Best Thread Spreadbetting, the myths and what is the reality?

[Black Swan]

Thought I'd start a thread trying to specifically discuss and or potentially put to bed some of the rumours (which may be fact) regarding the industry....

"they stop hunt", "the spikes are synthetic", "the slippage took me out", "they re-quoted me", "the platform froze", "they moved my stop", "they closed my account due to not liking me winning and or scalping", "their spreads are way off DMA", "their prices are 2 pips away from the real market", "they accused me of cheating", "they're just a bunch of crooked bookies, "they only want losers"...anything I've left out?

Then let's try and discuss these myths, or realities...evidence backed experiences would be great...

 

[maiden22]

I've actually got quite a few questions on this topic which I'll put up when I've got them in reasonable order. None of it is relevant at the moment, but things are beginning to go in the right direction so perhaps soon.

The best one that I have ever heard was on a now-defunct forum to which you were an occasional contributor. A member claimed to have actual knowledge (told by a friend who works for an SB company or something similar) that the SB company manipulates the individual charts specific to each client.

Yes, you did read that correctly. The chart you are viewing that just showed you your stop being taken out is different to the chart being seen by anyone else. On everyone else's chart, price never went there.

Call me cynical, but I find this very hard to credit.

Perhaps someone with first-hand experience could confirm or deny this allegation.

EDIT

Just noticed I am now a senior member due to this post. Hooray!

Pleased though I am, should not this system be looked at? New members might mistake "senior" status for trading expertise. Mostly what I've done to get here is go about shouting the odds on random stuff and slinging abuse at the few climate change believers on here.

 

[Black Swan]

The best one that I have ever heard was on a now-defunct forum to which you were an occasional contributor. A member claimed to have actual knowledge (told by a friend who works for an SB company or something similar) that the SB company manipulates the individual charts specific to each client.

Yes, you did read that correctly. The chart you are viewing that just showed you your stop being taken out is different to the chart being seen by anyone else. On everyone else's chart, price never went there. Call me cynical, but I find this very hard to credit.
Perhaps someone with first-hand experience could confirm or deny this allegation.

Charts can be slow, slow to load at times, whether S-Betting or DMA. I've always got meta trader and Pro real time running...and the 'behaviour' of price is v.similar. It wolud be impossible for any SB firm to get in that deep to affect your charts. Lots of other solutions to the problem (if it existed), for example get the chart package direct and only use the SB firm's platform to trade...

 

[trader_dante]

Hello,

I've made a few posts on this before but I will make some points based on personal experience, observation and opinion:

1. They stop hunt

This point is closely related to the theory that the spikes are synthetic. Yes, the data from SB companies is prone to the very infrequent spike. So is the data from some charting companies that have absolutely nothing to gain from it. It's a mistake. It happens. What most people don't seem to realise is that this is a fantastic opportunity. God knows how much money I've made off this in the past. If you see it and you're not in, get in fast. Bank your profits. Hope they don't notice. If you see it and you are in and you lose money as a result, ring up and complain. Money will be refunded every time. Easy. There is no way anyone could ever make me believe this was stop hunting. As for small price fluctuations, this is slightly more suspect but on the whole I still think its rubbish. Yes, I do, from time to time, see a price with an SB company that goes 1 or maybe once in a blue moon 2 pips from the DMA price. If this is actually repeatedly costing you money, the problem lies in your stop placement not the SB company. If your stop is a couple of pips above/below a daily/weekly high/low or 4hr/daily/weekly swing high/low etc, you need to re-think things

2. The slippage took me out

Slippage happens in the direct market too. It's a result of there not being enough liquidity to absorb your actions. If you hit market in Dec FTSE at £100 a point at 4.45pm, you're not getting the price you wanted. Simple. But the real question is, do SB companies slip you more than the direct market would? I don't have any evidence of this with most of the companies out there and as most of you know, have traded actively in SB whilst being in the direct market at the same time. The exception to the rule was VDM spreads who repeatedly slipped me on everything. I'm talking £1 bets in the Bund. When I contacted them several times about this, they closed my account. Nice.

The platform froze

You have to be careful who you listen too before you take everything at face value. e.g. "My platform froze just when I went to close my position which was £150 in profit. It was deliberate freezing by the company to stop me taking profit. There was no other reason for it. I've not turned my computer off for 3 day straight and was using Windows Media Player, FX Pro charting with 12 live charts, IG's Java Charts, Ransqwark, Outlook Express, Excel and was on Youtube and all of them seemed to be going fine." Again, I've seen platform freeze once - I've had the price go phone only at an inopportune time. These things happen. Do they happen deliberately to take money from the trader? I honestly do not believe this for one second.

They closed my account due to not liking me winning

It's happened to me once. And while I'd love to think it was because they didn't like me winning it was probably because I constantly complained over slippage (VDM) and made them aware I thought what they were doing was wrong. I would concede that if you are entering trades with high frequency and are very profitable, there is more than an above average chance you may lose your account. I have no proof of this, it is just my opinion. Any other types of traders would have absolutely nothing to worry about. Just my 0.2 cents.

They accused me of cheating

Then you probably did. They're generally not stupid.

They only want losers

If you were a SB company would you only want losers? I would want the best f*cking traders I could find! For obvious reasons...

 

[gle101]

Hello,

I've made a few posts on this before but I will make some points based on personal experience, observation and opinion:

1. They stop hunt

This point is closely related to the theory that the spikes are synthetic. Yes, the data from SB companies is prone to the very infrequent spike. So is the data from some charting companies that have absolutely nothing to gain from it. It's a mistake. It happens. What most people don't seem to realise is that this is a fantastic opportunity. God knows how much money I've made off this in the past. If you see it and you're not in, get in fast. Bank your profits. Hope they don't notice. If you see it and you are in and you lose money as a result, ring up and complain. Money will be refunded every time. Easy. There is no way anyone could ever make me believe this was stop hunting. As for small price fluctuations, this is slightly more suspect but on the whole I still think its rubbish. Yes, I do, from time to time, see a price with an SB company that goes 1 or maybe once in a blue moon 2 pips from the DMA price. If this is actually repeatedly costing you money, the problem lies in your stop placement not the SB company. If your stop is a couple of pips above/below a daily/weekly high/low or 4hr/daily/weekly swing high/low etc, you need to re-think things

2. The slippage took me out

Slippage happens in the direct market too. It's a result of there not being enough liquidity to absorb your actions. If you hit market in Dec FTSE at £100 a point at 4.45pm, you're not getting the price you wanted. Simple. But the real question is, do SB companies slip you more than the direct market would? I don't have any evidence of this with most of the companies out there and as most of you know, have traded actively in SB whilst being in the direct market at the same time. The exception to the rule was VDM spreads who repeatedly slipped me on everything. I'm talking £1 bets in the Bund. When I contacted them several times about this, they closed my account. Nice.

The platform froze

You have to be careful who you listen too before you take everything at face value. e.g. "My platform froze just when I went to close my position which was £150 in profit. It was deliberate freezing by the company to stop me taking profit. There was no other reason for it. I've not turned my computer off for 3 day straight and was using Windows Media Player, FX Pro charting with 12 live charts, IG's Java Charts, Ransqwark, Outlook Express, Excel and was on Youtube and all of them seemed to be going fine." Again, I've seen platform freeze once - I've had the price go phone only at an inopportune time. These things happen. Do they happen deliberately to take money from the trader? I honestly do not believe this for one second.

They closed my account due to not liking me winning

It's happened to me once. And while I'd love to think it was because they didn't like me winning it was probably because I constantly complained over slippage (VDM) and made them aware I thought what they were doing was wrong. I would concede that if you are entering trades with high frequency and are very profitable, there is more than an above average chance you may lose your account. I have no proof of this, it is just my opinion. Any other types of traders would have absolutely nothing to worry about. Just my 0.2 cents.

They accused me of cheating

Then you probably did. They're generally not stupid.

They only want losers

If you were a SB company would you only want losers? I would want the best f*cking traders I could find! For obvious reasons...

A good and balanced post. However, the major problem trading with SB today is trade rejections, referral to a dealer, and the not allowed practice of flagging individual clients, this in order to control how and when certain clients will be able to get into the trade. Otherwise, SB have come a long way in the right direction compared to just a few years back.

 

[Jack Hughes]

Having tried most SB providers in the last seven years or so, my thoughts are:



1. They stop hunt

No, only as much as the real market does, in that there are always 'magnetic' levels with lots of orders being fired off.

2. The slippage took me out

In the real market this is always a possibility. In the SB world, where you're only trading their quoted price (as they all stress) slippage only happens because it's artificially added by the software when prices move quickly. They could instantly fill at exact prices if they wanted to, but then they'd lose out on their hedges in the underlying market (if they really have a hedge). IMO, they mostly add as much slippage as they think they can get away with, which, as Dante says, was too much in the case of VDM.

3. The platform froze

This used to happen a lot, especially with Fatspreads, but whether it was deliberate or not, they can't get away with it now everyone has fast broadband and decent computers.


4. They closed my account due to not liking me winning

Never won enough to find out(!), but they certainly try to make life difficult for those who trade short term (unless they lose, of course).

They accused me of cheating

I've never understood this, particularly the accusation that customers who have a faster price feed are cheating.

They only want losers

To maximise their profit, they'd be stupid if they didn't want a constant stream of new clients who almost invariably lose and don't need to be hedged. At the other end of the scale, it would be useful to have some exceptionally good traders who consistently win, and could be both hedged and shadowed.

 

[gle101]

Charts can be slow, slow to load at times, whether S-Betting or DMA. I've always got meta trader and Pro real time running...and the 'behaviour' of price is v.similar. It wolud be impossible for any SB firm to get in that deep to affect your charts. Lots of other solutions to the problem (if it existed), for example get the chart package direct and only use the SB firm's platform to trade...

Yes I agree, I have never understood why some traders prefers the charts that SB provides.

 

[dimsdaletraders]

agreed. If anyone thought their SB firm was giving them "fixed" charts (it sounds unlikely to me too, tbh, as maiden22 made clear), the first thing they'd do would be to get a direct chart package!

On the "they only want losers" question,

well trying to imagine a business model as an SB firm, I can see advantages both ways from constant losers AND big winners (to paraphrase Jack). I can also see advantages to having a bunch of mid-range clients with funded, rather than margin, accounts that pootle along winning big now and then, and losing small here and there, and meantime, they have the use of your capital? ok, this applies less in these days of low interest rates, but it's not "nothing" either to an SB firm's bottom line.

love the thread, btw!

Tess

 

[gamma]

I've actually got quite a few questions on this topic which I'll put up when I've got them in reasonable order. None of it is relevant at the moment, but things are beginning to go in the right direction so perhaps soon.

The best one that I have ever heard was on a now-defunct forum to which you were an occasional contributor. A member claimed to have actual knowledge (told by a friend who works for an SB company or something similar) that the SB company manipulates the individual charts specific to each client.

Yes, you did read that correctly. The chart you are viewing that just showed you your stop being taken out is different to the chart being seen by anyone else. On everyone else's chart, price never went there.

Call me cynical, but I find this very hard to credit.

Perhaps someone with first-hand experience could confirm or deny this allegation.

EDIT

Just noticed I am now a senior member due to this post. Hooray!

Pleased though I am, should not this system be looked at? New members might mistake "senior" status for trading expertise. Mostly what I've done to get here is go about shouting the odds on random stuff and slinging abuse at the few climate change believers on here.

You do realise that the spreadbet company has an overall position in the particular market and probably don't even care who you are, unless you are a large player.
The spreadbet companies would be stupid to try and manipulate individual account charts, most people do the losing without any help from the companies.

 

[gle101]

You do realise that the spreadbet company has an overall position in the particular market and probably don't even care who you are, unless you are a large player.
The spreadbet companies would be stupid to try and manipulate individual account charts, most people do the losing without any help from the companies.

Yes, you are right, they do not manipulate individual charts, but they do manipulate individual accounts by flagging some clients, and by doing this not letting you trade on equal terms. Also, you do not need to be a big player to get targeted by some SB.

 

[Splitlink]

I heard that a long time ago and have been on the watch for it. I'm sceptical about that now, though at least, with average size traders.

 

[gle101]

I heard that a long time ago and have been on the watch for it. I'm sceptical about that now, though at least, with average size traders.

It all depends on what kind of trader you are, short term traders runs a bigger risk of being targeted.

 

[Black Swan]

Yes, you are right, they do not manipulate individual charts, but they do manipulate individual accounts by flagging some clients, and by doing this not letting you trade on equal terms. Also, you do not need to be a big player to get targeted by some SB.

I don't think they do, they simply move clients from "B" to "A" book...

 

[Splitlink]

I'll cross that bridge when I come to it. So far so good, as the man said falling past the 30th floor...

 

[gle101]

I don't think they do, they simply move clients from "B" to "A" book...

So what is the difference?

 

[Black Swan]

So what is the difference?

They (obviously) have their own software for identifying consistent winners and hedge 'em..simples. They do not/have no need, to manipulate the individual trades of individual consistent winners/traders...

 

[Jack Hughes]

They (obviously) have their own software for identifying consistent winners and hedge 'em..simples. They do not/have no need, to manipulate the individual trades of individual consistent winners/traders...

But what about the stage when they start differentiating between clients by delaying fills and referring trades to dealers? That's a sort of manipulation, and seems to contravene the MiFID rules. It would be fairer if the SB provider just said, 'sorry we don't want you' at this point.

 

[Black Swan]

But what about the stage when they start differentiating between clients by delaying fills and referring trades to dealers? That's a sort of manipulation, and seems to contravene the MiFID rules. It would be fairer if the SB provider just said, 'sorry we don't want you' at this point.

No Jack, that's not manipulation of trades or even "sort of", do they have the 'business' right to refuse someone's business, or decide a £10,000 a pip trade is too big to allow by platform execution?

 

[Splitlink]

I believe that they do have that right and the moral obligation to refuse it if they cannot service it.

But can't they place those bets with a broker?

 

[Jack Hughes]

No Jack, that's not manipulation of trades or even "sort of", do they have the 'business' right to refuse someone's business, or decide a £10,000 a pip trade is too big to allow by platform execution?

It's manipulation of traders, and seems to happen even at £1 per pt, when the risk to them of taking a bet must be tiny in the scheme of things. Why not just have the platform flash up a message saying:

'Trade rejected due to company policy. Please note that we only accept business on the basis that we can't lose.'