As a relative newcomer to trading I wonder if anyone can give me any advice regarding the following dilemma. I only trade a small account at present ( £2000) so I am only using SB companies. When I put on a trade I cannot put a stop at the position I want ,at best it is the companies minimum size.The problem I am left with is the trade now has a bad risk/reward ratio so I am very limited to what I can trade.Any help gladly appreciated.
Salty Gibbon
Experienced member
- Messages
- 1,535
- Likes
- 6
If you are very disciplined you can operate with mental stops and just make sure you hit the button and exit when the stop level is reached.
roguetrader
Senior member
- Messages
- 2,062
- Likes
- 49
andyone said:
Hi andyone I don't really understand spreadbetting so I am not sure what your problem is, when you say you cannot put a stop in the position you want why not?, could you give an example of something you have traded, and where you wanted to put the stop and where you had to put it?
Andy, I suspect from reading the above that your position-sizing might be inappropriate ... excuse me in advance if this is a grave slander on you, but it's not easy to see the problem, if it's not that. Are you by any chance opening SB positions for more than £1 per pip with your bank of £2,000? 
hi andyone -
not quite what you're asking but you could place an order to open an opposing position at your desired level, on the same instrument but a different book or with a different spreadbetting firm. this would be a everse, not a stop but similar effect.
e.g., you are ong on the FTSE April at 4010 and want to place a stop at 4000, but the SB firm won't accept it this close. So you place an order to go short on the FTSE May at 4000. Admittedly, this leaves the problem of how to stop the May short, but you should be left at least market-neutral.
Best wishes,
Tom
not quite what you're asking but you could place an order to open an opposing position at your desired level, on the same instrument but a different book or with a different spreadbetting firm. this would be a everse, not a stop but similar effect.
e.g., you are ong on the FTSE April at 4010 and want to place a stop at 4000, but the SB firm won't accept it this close. So you place an order to go short on the FTSE May at 4000. Admittedly, this leaves the problem of how to stop the May short, but you should be left at least market-neutral.
Best wishes,
Tom
Hi rogue trader heres an example, I want to buy gbp/usd at 1.8771 with a stop at 1.8739, the stop is 32 points away from the opening price,to make a trade to give me 3r profit i need my position to move up by 96 points,i.e 3x 32 . The S.B company says the nearest stop I can place to my opening bet of 1.8771 is at 1.8691 a difference of 80 points. If I take this position I need the market to move up by 240 points i.e 3x 80, to give the same 3r trade ,which obviously is a more risky bet. I hope this explains the situation.roguetrader said:
roguetrader
Senior member
- Messages
- 2,062
- Likes
- 49
Ok Andy I understand what you are saying, as I said I don't really understand spreadbetting, the idea that anyone can tell you where you can and can't put a stop is a bit alien to me but what I would say is that if I couldn't put a stop where I felt it ought to be then the trade for me would be a no go. Trades are a bit like tube trains, there'll always be another one along shortly. I follow the addage that I'd rather be out of a trade wishing I was in , than in a trade wishing I was out. Hopefully Roberto will elaborate a bit more for you as he seems to think something is not right about what you are experiencing.
Hi Roberto,just took a look at tradindex site,contract info for gbp/usd June futures says min stop loss of 75 points. Please could you recommend any SB firms that give smaller stops.Roberto said:Andy, there is some mistake here, I promise you! That would be an SB company that wouldn't have many customers left!
Many thanks Andy.
damianoakley
Established member
- Messages
- 542
- Likes
- 57
Hi Andyone,
I completely understand your problem in placing these stops - it's one i've faced myself in the past.
Personally, I wouldn't recommend leaving stops in the market with any SB firm. Because they make their own markets, you can find yourself getting stopped out of a position even if the underlying price of the stock didn't hit your particular stop price.
You have 3 choices as far as I can see:
1) If you're only looking to trade Forex, then don't spreadbet - change to a Forex Broker instead. I daytrade spot Forex using FXCM and they let me place stops 10 points away from the current price.
2) If you're going to continue to spreadbet, then certain websites will let you set up text alerts to your mobile phone so that you know instantly when your stock(s) has hit a certain price and you can then take appropriate action, eg - call your SB firm and initiate a sell, or whatever. I've done this in the past and it worked ok, although sometimes I did miss my ideal stop price because of the delay between getting the text and then ringing the SB firm to take action.
3) Again, if you choose spreadbetting, then you could buy one of those MiniReuters Pagers which track prices and alert you when certain prices are hit, so that you can take appropriate action.
Hope this helps mate,
Damian
I completely understand your problem in placing these stops - it's one i've faced myself in the past.
Personally, I wouldn't recommend leaving stops in the market with any SB firm. Because they make their own markets, you can find yourself getting stopped out of a position even if the underlying price of the stock didn't hit your particular stop price.
You have 3 choices as far as I can see:
1) If you're only looking to trade Forex, then don't spreadbet - change to a Forex Broker instead. I daytrade spot Forex using FXCM and they let me place stops 10 points away from the current price.
2) If you're going to continue to spreadbet, then certain websites will let you set up text alerts to your mobile phone so that you know instantly when your stock(s) has hit a certain price and you can then take appropriate action, eg - call your SB firm and initiate a sell, or whatever. I've done this in the past and it worked ok, although sometimes I did miss my ideal stop price because of the delay between getting the text and then ringing the SB firm to take action.
3) Again, if you choose spreadbetting, then you could buy one of those MiniReuters Pagers which track prices and alert you when certain prices are hit, so that you can take appropriate action.
Hope this helps mate,
Damian
Hi Andy, now I suddenly understand where the mistake is (knew something was "not quite right" here!). It turns out to be my mistake - apologies. After reading Tom's post in this thread, I had it in my mind that we were talking about the FTSE, and I _knew_ that an 80-point minimum SL couldn't be right for that! It wasn't until I read your reply that I realised you were talking about cable futures! Yes ... I do see what you mean. Well, cable futures are a hell of a lot more volatile and you ought to _want_ a pretty wide SL for that product, I would have thought (not what you asked me, though).andyone said:
Capital Spreads are worth asking. Their minimum SL's tend to be smaller than other people's. However, annoyingly, they don't display them in the "product information" download on their website (I just checked). However, if you send a quick email on Monday to [email protected] just saying that you currently spreadbet elsewhere and you'd like to know what their minmum SL is on cable futures, you'll get a fast answer from them.
Apologies again for misunderstanding you! Must learn to engage brain before keyboard!
And you imagine that retail forex "brokers" don't do that?!damianoakley said:
FXCM, in particular, the firm you've suggested, IMHO have absolutely the world's _worst_ reputation for doing _precisely_ that! I would urge anyone considering using them to do a very detailed search at MoneyTec, EliteTrader and ForexFactory before reconsidering it! Not only that, but they also have _much_ wider spreads than the SB firms I use every day for forex trading.
Many people believe something similar to what you've just said, Damian. Ironically, the truth is exactly the opposite: the retail forex brokers, precisely because they do counterparty trading (i.e. they hold the other side of your trade), are the ones who have the incentive to take your stop out by adjusting their own prices (which they control, of course). SB firms, in contrast, apart from being much better regulated and much safer places to keep your money anyway, usually _don't_ have any such incentive because some of their clients are hedged against others, and their net exposure is hedged in the underlying market anyway.
Unlike the bucketshop brokerages, who make most of their living characteristically from clients' losses (and don't even deny that), the SB firms make most of their living from the spread, which is of course paid by winners and losers alike.
Not trying to have a go at you at all, and desperately not trying to start an argument(!) but the degree of misunderstanding about this simple subject is absolutely _staggering_!
Many thanks for your advise Roberto.Roberto said:Hi Andy, now I suddenly understand where the mistake is (knew something was "not quite right" here!). It turns out to be my mistake - apologies. After reading Tom's post in this thread, I had it in my mind that we were talking about the FTSE, and I _knew_ that an 80-point minimum SL couldn't be right for that! It wasn't until I read your reply that I realised you were talking about cable futures! Yes ... I do see what you mean. Well, cable futures are a hell of a lot more volatile and you ought to _want_ a pretty wide SL for that product, I would have thought (not what you asked me, though).
Capital Spreads are worth asking. Their minimum SL's tend to be smaller than other people's. However, annoyingly, they don't display them in the "product information" download on their website (I just checked). However, if you send a quick email on Monday to [email protected] just saying that you currently spreadbet elsewhere and you'd like to know what their minmum SL is on cable futures, you'll get a fast answer from them.
Apologies again for misunderstanding you! Must learn to engage brain before keyboard!
damianoakley
Established member
- Messages
- 542
- Likes
- 57
Roberto:
Don't worry mate - I don't see your post as argument (!) - very interesting, thank you.
I can only truly speak from my own experiences to be honest. I've traded daily (EOD) positions with a SB firm in the past and found that quite often I would see the SB price of a stock dip below a certain price without the underlying price ever dipping. I fully accept that SB firms make their own market so this is bound to happen and I have no problem with it. Therefore, I'm much more comfortable keeping an eye on the underelying price ONLY and manually stopping myself out of a position with the SB firm if that price hits my level.
As regards Forex, once again, I can only speak from my own experiences. FXCM have been fine as a trading platform for me. I trade 5 min eur/usd and have yet to encounter a problem of being stopped out due to mysterious price spikes or dips.
I totally take on board your comments about the way these market makers trade against you. The way I look at it though, is that no matter what market you trade in, you are going up against big market-maker institutions all of which are trading against you in the market. The way I understand things to work is that a company like FXCM would monitor all their client positions and know where everyone's stops are at any one time. I have no doubt that FXCM might shift their market now and then to take out certain client stops, but this to my knowledge is based on how their book is weighted overall. I would need to be trading a massive position for FXCM to want to stop out my position and my position alone. Also, these forced price shifts (in my opinion) are no different than market-makers in ANY market manipulating prices to try to shake certain traders out of the market during certain conditions.
These are just my thoughts and beliefs mate, so feel free to shoot me down in flames (!)
Andyone:
If you do go down the Forex Broker route (and remember i'm talking Spot Forex here not futures), then I think the minimum account balance is about £300, but I wouldn't recommend you try to trade at this level as you won't be able to position size correctly.
Hope all this helps mate,
Cheers
Damian
Don't worry mate - I don't see your post as argument (!) - very interesting, thank you.
I can only truly speak from my own experiences to be honest. I've traded daily (EOD) positions with a SB firm in the past and found that quite often I would see the SB price of a stock dip below a certain price without the underlying price ever dipping. I fully accept that SB firms make their own market so this is bound to happen and I have no problem with it. Therefore, I'm much more comfortable keeping an eye on the underelying price ONLY and manually stopping myself out of a position with the SB firm if that price hits my level.
As regards Forex, once again, I can only speak from my own experiences. FXCM have been fine as a trading platform for me. I trade 5 min eur/usd and have yet to encounter a problem of being stopped out due to mysterious price spikes or dips.
I totally take on board your comments about the way these market makers trade against you. The way I look at it though, is that no matter what market you trade in, you are going up against big market-maker institutions all of which are trading against you in the market. The way I understand things to work is that a company like FXCM would monitor all their client positions and know where everyone's stops are at any one time. I have no doubt that FXCM might shift their market now and then to take out certain client stops, but this to my knowledge is based on how their book is weighted overall. I would need to be trading a massive position for FXCM to want to stop out my position and my position alone. Also, these forced price shifts (in my opinion) are no different than market-makers in ANY market manipulating prices to try to shake certain traders out of the market during certain conditions.
These are just my thoughts and beliefs mate, so feel free to shoot me down in flames (!)
Andyone:
If you do go down the Forex Broker route (and remember i'm talking Spot Forex here not futures), then I think the minimum account balance is about £300, but I wouldn't recommend you try to trade at this level as you won't be able to position size correctly.
Hope all this helps mate,
Cheers
Damian
Roberto said:And you imagine that retail forex "brokers" don't do that?!
Unlike the bucketshop brokerages, who make most of their living characteristically from clients' losses (and don't even deny that), the SB firms make most of their living from the spread, which is of course paid by winners and losers alike.
BWAHAHAHAHAHAHAHA
That's an all time classic quote.
Sorry everyone I won't be posting for another week cause I can't stop laughing................
PS. What was that somebody said? Oh yes, here's the quote;
"but the degree of misunderstanding about this simple subject is absolutely _staggering_! "
If 80-90% of the punters lose that's PURE GOLD, so if you're an SB company then you might take the trades on your own book but watch out for when the serial winners punt. But of course heavily play down this fact, deny it if need be because it doesn't make you look good with your clients, yep those same clients whose money is being transferred from their pockets to the SB company's.........
Last edited by a moderator:
damianoakley said:
Thanks again Damian. I would also like some advise as to placing a stop, there are quite a few methods of working out the position,and I understand these may be different in each market,Roberto mentioned earlier that my stop might be too close in gbp/usd because the market is volatile, but if I am placing it underneath or above an area of support/resistance that the market has bounced off would it not be possible to keep it fairly close to the opening trade?
Or have I got it all wrong and need to go back to the drawing board,hope all this makes sense.Thanks.
BroadSword
Guest
- Messages
- 137
- Likes
- 4
Roberto said:
The business model for both retail counterparty FX brokers and SB looks pretty similar to me. Both take the other side of your trade.
I would have thought that the retail FX brokers matched trades and hedged the net position as SB firms such as Capital Spreads claim to do.