Spread betting companies angles and pitfalls they use to relieve you of your money.

[klw]

There are numerous posts scattered around complaining of an action /occasion where traders have lost money due to a spread betting company having a rule or taking an action or making a decision ( slightly underhanded perhaps ) and I would like to gather them all in one place so that other traders can see them and be aware of them. After all if it saves someone else making the same mistakes then it will have been worth it.

There are lots I am sure. I will start off with a couple myself,please feel free to post your own experiences.

1. Did you know that if you place a stop on an overnight trade with World Spreads it will not be honoured until the following morning and then only at the morning price.

Think about this for a second. You are long the dow,major bad news overnight,your stop is a waste of time and gets settled the following morning at the morning price hundreds of points lower,result empty trading account or worse.

2.Capital Spreads widen thier spread on the ftse rolling ( maybe others I don't know ) about 15 - 30 seconds before 5.30 p.m. from 1 point to 4 points.

I have an eod system and am trying to get into a position as close as possible to the ftse future close to mimic its closing price so leave entry until the last moments e.g just before 5.30 p.m. I checked the price,happy with the 1 point spread on offer and clicked just before 5.30 ( approx 15 seconds before ) and immediately checked my open position to find to my amazement that I am immediately 4 points + down despite the fact that the markets had barely moved. I did the same thing tonight and just before clicking my price re-checked the spread and it had indeed widened to 4 points well before 5.30.

Now how many traders out there are doing exactly the same thing as me and not noticing this ?

Any more people ?

 

[Hoggums]

There are numerous posts scattered around complaining of an action /occasion where traders have lost money due to a spread betting company having a rule or taking an action or making a decision ( slightly underhanded perhaps ) and I would like to gather them all in one place so that other traders can see them and be aware of them. After all if it saves someone else making the same mistakes then it will have been worth it.

There are lots I am sure. I will start off with a couple myself,please feel free to post your own experiences.

1. Did you know that if you place a stop on an overnight trade with World Spreads it will not be honoured until the following morning and then only at the morning price.

Think about this for a second. You are long the dow,major bad news overnight,your stop is a waste of time and gets settled the following morning at the morning price hundreds of points lower,result empty trading account or worse.

2.Capital Spreads widen thier spread on the ftse rolling ( maybe others I don't know ) about 15 - 30 seconds before 5.30 p.m. from 1 point to 4 points.

I have an eod system and am trying to get into a position as close as possible to the ftse future close to mimic its closing price so leave entry until the last moments e.g just before 5.30 p.m. I checked the price,happy with the 1 point spread on offer and clicked just before 5.30 ( approx 15 seconds before ) and immediately checked my open position to find to my amazement that I am immediately 4 points + down despite the fact that the markets had barely moved. I did the same thing tonight and just before clicking my price re-checked the spread and it had indeed widened to 4 points well before 5.30.

Now how many traders out there are doing exactly the same thing as me and not noticing this ?

Any more people ?

You should use guaranteed stops if you want to protect yourself with out of hours moves. It's not a rip-off - the markets are closed so if CS or whoever is hedging your bet - they'll lose on the trade exactly the same as you do as they won't be able to close the trade until the market opens and at whatever price it is at.

 

[klw]

Hi Hoggums --- I totally agree with you on using guaranteed stops for overnight positions,however the point of the thread is to highlight pitfalls and angles. I never said at any time that it is a rip off,if it's in their rules then at least they are up front about it,however if I can highlight this for someone else and it helps them avoid unnecessary losses where's the harm in this.

I would certainly class no.1 as a pitfall for the unwary and no.2 as an angle ( unless it's in their rules which I doubt ).

Any other contributions out there ?

 

[FXSCALPER2]

Unfortunately the issues you raise have nothing to do with SB. This is a problem you cannot avoid in markets that close for the night. whoever you trade with, you will suffer from gaps in this markets whenever they happen. In fact, if they honour the guaranteed stops, SB is less risky than other brokers.

If you are not a high frequency day trader, then SBetting is a pretty good deal.