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

[piphead]

They will probably say that their charts are only "indicative".
It is probably worth querying just to see what they say, but don't necessarily expect to get anywhere with it.

Ultimately, you trade on their prices, not the market.

Thanks Mike, I'm quite new to trading and others have told me the same thing as a result I'm thinking of a micro acount with alpari. Generaly speaking I have not had many problems with the trading platform they seem quite honest

 

[montmorencyt2w]

Thanks Mike, I'm quite new to trading and others have told me the same thing as a result I'm thinking of a micro acount with alpari. Generaly speaking I have not had many problems with the trading platform they seem quite honest

Yes, I was not criticising them. I had no problems with them.

Can also recommend IG and Tradefair, and Capital Spreads worth a look (not tried the new platform).

There are other apparently good ones out there as well. I think SB is a perfectly good, low cost of entry way into trading, with the obvious tax benefits.

If you want to deal more directly with the market, there is FXCM, who put a trading platform inside a SB wrapper, so you don't have to pay tax on winnings.

Check out the postings on T2W by Jason Rogers, an FXCM representative.
He has confirmed that (except for the micro account) all of your trades with them are hedged on the real market.

There is also Prospreads, who do a similar thing, but only claim a DMA-like platform, ie. I don't think they quite say that every trade with them is hedged on the real market.
Not 100% sure about that. But Prospreads is aimed at the professional trader with a fair amount of capital; it is also aimed at scalpers, apparently.

 

[Omoh101]

Yes, I was not criticising them. I had no problems with them.

Can also recommend IG and Tradefair, and Capital Spreads worth a look (not tried the new platform).

There are other apparently good ones out there as well. I think SB is a perfectly good, low cost of entry way into trading, with the obvious tax benefits.

If you want to deal more directly with the market, there is FXCM, who put a trading platform inside a SB wrapper, so you don't have to pay tax on winnings.

Check out the postings on T2W by Jason Rogers, an FXCM representative.
He has confirmed that (except for the micro account) all of your trades with them are hedged on the real market.

There is also Prospreads, who do a similar thing, but only claim a DMA-like platform, ie. I don't think they quite say that every trade with them is hedged on the real market.
Not 100% sure about that. But Prospreads is aimed at the professional trader with a fair amount of capital; it is also aimed at scalpers, apparently.

Thanks for the information - It answered my question.

 

[Scotty2Cues]

This thread reminds of the "Is online poker rigged?" ie the poker site use a rigged random number or there are poker bots out there....

 

[Jack Hughes]

Nah, it's a pseudo-random number....

 

[Bollo57]

Hi everyone,
just joined today. This is my first post.
Some fascinating threads and postings, particularly from the more experienced traders. You are all very welcoming to us newbies.
OKay, a quick resume: been SB for about 7 years, mixed success, as is the norm, maybe starting to get somewhere (hopefully!), deciding to start trading as more of an income provider, than my day job.
My understand of SB companies: (I've used primarily one for the last 7 years, signed up with another to try them out). They obviously derive income from: losing trades, the spread they charge, and hedging the positions. Now, if they only had losing clients, they probably couldn't survive in the long term, or even the middle term. The amount they must need to invest to get up and running must be huge. So, imho, I guess they must like to have a substantial portfolio of winning clients (for reasons already posted previously). Again, they make money off winning clients, and winning clients will probably keep trading, adding to their spread and hedging derived income. So if they cut off winning clients, they are, in effect, cutting off a revenue stream. Is this reasonable, too simplistic/naive? Please educate me.

I do have a question for all (probably some of the more experienced traders): some of the posts mention that its possible for accounts to get flagged up for large/consistent trades. I have no doubt this happens, as too many people in various threads mention this. What is your collective definition of a 'large' trade? £20 a point, £50, £100? I really have no idea what is considered large - I have been doing this on my own outside of this community. I would consider excess of £50, but everything is relative.
I appreciate your comments to my first ever post, and I thank you in advance.
Kind regards.

 

[montmorencyt2w]

Hi everyone,
just joined today. This is my first post.
Some fascinating threads and postings, particularly from the more experienced traders. You are all very welcoming to us newbies.
OKay, a quick resume: been SB for about 7 years, mixed success, as is the norm, maybe starting to get somewhere (hopefully!), deciding to start trading as more of an income provider, than my day job.
My understand of SB companies: (I've used primarily one for the last 7 years, signed up with another to try them out). They obviously derive income from: losing trades, the spread they charge, and hedging the positions. Now, if they only had losing clients, they probably couldn't survive in the long term, or even the middle term. The amount they must need to invest to get up and running must be huge. So, imho, I guess they must like to have a substantial portfolio of winning clients (for reasons already posted previously). Again, they make money off winning clients, and winning clients will probably keep trading, adding to their spread and hedging derived income. So if they cut off winning clients, they are, in effect, cutting off a revenue stream. Is this reasonable, too simplistic/naive? Please educate me.

I do have a question for all (probably some of the more experienced traders): some of the posts mention that its possible for accounts to get flagged up for large/consistent trades. I have no doubt this happens, as too many people in various threads mention this. What is your collective definition of a 'large' trade? £20 a point, £50, £100? I really have no idea what is considered large - I have been doing this on my own outside of this community. I would consider excess of £50, but everything is relative.
I appreciate your comments to my first ever post, and I thank you in advance.
Kind regards.

Sounds about right to me, but really, your guess is as good as mine.

There has seemed to be a consensus that as long as you basically don't take the p**s with them, you should be ok. Nevertheless, from time to time, a story will emerge where, on the face of it, it seems to have been the SB firm that took the p**s.

In my personal experience to date (about 2.5 years), I have only had one questionable decision by an SB firm that cost me a significant amount of money. But as I was still up on the (volatile) day in a very successful week, I decided to put it behind me, and it has not been repeated.

 

[Bollo57]

Thanks Mike. what, in your opinion, would you consider a large trade per point?

 

[montmorencyt2w]

Thanks Mike. what, in your opinion, would you consider a large trade per point?

Well for me it would be about £10 per point, but for the time being at least, I never do it in one chunk. I always break it down into smaller trades, usually with different entry points, but that's more a trading style thing. I don't think that £10 is large for the SB firm though. For that, what you said, about £50, or maybe £50-100 is perhaps beginning to show up on their radar, depending on how successful you are I don't really have any insights, other than what people report on forums like this, or what SB representatives sometimes write on the web. There is some interesting stuff here for example.

 

[Bollo57]

I agree that £50+ would probably start to show up. I think 10-25 per pip is reasonable. I read in one thread that somebody was putting between 100 and 150 per pip on binaries. Possibly true, but I guess their radar screen would be lit up. I know that one of the BIG SB companies claim that online orders are good for up to £100 per pip. If you're trading that frequently, and successful, I'm not sure how they'd react to it. Maybe they'd embrace it, as they have a 'star' trader on their books. I don't know. Like said, I think up to £25 is comfortable, and £10, what you said, is very reasonable.

Thanks for your reply.
Happy and successful trading.

 

[Black Swan]

There are tens of thousands of punters placing bets at 100-1000+ quid per pip daily. TBH there's a variety of reasons you may flag up as a customer with an SB firm, being profitable consistently is right up there. But they won't hedge you, or give you that much attention if you're a consistent swing trader winner placing bets at 5 quid a pip...they'll just *carry you*/you'll be absorbed in the normal activity..


IMHO the widely used SB firms are reputable and fair, you have to take on board that there are thousands of new gripes generated daily versus brokers also, most are kept private but a selection of gripers choose to use forums to air their greivances and IMHO most gripes are human error on the part of the trader.. There is an unquestionable fall off in gripes once the trader becomes more proficient and profitable..which answers its own question..

The SB firms are not however set up to facilitate scalping, or trading effectively off short term TFs, that said you can still trade well of 3-5 min TFs using short term TFs but the spread and or slight delay in fill means you're probably losing 10-15% potential profit each trade...That lack of set up; not being a NDD firm, or an ECN can't be used as a stick to beat the SB firms with, that's not what they do, or the business they want.

 

[Bollo57]

Thanks Black Swan.
I think forums like this are excellent for sharing knowledge and experiences.
Like I said previously, I'd been on my own up until I discovered this forum, so one persons trade of £5 per pip may seem high, to another, this is just penny trading - its all relative.
I certainly had no idea people were placing 1000 per pip!

I've enjoyed your comments on other threads - keep up the good work!

 

[Splitlink]

There are tens of thousands of punters placing bets at 100-1000+ quid per pip daily. TBH there's a variety of reasons you may flag up as a customer with an SB firm, being profitable consistently is right up there. But they won't hedge you, or give you that much attention if you're a consistent swing trader winner placing bets at 5 quid a pip...they'll just *carry you*/you'll be absorbed in the normal activity..


IMHO the widely used SB firms are reputable and fair, you have to take on board that there are thousands of new gripes generated daily versus brokers also, most are kept private but a selection of gripers choose to use forums to air their greivances and IMHO most gripes are human error on the part of the trader.. There is an unquestionable fall off in gripes once the trader becomes more proficient and profitable..which answers its own question..

The SB firms are not however set up to facilitate scalping, or trading effectively off short term TFs, that said you can still trade well of 3-5 min TFs using short term TFs but the spread and or slight delay in fill means you're probably losing 10-15% potential profit each trade...That lack of set up; not being a NDD firm, or an ECN can't be used as a stick to beat the SB firms with, that's not what they do, or the business they want.

I've never felt the necessity to trade any other way. I tried, and still have an account with IB, but I guess I'm simply not ambitious! Simply retired and do this as a hobby. I've also got enough sense to know my limits.

 

[Jack Hughes]

No doubt the definition of a 'large' stake varies between SB companies and the liquidity/type of market. I think Simon on the CS thread once said that most punters are in the £1-5 per pip bracket, so I'd be surprised if many clients are regularly placing £1000 pp on the Dow, Nikkei or FX crosses.

 

[montmorencyt2w]

There are tens of thousands of punters placing bets at 100-1000+ quid per pip daily.

Without asking you to reveal your sources, I would suggest that that is not published knowledge. Some of the people who write on that site I linked to talk about having some very large clients, but I don't think they go into as much detail as this.

Let us say that "tens of thousands" means at least 90,000, call it 100,000 for round figures.
Let's say there are 10 significant SB firms (I can't think of any more).
That means 10,000 clients per firm who are placing bets at £100-1000 per pip daily.

Presumably more at £100 than £1000, but let's say there are 1000 clients per firm placing bets of £1000 daily. Lets say on average their bets involve a 10 pip movement.

That's a movement of 10 x 1000 x £1000 or £10 million. That is not a net movement of course; there will be winners and losers. Anyway...call it £50 million a week or about 50x50=£2,500 million a year, i.e. £2.5 billion.

hm...I'm just not seeing this as feasible, somehow, and this is ignoring the bread-and-butter customers.



On a completely different tack Black Swan, you are a fan of FXCM. Does their "No Dealing Desk" platform also automatically mean no "dealer acceptance"?
Thanks,
Mike

 

[Jack Hughes]

Without asking you to reveal your sources, I would suggest that that is not published knowledge. Some of the people who write on that site I linked to talk about having some very large clients, but I don't think they go into as much detail as this.

Let us say that "tens of thousands" means at least 90,000, call it 100,000 for round figures.
Let's say there are 10 significant SB firms (I can't think of any more).
That means 10,000 clients per firm who are placing bets at £100-1000 per pip daily.

Presumably more at £100 than £1000, but let's say there are 1000 clients per firm placing bets of £1000 daily. Lets say on average their bets involve a 10 pip movement.

That's a movement of 10 x 1000 x £1000 or £10 million. That is not a net movement of course; there will be winners and losers. Anyway...call it £50 million a week or about 50x50=£2,500 million a year, i.e. £2.5 billion.

hm...I'm just not seeing this as feasible, somehow, and this is ignoring the bread-and-butter customers.



On a completely different tack Black Swan, you are a fan of FXCM. Does their "No Dealing Desk" platform also automatically mean no "dealer acceptance"?
Thanks,
Mike

I agree with the gist of what you're saying, but the ariffmetick seems a bit suspect. Why does 'tens of thousands' mean 90,000 plus, not 20,000, especially if clients rarely only have one account?

 

[montmorencyt2w]

I agree with the gist of what you're saying, but the ariffmetick seems a bit suspect. Why does 'tens of thousands' mean 90,000 plus, not 20,000, especially if clients rarely only have one account?

Your first point is valid I think. Phrases like "tens of thousands" are a bit meaningless really, and BS is a bit naughty in using it; over-egging his pudding, I suspect. It probably does just mean 20,000, or maybe even only 15,000 or so.

I'm not sure if clients having more than one account is relevant though. He was talking about actual bets placed wasn't he (not numbers of customers)? If bets are being placed, then that account is by definition active.

(Looks down...OK, he does say "tens of thousands of punters";OK, well, I was reading that as "bets placed", not as "punters", so that's what my riffmetic is referring to )

 

[Black Swan]

According to the study I saw sight of (some of which went into the public domain) there are 100,000 regular spread betters. Approx 5-10% of them place *large* bets, could be considered big hitters... so that's probably max ten thousand, I should have stated thousands (ten), not tens of thousands, apologies...

 

[bevok]

From what I've seen with the one I trade at (one of the biggest) they're very fair and have sorted out any issues. They make their money from the spread, and as most traders lose overall then obviously they make a good living from taking the other side of their trades. They like scalping as well as this obviously generates lots of spread revenue and is a very effective way of parting punters with their money. The only people who might get caught out are those arbitraging on news or whatever and catching too many short term spikes where they're not covered, but this is very rare.

99% of the complaints about them are from losers looking for someone to blame, or simply from fantasists who like to fabricate the story that they were winning a lot of money and were stopped trading.

 

[gle101]

Yes, things have really changed on this forum. A couple of years back I was among the very few that could take the SB side in a discussion. And the language was terrible, I was attacked from every angel possible. You could get away with almost anything and the moderators didn't act (my compliments to the moderators of this forum who stepped in and made the T2W forum a high class discussion forum for traders). Today the situation is different, there is a bunch of well well-versed traders taking a balanced view. The discussion is healthy and with a decent language towards traders who express a different viewpoint on some issues. Along with this, the SB industry have improved and overall deliver a good service. All is not well, but I think as the industry matures, regulation tightens and this together with an increased competition we are in for a very interesting future trading SB.