Spreadbetting Firms Spreads

[bottomdollar]

Dear All,
I was wondering whether would be spreadbetters would be able to inform me of the various spreads of the spreadbetting firms out there (inc any other amount payable for Spreadbetting) for both UK and US markets.

I have a City Index spreadbetting account and the spread I've found for both FTSE and DOW Jones is 8.

I've also had a look at Deal4Free, the FTSE spread is 4 points and the DOW Jones is 5.

IGindex, spreads for both also 8...

So far, Deal4Free seem the cheapest, there isn't (I don't think) any extra added costs. Any else have any others??

 

[genti]

HI,

deal4free is the best so far,however in spreadbeting there is high risk involved in DOW

Genti

 

[bottomdollar]

What do you mean Genti? High risk in DOW?

 

[genti]

hi,
if you trade DOW you really need to hit it on the exact point otherwise you will see yourself losing at all the times.

also please which stop levels you will use?

hope this helps.

 

[jls483]

deal4free is 3 points during market hours and then 4 points outside

 

[ChartMan]

Trade the dow chart and NOT df4 prices. When the bias cuts in, it adds 10 - 15 points from the real value and can panick you into an exit. I know their charts leave a lot to be desired, but they DO show you their baised support and resistance levels....

 

[Bigbusiness]

At the moment I prefer IG to Deal4free. IG have an 8 point spread on the Dow but it doesn't seem to jump around as much as the Deal4free quote.

It is hard to use a stop with Deal4free when the quote is darting all over the place.

 

[bottomdollar]

Chartman, what do you mean trade the DOW chart and not the D4F prices. Don't the broker broker give you the prices for the DOW chart???

 

[ChartMan]

Nooooooooooooooo Bottom Dollar, They DO NOT!
As a move up develops, say at 8480, you will get a buy price of 8495....... so you take it...... Then the price on the chart falters and goes to 8475... you want to get out - the price to sell is 8460
Gross exaggeration, but you get the picture- it's not too far off the truth and reality. For a 5 point move in the chart, the SB's have moved their Bid /Offer by 35 points!!!!!
It is very important that you are dam sure of a move before you trade. OR you have to have deep pockets and nerves of steel .
Place your trade and the stick to the charts. If you keep looking at the SB price, you'll likely get "frightened out" on an otherwise NORMAL trade risk.
This is a simplistic view, but consider it carefully and take it on board. Search the achives for BIAS- a lot has been discussed at great length on this subject.
Last point, I second BB- stops are a no no, unless they are 20-30 points below a support point- use as a self destruct stop.
Read my post on the dow- that's exactly the reason why I chose to close and take profit instead of risking a stop. Had I had a lot more profit on the table, I may have risked a 5 point "risk all" stop on ES. ( equivalent to 50 points on the DOW)......

 

[Helenqu]

Hi BD,

I second what Chartman says. SBs are best used for longer term trading where the jiggling around of 20 points or so is insignificant and you are going for big wins. If you want to go for smaller gains (sub 20 points) then futures are the vehicle you need.

 

[sidinuk]

SB firms base their quote for the 'cash' index on the nearest futures price. You cannot trade the index directly, therefore if you are going to watch any chart then make sure it is one based on the commodity you are actually trading.

Futures prices move quicker and are more volatile than the underlying index (for reasons I won't go into here), it follows therefore that the SB company's prices which follow the futures appear to move more quickly and are more volatile than the index.

The SB companies are certainly guilty of claiming that they offer trading on the cash index when it is actually based on the futures. But you will never be able to deal at the exact price of the index whatever you use, whether it is SB or futures. All the SB co does is add/subtract a set amount from the futures to simulate the cash index. The problem is the size of spread that the SB co's have compared to futures.

Some people seem to believe that the SB co's 'know' which way the market is going to go and 'bias' their prices accordingly! This is ridiculous, if they know what the market is going to do then why bother setting up a SB business at all, why not just use this unique knowledge to guarantee a trading profit in the futures market.

 

[jpwone]

Some people seem to believe that the SB co's 'know' which way the market is going to go and 'bias' their prices accordingly! This is ridiculous, if they know what the market is going to do then why bother setting up a SB business at all, why not just use this unique knowledge to guarantee a trading profit in the futures market.

No, I think you have that wrong. It would be correct to say that the SB companies bias their prices. This bias is usually in line with the current direction of movement. No magic, no crystal ball. If the underlying instrument is going up then they bias their prices upwards. If it is going down then they bias their prices downwards.

Pretty simple really.

 

[Miki]

“Some people seem to believe that the SB co's 'know' which way the market is going to go and 'bias' their prices accordingly!”

Absolutely! They know potential S/R levels just like you do – it’s a game of percentages.

“This is ridiculous, if they know what the market is going to do then why bother setting up a SB business at all, why not just use this unique knowledge to guarantee a trading profit in the futures market.”

Because, it’s easier to make money if you control the prices (and spread) and bias.

 

[sidinuk]

Jpwone, do you believe that the whole futures market is also 'biased' as this always appears to move ahead of the underlying cash index too? The index is made up of the share prices of a number of companies which all take longer to respond than a single highly liquid futures contract.

The SB co's have to base their prices on the futures because in the unlikely event that one of their punters might actually be able to predict the correct direction (which is 'pretty simple really') to trade then they need to be able to hedge it in the market and they can't start buying up the whole FT-SE100 can they?

Miki, I really don't think the SB co's actually control the whole market! If their prices are wildly biased compared to the underlying market then I assume that you are making a fantastic living from arbitraging between them and the underlying futures contracts.

I have studied the D4F prices and the futures prices and they move tick for tick together, so if you have found where this bias actually is then please let us all know!

 

[Miki]

“I really don't think the SB co's actually control the whole market! “

Controlling SB’s price movement is not the same as controlling the market!


“I have studied the D4F prices and the futures prices and they move tick for tick together”

I am sorry – you have just failed your exam.

 

[jpwone]

Why would I believe the futures market is biased because it moves ahead of the cash market? That is the nature of futures. They reflect the current market view of the future and a view can change far quicker than the underlying stocks in the underlying index.

The dow daily cash is an instrument created by the SB companies which is based upon the underlying index. As the SB company needs to hedge their exposure they have to do this using the futures market. Their price for the dow cash will move in line with the futures market and is weighted by the current direction of movement, the strength of the current movement and their current unhedged exposure.

In its simplest form they have to bias the the cash price. They are giving me a price at which I then trade and they must then hedge by using the futures. There is no point in giving me a price which cannot be hedged because the futures have moved against the price they have quoted.

Try trading the dow daily cash for a couple of weeks and then say with the same conviction that they are not biased.

If you find they are not biased then I would like to use the same price feed

 

[sidinuk]

Jpwone, why are you trading with a company whose prices you do not believe are fair and correct?

Miki, what exam? I was just stating a fact.

Anyway, the bias argument has been done to death on these boards before and we aren't going to get anywhere here.

The SB firms are very far from perfect, the spreads alone are prohibitive for short term trading, the dealers seem to be sleeping when you want to deal and the overnight financing can add up to a small fortune. But I just don't believe that they somehow 'know' which way the market is going and bias their quotes accordingly. Their prices are based purely on the futures and move accordingly.

 

[jpwone]

When did I say the prices are not fair or correct.

By putting words in my mouth I'm now starting to suspect that this is a troll.

 

[sidinuk]

jpwone you said:

It would be correct to say that the SB companies bias their prices

So you think that the SB co's bias their prices and yet they still remain fair and correct? Sorry, you've lost me a bit there.

What do you mean by a troll?

 

[jpwone]

A troll. Trolling for an argument. An argument for argument sake.

The logic you use to presume that because I believe the prices are biased that I should also believe that this is incorrect or unfair has me puzzled. Why should you arrive at this conclusion on my behalf when I have not.