the close. The SB company will have biased a little too much one way and offers you an opportunity. These are not rogue prices (they would not have to honour the trade if they were) but a couple of points in the wrong direction at the wrong time. If you are quick you can trade them but you need to know the market very well to be able to identify them and it is possible that the price is correct because they are correct and that is the way the market is going.

Personally I think you are better off forgetting about arbitrage in the SB arena (for indices) and concentrating on trading the market whilst trying to get the best price you can from the SB company.

I have heard that SB on sporting events does present arbitrage opportunities on occasions and these are worth trading but as I'm not that knowledgable on sport and can't be bothered with checking/looking for these opportunities I doubt I'll ever make a penny from these either.
 

mmillar

Guest
rjay,

The difference you are seeing maybe partly because D4F show real time prices whereas Finspreads show delayed prices.


jpone,

I agree that you shouldn't waste time looking for these opportunities because they are few and far between. Whenever I have seen significant arbitrage opportunities they have been computer errors, where a price has got 'stuck', or late in the evening (around 11.00pm) when people are obviously tired and making mistakes.
 
mmillar said:
The difference you are seeing maybe partly because D4F show real time prices whereas Finspreads show delayed prices.

I think the point you made needs to be clarified as the way it stands it could be misunderstood. Finspreads update their prices every 30 seconds, so for slower moving instruments that is as good as real time. However, whatever the market, when you go to trade you are offered the real time price and are not requoted.
 

spreadbet

Member
I have experienced he same problem with D4F, so much so I moved to IG. IG can get out of line with the cash index also, however I have never seen them as far out as D4F.

With respect to the cost of trading the Dow30 Daily D4F charge 4pts on the open, 4 on the close and 4 for the controlled risk bet a total of 12pts. IG charge 11pts on the opening of the trade and that also includes your controlled stop.

The thing to whatch with both companies is where you place your stop. D4F can be so far out of line that you test your stop very quickly. If they requote you before you can trade then your stop may be in serious jepordy.

IG take the level where you press the buy/sell and add 11pts your stop is the take from the higher point.

ie market = 9000 when you press buy, therefore your stop will be calculated from 9011 and not 9000.

With IG there are no requote's where you buy sell is the price you get, your trade is filled immediately.


Hope this helps and good luck

Please note I have no connection with any S/B companies other than a client of IG



Cheers

Spreadbet
 

bonsai

Veteren member
rjay
have you considered that you may be trying to trade too
long after the market has started its move ?
at the tops and bottoms you can always detect the change
in quotes from being 'above market' to being 'below market'
If you can time that right, you will start your trade with a few extra point in the bag and the same when you close. That in itself
will more than pay for the 'spread'
If you take too long to decide, you will lose on both ends.
 
 
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