Spreadbetting Vs Real Trading

[the blades]

Perhaps in your infinate wizdom you can tell me how you think the spread betting industry does make its money if it isnt from its customers losses???

Hello BBB,

How would you differentiate between derivatives such as SB and CFD's? In the end, nothing is actually owned and the underlying structutre of these products is similar - isn't it? (genuine question I wonder if someone could clarify?).

The reason for the question is that of all the transactions that take place, CFD's now make up a "huge" proportion of the pot. If these are accepted by city professionals (where surely the CFD provider wouldn't try to outperform hence would have to make money on the spread?) then why is it inplausible that the bulk of profits from SB are achieved through the spread, rather than bias?

All info appreciated.

UTB

 

[Chris Hood]

Saxo a SB, sure.

BBB

. . . What is your opinion of the middle option - retail banks, FXCM / Saxo ? Are they not just SB's in posh clothing ?

Sure, Saxo is a SB, not an investment bank. That "bank" part is schtick. I know because I traded a six figure USD account with Saxo until promptly being burned. There are no "streamed, tradeable" prices. Absolutely no "transparency." Saxo, as the counterparty, mulls an order before filling it to determine if it wants to give you the trade and price. Exception is "inventory" size EUR/USD or USD/YEN, i.e., 100k lot, in which case the price pushed through to your platorm is instantly tradeable. All else, particularly if you get a lead in your account or a particular position, is subject to Saxo's manipulation. When it beat me four times in one week, I got excuses like "quote misfeeds," "lost connection," etc.

 

[wisestguy]

as I understand it , the only difference between CFDs and SB is in name only , since as has been pointed out , both products are market made , and not sold or bought directly to the client.

so for legal purposes , 1 is gambling while the other ( CFD ) is a legit trading product .

correct me if I am wrong .

 

[jonlebon]

THEY decide if you win or lose. If he ever decides to let you win (he will occasionally as he knows about random rewards), he does so because he knows it is in his interest to let you win sometimes, but certainly not all times.
One day, you will mysteriously find their platform is down, you wont be able to get quotes etc.

I v been spreadbetting for 3 years and can tell you that if any company were to behave the way you describe, word would go around very quickly and many ppl would go to another broker as there are quite a few to choose from.
Platform down? Yes it has happened on Finspreads and IG once but problem was solved quickly. But then this can happen on any online platform.
For your information, I know of many traders who are doing quite well with SP.
Order fill tend to be better and it doesnt require huge capital. And its tax free in UK (for now) On other hand, losses can be bad if exposure is too big.
Used to have a share trading account with IB and Zecco and some of the fills were simply horrendous with appalling customer service.
SP is a derivative and its not for everybody. Personaly, I could nt care less whether its "real trading" or not. It still requires skills to be successful and if you approach it as betting, you will get burned in the long term.

 

[fibbinstarchi]

I v been spreadbetting for 3 years and can tell you that if any company were to behave the way you describe, word would go around very quickly and many ppl would go to another broker as there are quite a few to choose from.
Platform down? Yes it has happened on Finspreads and IG once but problem was solved quickly. But then this can happen on any online platform.
For your information, I know of many traders who are doing quite well with SP.
Order fill tend to be better and it doesnt require huge capital. And its tax free in UK (for now) On other hand, losses can be bad if exposure is too big.
Used to have a share trading account with IB and Zecco and some of the fills were simply horrendous with appalling customer service.
SP is a derivative and its not for everybody. Personaly, I could nt care less whether its "real trading" or not. It still requires skills to be successful and if you approach it as betting, you will get burned in the long term.

CMC used to be called Deal4Free, they were so bad they had to remarket themselves. They now call themselves CMC Markets. They still do the tricks: Advertise tight spreads but slip you on the trade making the real spread much wider than advertised, close orders that have not hit stops/take profit levels, their own market data deviates from the actual market so they can hoover up stops, need I go on? I know a trader who traded a FX pair at £200pp once and the trade was cancelled and he was accused for trading for a Bank! Show me an honest spreadbet company that doesn't slip on purpose and do the already mentioned actions and I will sign up, so far I traded with ETX, FXCM, CMC, Cap spreads, IG Index, GFT, and they all mess you around with underhand tactics, I'm thinking seriously of buying a boat with satalite connection and trading real markets in international waters to stay Tax free!