Platforms FTSE position vs real position

scarr999

Newbie
9 0
Judging by these questions, the main thing is keep your risk very small or only demo trade while you gain more experience and knowledge of the markets, and also your strategy
I am not trading just learning :)

it looks like from the replies that "nobody" can actually trade the "Real" FTSE position (forgetting a small margin for your provider as a transaction fee) at the open!

Seems strange that the FTSE actually is something we cannot use as a buy/sell price but only a "position" given buy a middle man that can be anything they dictate at the start of the day.

I get it they want to make a profit, but surly just having a provider that charges a "transaction fee" and nothing else would be achievable and a good business? I feel I must be missing something here :-(

Steve
 

mpups

Experienced member
1,024 143
I am not trading just learning :)

it looks like from the replies that "nobody" can actually trade the "Real" FTSE position (forgetting a small margin for your provider as a transaction fee) at the open!

Seems strange that the FTSE actually is something we cannot use as a buy/sell price but only a "position" given buy a middle man that can be anything they dictate at the start of the day.

I get it they want to make a profit, but surly just having a provider that charges a "transaction fee" and nothing else would be achievable and a good business? I feel I must be missing something here :-(

Steve
Yes you've missed something. By the "open" as you mentioned, the UK 100 contract you are looking at has moved according to FTSE futures since yesterday's "close" - usually correlated with the US market etc. Your provider is not making that movement themselves as such.
 

scarr999

Newbie
9 0
Yes you've missed something. By the "open" as you mentioned, the UK 100 contract you are looking at has moved according to FTSE futures since yesterday's "close" - usually correlated with the US market etc. Your provider is not making that movement themselves as such.
I think I get that, but to my simple head.

1. the FTSE closes at 4:30 7000
2. overnight stuff happens but the FTSE is closed so cannot move.
3. at 7:59 the FTSE is still at 7000
4. why can't I place an order at the price of 7000? why do we accept a fictional position of e.g. 7040 made by providers?

Is there no way to buy at the close/open price. accepting that I will be in a que and won't get the exact price but a lot closer than something calculated by a company?


Thanks
 

mpups

Experienced member
1,024 143
I think I get that, but to my simple head.

1. the FTSE closes at 4:30 7000
2. overnight stuff happens but the FTSE is closed so cannot move.
3. at 7:59 the FTSE is still at 7000
4. why can't I place an order at the price of 7000? why do we accept a fictional position of e.g. 7040 made by providers?

Is there no way to buy at the close/open price. accepting that I will be in a que and won't get the exact price but a lot closer than something calculated by a company?


Thanks

What contract and broker are you looking at? screenshot perhaps?
 
Last edited:

scarr999

Newbie
9 0
What contract and broker are you looking at? screenshot perhaps?
IG, Cmc, etoro. I do realise cmc and etoro are not the best but IG?

if you looked at the full thread there is an example and screenshot of IG at open the other day.

thx
 

mpups

Experienced member
1,024 143
IG, Cmc, etoro. I do realise cmc and etoro are not the best but IG?

if you looked at the full thread there is an example and screenshot of IG at open the other day.

thx
Oh I see

The Yahoo quote is the cash Index which will stop at about 4:30 as you know. The next day's open will reflect what the futures have done since yesterday's close. And no you can't buy/sell the close when you are at the open, unless you have a time machine :)

Basically, you are not trading "the Index" on IG etc, you are trading an OTC instrument which behaves more like a FTSE futures contract.

p.s. be aware of any silly spreads after hours, and spreads in general
 

MasterOfCoin

Experienced member
1,228 478
Is there no way to buy at the close/open price. accepting that I will be in a que and won't get the exact price......
......it's a very, very, long queue, is why. Akin to the M25 at rush hour.

🚗🚕🚙🚓🚌🚚🚛🚛🚛🚐🚙🚕🚗🚑🚒🚕🚗🚜🚌🚕🚙🚚

It just clears rather quicker.

By the time your order gets to be processed, the price can have changed dramatically.

And your retail order, through a broker potentially several steps from the direct access trades, is in the restricted traffic lane, with all the other smaller slower low volume trades. Ergo. Probably not a good way to get reliable prices.

Best to watch the mayhem and pitch in once it settles on a trend.
 

BigDeal

Active member
113 55
Is there no way to buy at the close/open price. accepting that I will be in a que and won't get the exact price but a lot closer than something calculated by a company?

No because the open price is only the same as the close price for convention. As well as what goes on whilst the market is closed, don't forget there is an auction after FTSE close and before the open which will have a direct bearing on an index value.
Most brokers are quoting during closing hours so you can always trade during this time (although watch for overnight charges if you do it too early) and of course increased spreads. But of course they will still get the trend correct most of the time, thus reducing what you could make if you agree with them. If they get it wrong, then great for you at the open, but it won't happen that often
Remember a FTSE spreadbet is betting against a bookmaker who will move the price to protect itself.
 

mpups

Experienced member
1,024 143
......it's a very, very, long queue, is why. Akin to the M25 at rush hour.

🚗🚕🚙🚓🚌🚚🚛🚛🚛🚐🚙🚕🚗🚑🚒🚕🚗🚜🚌🚕🚙🚚

It just clears rather quicker.

By the time your order gets to be processed, the price can have changed dramatically.

Ahh so this is what the queue for the close at the open looks like :ROFLMAO:
 
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MasterOfCoin

Experienced member
1,228 478
However you're trading, be it spread-betting or otherwise, you are nevertheless not getting direct index access.

Think of it like the, the errrm, US / Mex border, for instance, only your 'order' or bet starts from Argentina.
If there's been a change of President whilst your order made it's way to the border, well that could have a big effect on what's actually going to happen.

Whatever the case may have been at the last close, that don't mean that's the case at the next open.

Especially, if your broker is routing orders through Belarus.


:whistle:
 
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mpups

Experienced member
1,024 143
However you're trading, be it spread-betting or otherwise, you are nevertheless not getting direct index access.

Think of it like the, the errrm, US / Mex border, for instance, only your 'order' or bet starts from Argentina.
If there's been a change of President whilst your order made it's way to the border, well that could have a big effect on what's actually going to happen.

Whatever the case may have been at the last close, that don't mean that's the case at the next open.

Especially, if your broker is routing orders through Belarus.


:whistle:
Yeah you think you're flying your plane to the UK but always get redirected to Belarus and lose a passenger, however if you fly well you still get paid
 
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Time_Lord

Newbie
2 1
I think I get that, but to my simple head.

1. the FTSE closes at 4:30 7000
2. overnight stuff happens but the FTSE is closed so cannot move.
3. at 7:59 the FTSE is still at 7000
4. why can't I place an order at the price of 7000? why do we accept a fictional position of e.g. 7040 made by providers?

Is there no way to buy at the close/open price. accepting that I will be in a que and won't get the exact price but a lot closer than something calculated by a company?


Thanks

I think you have a few things mixed up in your understanding, which is easily done because it's a very complicated matter. I cannot claim to be an expert but I found it very interesting when I started out and this is my current understanding...

Firstly the close and the open price are in no way related or connected - once the market is closed that price is gone. Even with a single stock they are not related - each morning there is a pre market auction which matches buyers and sellers and sets the new opening price.

Now with index trading the picture gets a bit more complicated. Obviously the FTSE 100 index value is calculated by some formula using the top 100 companies on the LSE. The price for each individual company will be reset each morning at 8am (cash open) after they have all had their pre market auction and then you will have a new index value. You cannot actually trade this value unless you were to buy/sell all constituents simultaneously, which is not possible for small fish like us. What you can do however is place a trade with your broker on their version of the FTSE (it's usually called UK100 because it's their own creation and not the actual FTSE). This is an OTC - over the counter - trade because you are trading directly with the broker and not over an exchange, as you would with a stock.

The picture is further complicated by the existence of index futures contracts, which are a relatively recent invention, largely made possible by modern technology. Futures are contracts traded on exchanges (seller to buyer directly) and they have a set value (eg the ICE FTSE contract is £10 per index point). They are traded for much longer hours than stocks - the market opens at 11pm Sunday UK time and closes again for the weekend on Friday evening. In theory people from all over the world can trade FTSE futures 24 hours a day.

So professional traders and institutions will be buying and selling futures contracts (for hedging or speculation or whatever) independently of the stock index. The value for the cash/spot FTSE is then kept in line with the FTSE futures by arbitrage traders who will make a profit by selling one and buying the other if they start to diverge. Obviously that requires a lot of capital so it's the preserve of instituions. What it means is that price discovery comes from the futures market and the cumulative value of the index stocks, with one running 24 hours and the other running 8-16:30 (cash hours).

What's very interesting is that in the US most index traders trade futures directly on exchanges (eg 'ES' on CME) whereas in the UK the CFD and spread bet firms have managed to insert themselves as middle men (or not) between market participants. There are advantages and disadvantages to both systems, but if you are serious about index trading then it is usually better to trade futures directly on an exchange. What's also interesting is that trading FTSE futures ('Z' on ICE) is actually quite difficult for retail to do, some brokers don't even list it. It's generally much easier to trade ES, FESX or even other wierd and wonderful things like bund/gold/oil. So if you just want to trade the FTSE/stocks you would be better of with a CFD firm.
 
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