Just a quick question.

[pietro]

Hi there,
I was just wondering, about SB company's prices, i know that they base there figures on the underlying market such as the FTSE indices etc, so does that mean that they use volume to dictate the prices on their market and spreads? if that is true then where can i find a source which can tell me about volume in realtime?


thanks for your time

Pietro

 

[JTrader]

Hi pietro

Whenever I ask CMC about their prices they tell me that their price is arrived at by taking the futures price and subtracting fair value.

Fair value seems to be the subjective element. It is an amount that they calculate themselves.

I am not sure if this is the equation used by CMC on all of their spreadbet products, or just the ones I have asked about!......... And i do not know if all SB companies do the same thing.

jtrader.

 

[Roberto]

I believe that all spread-bet cash indices' prices are derived from the most proximal corresponding futures price with an "adjustment" for "fair value". I think the fair-value adjustment is to do with the amount of time still to elapse between the cash price and the most proximal future price, and their impression of the direction in which it's currently moving. Doubtless some complicated calculation, although it sounds simple enough. To the best of my knowledge, volume has absolutely nothing at all to do with it. (The kindly gentleman from CapitalSpreads will doubtless explain it to all of us if someone asks him in the appropriate thread, where he responds.)

 

[pietro]

thank you

Hi thanks for answering that question.

 

[stevespray]

I have found that the 'cleverer' companies introduce an element of bias into their quotation. This isnt always an exact science, it's quite often down to the dealers interpretation of where he feels that it is most beneficial to place his market. For example, if a company is noticing that a very high percentage of its customers are taking long positions then he may very well bias his price to the upside. This means that over time customers pay slight more for 'value'. Likewise with a strong down trend, customers get paid slightly less for 'value'. This means that over an extended period of time the company will extract slightly more from each deal and thus turn a larger profit.

Other companies just attach the quotes to the underlying and discount fair value so their quote is purely mechanical.

Steve.