Really Not A Ton Of Difference Between Spread Betting And DMA Brokers

[jkane]

using SP futures as an example

dma its aprox 30 cents wide including commissions

spread betting 40 cents wide no commission and no taxes

Thoughts??

 

[tar]

:cheesy:

What happened did you change your mind i thought you hate SB ?

 

[DowJones]

Really Not A Ton Of Difference Between Spread Betting And DMA Brokers

I'm assuming you are just posting this for the lulz right?

 

[jkane]

running numbers now

If your a scalper well then slight lean towards DMA but not many to choose from for UK players

 

[Final1001]

Dont see why people hate spread-betting so much, its really not too bad.

As-long as you have a good strategy in place and you are good at reading the markets then you can do well, only a 1 point spread on the FTSE. No tax is also a huge advantage compared to DMA.

Would love to hear peoples thoughts/experiences

 

[highbury fx]

Dont see why people hate spread-betting so much, its really not too bad.

As-long as you have a good strategy in place and you are good at reading the markets then you can do well, only a 1 point spread on the FTSE. No tax is also a huge advantage compared to DMA.

Would love to hear peoples thoughts/experiences

they don't hate spreadbetting at all, intelligent people embrace the fact you can make money tax free using a spreadbet vehicle... what they hate is that spreadbet firms capture their loss and no matter how much they whine and moan they cant accept that its not the spreadbet firms fault at all but their trading style that does the bank roll damage - too much leverage, too many trades, stops so tight, doubling up etc. The leading spreadbet firms invest millions in technology and sits there patiently because they know the client will most probably lose and do the damage themselves, and do it fairly quickly. The S/B co doesn't have to interfere with that process, human nature does the job well enough for them.

with spreads and margins what they have been the last 5 years DMA and spreadbet are very close, to the extent that some smaller spreadbet firms (names that you would know) use other spreadbet firms to hedge instead of using the underlying directly. why would they do that if the whole model was deliberately made too difficult to make money. if I eat in a bad restaurant I don't go back because there are too many other restaurents to try.. spreadbetting is the same, find a good one, stick with it and use it for what its designed to be - a platform for retail traders to buy and sell derivatives under a tax free wrapper.. its not designed for people to execute hundreds of trades per day trying to capture fractions of pips - that's the same as someone going up to the endless buffet 10 times a day? how long would the restaurant put up with that before they told the fat fker to not come back?

its so simple in principle but greed takes over and then blame. funny no one ever complains to a s/b firm when their limit is filled by mistake or that strange spike triggers their limit to be filled or an order that puts them straight in the money. There aren't too many phone calls to s/b firms yelling at them telling them to take that incorrect profit off their account and stop moving the markets in to the clients favour deliberately to fill all the limit orders !!

 

[Final1001]

Yup, well said Highbury

I Trade the FTSE futures and aim to capture a 10-30 point move on a daily basis (although have not done it as much lately), I just use IG and they seem good enough to me. Have not had any problems at all but maybe I am one of the lucky ones.

 

[jkane]

Great post and I am starting to think your right. Spreadbetting firms have really tightened up spreads, I see many now with 2 point dow and 3-4 point sp futures which is very close to DMA places. I think other than prospreads because they trade underlining in real time it does not matter.

they don't hate spreadbetting at all, intelligent people embrace the fact you can make money tax free using a spreadbet vehicle... what they hate is that spreadbet firms capture their loss and no matter how much they whine and moan they cant accept that its not the spreadbet firms fault at all but their trading style that does the bank roll damage - too much leverage, too many trades, stops so tight, doubling up etc. The leading spreadbet firms invest millions in technology and sits there patiently because they know the client will most probably lose and do the damage themselves, and do it fairly quickly. The S/B co doesn't have to interfere with that process, human nature does the job well enough for them.

with spreads and margins what they have been the last 5 years DMA and spreadbet are very close, to the extent that some smaller spreadbet firms (names that you would know) use other spreadbet firms to hedge instead of using the underlying directly. why would they do that if the whole model was deliberately made too difficult to make money. if I eat in a bad restaurant I don't go back because there are too many other restaurents to try.. spreadbetting is the same, find a good one, stick with it and use it for what its designed to be - a platform for retail traders to buy and sell derivatives under a tax free wrapper.. its not designed for people to execute hundreds of trades per day trying to capture fractions of pips - that's the same as someone going up to the endless buffet 10 times a day? how long would the restaurant put up with that before they told the fat fker to not come back?

its so simple in principle but greed takes over and then blame. funny no one ever complains to a s/b firm when their limit is filled by mistake or that strange spike triggers their limit to be filled or an order that puts them straight in the money. There aren't too many phone calls to s/b firms yelling at them telling them to take that incorrect profit off their account and stop moving the markets in to the clients favour deliberately to fill all the limit orders !!

 

[Final1001]

I guess it comes down to position size...

DMA you pay a fixed fee but spread betting you paying the spread. If you are on £200 per point then obviously DMA would be better, but saying that you would start paying taxes on DMA.

Dilemma.

 

[highbury fx]

I guess it comes down to position size...

DMA you pay a fixed fee but spread betting you paying the spread. If you are on £200 per point then obviously DMA would be better, but saying that you would start paying taxes on DMA.

Dilemma.

if they charge you a volume brokerage fee the deal size isn't in the equation.

for example, taking a £200 per point trade on GBP/USD is a deal size of £3.38M. If the DMA broker charges you $15 per million USD traded this will mean you have to pay brokerage fees of $85 (£3.38m * 1.69 = $5.71m)

That $15 per million $ traded on a GBP/USD trade is equivalent to 0.25 pips per leg ($15 * 1.69) per million £ of notional, which is an extra 0.5 pips spread round turn on your GBP/USD trade. If the GBP/USD DMA spread is 1.0 your all-in cost is 1.5 pips. that's the number you need to use for your comparison.

 

[Final1001]

I thought DMA was charged from commission on buying and selling at a fixed rate?

 

[highbury fx]

I thought DMA was charged from commission on buying and selling at a fixed rate?

most dma brokers will quote you what they tell you is a 'raw spread' and then apply volume commissions on top.

these volume commissions are a cost to you the same way the spread is and you have to understand your costs in order to compare dma to non-dma

 

[jam121]

I actually use prospreads when specially trading Oil as you see the underlying market which obviously does gaps during the day normally its between 1-2 points so even with taking into account the fixed spread costs I pay of .75 per side when the market is at only 1 point my total spread costs is 2.5 points! which I find is pretty good for a spreadbetting account and also since I can bet for $1 it makes sense to use it?, I haven't traded any other products though but for oil it looks ok

 

[Piman78]

using SP futures as an example

dma its aprox 30 cents wide including commissions

spread betting 40 cents wide no commission and no taxes

Thoughts??

The difference is how the orders are executed. With spread betting your broker is the counter party to your trades. If the broker choose not to hedge your position then they would remain exposed and profit from your losses and lose when you won money. Many people see this as a potential conflict of interest.