Question about the Zero Sum game of Trading

[lpr59]

I'm new to this game and have a question that someone might like to answer.

As I understand it, spread betting is a zero sum game between all the traders involved at a given time. The trading platform makes its money from the spread, and thus in theory it's a matter of indifference to the broker whether you win or lose.

So how does that square with the experience of many of the contributors to these forums who say that their brokers have tried to manipulate the trading in various sneaky ways so as to ensure that they never make too much money, or increase the chances of losing rather than gaining? Are these people trying to blame the broker for their own poor trades, or is there more to this than meets the eye?

 

[SanMiguel]

I'm new to this game and have a question that someone might like to answer.

As I understand it, spread betting is a zero sum game between all the traders involved at a given time. The trading platform makes its money from the spread, and thus in theory it's a matter of indifference to the broker whether you win or lose.

So how does that square with the experience of many of the contributors to these forums who say that their brokers have tried to manipulate the trading in various sneaky ways so as to ensure that they never make too much money, or increase the chances of losing rather than gaining? Are these people trying to blame the broker for their own poor trades, or is there more to this than meets the eye?

It's mostly traders blaming the broker as an excuse probably 7 out of 10 times.
2 out of 10 times it's the brokers system being poorly programmed.
Where you have to question is the times the broker takes the other side of the trade.
For the most part, the broker doesn't give a crap about the average retail trader.
If you were trading £500 a pip, then you could be more careful with your stops and trade at different brokers but that's about it - have a read of Reminiscences of a stock operator to see the types of games that used to be played but at the time those were "bucket shops".

 

[shadowninja]

Depends on the broker/SBer, I think. That's why you should only trade with the bigger, well-established companies as they do make money from the spread. During the crash we had in recent years, I recall one small broker going broke ( ) because they were relying on traders losing but someone had a nice short.

 

[Panaret]

I met and spoke to David Jones of IG Index recently and he advises that these conspiracy theories are totally unfounded. You might say 'Well he would!' but his point was that the amount involved from private traders like most of us is so negligible in the size of the overall market that it is not worth the bother. For what it is worth I believe him.

 

[nunrgguy]

I met and spoke to David Jones of IG Index recently and he advises that these conspiracy theories are totally unfounded. You might say 'Well he would!' but his point was that the amount involved from private traders like most of us is so negligible in the size of the overall market that it is not worth the bother. For what it is worth I believe him.

And yet IGs P&L is further on the rise just from the spread when the number of retail punters is actually decreasing afaik. How do they do it then, I'm sure all the institutions are spread betting at bucket shops?:whistling

Don't get me wrong I'm not saying they do anything 'dodgy' in the main they don't have to.

 

[lpr59]

It's mostly traders blaming the broker as an excuse probably 7 out of 10 times.
2 out of 10 times it's the brokers system being poorly programmed.
Where you have to question is the times the broker takes the other side of the trade.
For the most part, the broker doesn't give a crap about the average retail trader.
If you were trading £500 a pip, then you could be more careful with your stops and trade at different brokers but that's about it - have a read of Reminiscences of a stock operator to see the types of games that used to be played but at the time those were "bucket shops".

Thanks, that helps a lot!

 

[shadowninja]

IG are one of the bigger "brokers" so can be trusted. I've had very few problems with them, anyway, even if they don't give me money to promote them every time this subject comes up.

 

[BeginnerJoe]

IG are one of the bigger "brokers" so can be trusted. I've had very few problems with them, anyway, even if they don't give me money to promote them every time this subject comes up.

I am not so sure about them. Their platform goes a bit funny when you are in a winning streak, with the trade disappearing and then reappearing sometime later. This can catch you out if you are not careful and end up placing the same order over and over again. It can potentially kill your margin resulting in close outs if you are working close to the limit.

Not sure you can call them a broker. They are certainly one of the bigger bookies.

 

[SanMiguel]

I am not so sure about them. Their platform goes a bit funny when you are in a winning streak, with the trade disappearing and then reappearing sometime later. This can catch you out if you are not careful and end up placing the same order over and over again. It can potentially kill your margin resulting in close outs if you are working close to the limit.

Not sure you can call them a broker. They are certainly one of the bigger bookies.

Lol - you just contact their customer services and explain.
If it was a real system error, they give you the money back.