New bet sizes from IG Index *scandalous*

[0007]

The shenanigens of your broker is just another factor in trading the market. Take it in your stride.

 

[tar]

IG knows what they are doing , they are not morons , they already had the Ftse and the Dax at 2 quids instead of 1 and they are doing great on indices , changing fx from 0.5 to 1 pound is nothing , cant be compared to Amazon 2 different animals ...

 

[new_trader]

IG knows what they are doing , they are not morons , they already had the Ftse and the Dax at 2 quids instead of 1 and they are doing great on indices , changing fx from 0.5 to 1 pound is nothing , cant be compared to Amazon 2 different animals ...

I think statement from IG says it all:

There are some signs that competition on price in our main markets is becoming less intense. One of our larger global competitors had competed aggressively on price for a year or so, but has recently reverted to pricing levels similar to ours. Their failure to gain market share with this pricing strategy supports our belief that clients are generally more focused on quality of execution, service and technology than on price alone.

A number of our competitors have been either loss making or only marginally profitable for several years. In these subdued markets there is evidence that they are finding conditions increasingly difficult, with announcements of large-scale redundancies and withdrawals from entire markets and we are also witnessing them cutting back heavily on their marketing expenditure.

Margins of many companies are being squeezed so I would say that IG's new pricing is changing in line with the state of the economy more than anything else. Price inflation doesn't only result from an expansion in money supply and credit, it can also happen when there is a reduction in supply (competition).

IG might find this increase has been detrimental to their business and they may end up cutting them again, I don't know for sure, but I can positively guarantee that in 5 years time £20/point will be considered dirt cheap by everyone now complaining.

 

[x4x]

IG have the best and most sophisticated SB platform of all the major UK players. It's still the best for newbies because you can trade at £1.01 as the next step up, rather than at £2 on most others. This allows for correct compounding, as per proper MM.

I see many that are complaining have been around for a few years, I would suggest that if you can't afford to trade at £1 minimum after a few years, it's probably time to give up and save yourself the expense anyway.

 

[new_trader]

Great piece.
My thoughts were similar. Why cut out the low level guys. It must cost IG very little to have the 'smaller' traders tinkering about. Very low risk, minimal hedging, you'd of thought it'd all be automated pretty much. They have chosen to take a chainsaw through all of them.

You aren't taking into account all the "extraneous" costs like the cost of complying with Government regulations. What about customer service personnel? A lot of these expenses cannot be automated because they require human intervention like new accounts etc

Imagine paying personnel to deal with all the complaints? You only need to spend 5minutes on T2W to see they must get 100's per day!. If I was a S/B company I would do the same thing as IG so I wouldn't have to give £20/point quality service to dim-witted 50pence/point spread-betters.

They are not the first broker I have known to have eliminated products for the 'little guy' due to increasing costs. One broker increased their minimum managed account size from $5000 to $25,000.

 

[Atilla]

IG knows what they are doing , they are not morons , they already had the Ftse and the Dax at 2 quids instead of 1 and they are doing great on indices , changing fx from 0.5 to 1 pound is nothing , cant be compared to Amazon 2 different animals ...

Do you know or are you guessing?

HMV have been facing the threat to their business for the last ten years and other than restructure shop space and decorate their retail outlets, coupled with mixing up sale items they've done nothing much.

Great big internet heading towards you and you focus on your core business of redecorating and branding retail outlets. What a great idea? I'm sure that'll beat the competition.

Online music, video/digital sales and gaming sites all gone to specialists. No bother. We are high street brand name.

HMV too narrow minded and too late. I'm sure somebody somewhere might have said their management are not morons they know what they are doing too. M&S have done pretty much the same but losing sales to low end upstarts like Primark. S

Think of a car manufacturer. Successful one obviously. Look at their car ranges and prices. What do you see? They try and cater for the family with budget variations as much as possible. Whether poor man buys low end car or rich man buys low end car to teenage son there is choice in product range and price.


Amazon, Car Manufacturers or SB firms - the economics of business is pretty much always the same. The detail is in your marginal costs and marginal revenue.

Let's hope IG Management know what they are doing. I have an email from them telling me about frictionless dealing. Now is this a feature or a benefit to me???

Let's just think about that for a moment. :whistling

 

[Jason101]

I see many that are complaining have been around for a few years, I would suggest that if you can't afford to trade at £1 minimum after a few years, it's probably time to give up and save yourself the expense anyway.

Lets leave the B.S at the door please.

Brent Crude will often trade at a daily ATR of 250 pips. So to enter a stop or trail a stop at a poultry 2 day stop, you are talking about 500 pips at the new minimum of £2 a pip, this is £1000 which would require you to have an account of at least £100,000. In order to trade at a modest 1%.

Are you winding me up!!

 

[x4x]

Are you winding me up!!

Seems like it....:clap:

 

[Jason101]

Increased bet sizes are no good for those who scale in and out.

btw, Do these poultry stops have anything to do with the Three Ducks strat?

I've only just got that! very good, should have written paltry.
No nothing to do with the Ducks method.

Exactly, I scale in as well as scale out and this new increase really has mucked up my system as I will often need multiple stops and trails of a couple of days plus.

I can still do it, but it does compromise my risk management if I continue with IG.

 

[tar]

Do you know or are you guessing?

Yes they are doing great on Indices just a quick look at their financial reports and you will see that , i don't think the increase for FX from 0.5 to 1 is a big deal there are many FX brokers out there who don't have microlots anyway just minis , even many SB brokers wont let you bet at less than 1 Pound/Point , anyway who cares there are many alternatives for micro-FX .

 

[D70]

Yes they are doing great on Indices just a quick look at their financial reports and you will see that , i don't think the increase for FX from 0.5 to 1 is a big deal there are many FX brokers out there who don't have microlots anyway just minis , even many SB brokers wont let you bet at less than 1 Pound/Point , anyway who cares there are many alternatives for micro-FX .

This isnt directed at you specifically but if IG take on IB or other proper brokers (if that is what they want to become or want to be seen as) they will lose.

I'm not sure that this move (and previous alterations they have made to spreads and so on) demonstrate to their target market that they are wanted customers and as Atilla beautifully put it. Customers will have no problem migrating to more preferable climates.

 

[new_trader]

Do people here actually think IG weren't aware that they would lose the marginal customers? Somehow, I think it is exactly what they want. Tax Free trading will always have its appeal to profitable traders.

 

[isatrader]

IG Index have increased minimum bet size on the spooz to 20. This basically takes away any 'I want to have a dabble at this trading thing' and makes it a lotto. A pure over leveraged gamble for the small retail trader. (My guess is they dont want any retail traders to trade with them anymore).

If you want to trade the S&P 500 with IG, then maybe look at the ETFs instead of the indexes if the new sizes are too big, as the ETFs have much smaller minimum bet sizes. For example the S&P 500 Index Fund - IVV has minimum bet size of 0.24 per point, so is a much smaller position size. Although the spreads will probably be wider, but maybe worth looking into.

 

[tar]

If you want to trade the S&P 500 with IG, then maybe look at the ETFs instead of the indexes if the new sizes are too big, as the ETFs have much smaller minimum bet sizes. For example the S&P 500 Index Fund - IVV has minimum bet size of 0.24 per point, so is a much smaller position size. Although the spreads will probably be wider, but maybe worth looking into.

+1 exactly my thoughts , one can trade the SPY instead of the SP500 . So they didn't change their minimums for US stocks , that's good .

 

[D70]

Do people here actually think IG weren't aware that they would lose the marginal customers? Somehow, I think it is exactly what they want. Tax Free trading will always have its appeal to profitable traders.

Dont kid yourself about the tax free thing.

 

[new_trader]

Dont kid yourself about the tax free thing.

You pay taxes on your S/B profits?

 

[D70]

+1 exactly my thoughts , one can trade the SPY instead of the SP500 . So they didn't change their minimums for US stocks , that's good .

Hang on. Now you're agreeing that it's a good thing they havent increased the minimums on US stocks.....

I'm pretty sure people just trawl around this site looking for fights. Why dont you go outside and punch the first person you meet in the head.

 

[new_trader]

If you want to trade the S&P 500 with IG, then maybe look at the ETFs instead of the indexes if the new sizes are too big, as the ETFs have much smaller minimum bet sizes. For example the S&P 500 Index Fund - IVV has minimum bet size of 0.24 per point, so is a much smaller position size. Although the spreads will probably be wider, but maybe worth looking into.

The downside is you can only trade them during cash market hours, right?

 

[D70]

If you want to trade the S&P 500 with IG, then maybe look at the ETFs instead of the indexes if the new sizes are too big, as the ETFs have much smaller minimum bet sizes. For example the S&P 500 Index Fund - IVV has minimum bet size of 0.24 per point, so is a much smaller position size. Although the spreads will probably be wider, but maybe worth looking into.

Thanks Isatrader.
A very helpful post for those that want this flexibility.

 

[isatrader]

The downside is you can only trade them during cash market hours, right?

Yep, US ETFs only trade during US market hours.