The fast-growing spreadbetting market. Is all as it seems?

forexanalyst

Junior member
26 3
David,

Nice article, hopefully it got through to some members of the public who otherwise would have been roped into something unsuitable for them under false pretences.

The spreadbetters generally use proprietary platforms and have the ability to do whatever they want with spreads, prices, execution etc it's all within the Ts&Cs. However, it really doesn't make any business sense for them to spend all day watching their clients trade. As noted above the client is going to lose anyway, why ruin their reputation by fixing it? I am talking of the big players like IG. Even if you beleive something has gone wrong like mis-pricing etc they will run an investigation and if you can prove your stop-loss wasn't reached or profit target got tagged then they will amend the trade for you. The big spreadbetters all get their prices from the big liquidity providers just like other brokers. Normal brokers have the ability to fix all of the above just like the spreadbetters do (a la fxcm positive slippage). At the end of the day it's an over-the-counter market and you are trading against the broker. It's up to the broker if they want to hedge or not. The mandatory hedging by regulation is virtually nil.

Taking all that into account I don't think IG are dodgy, let's be honest they have more than 3/4 of the market so it's them that we are really talking about! They wouldn't fix it for the same reason online gambling firms don't fix their software and odds. Fines and bad reputation have a disastrous effect in an industry so heavily built on trust.

note, this is from a forex, futures and commodities perspective. Looking at spreadetting on shares is crazy imo, why would you trade short term in shares and pay the spread plus commission? The edge required is huge just to break even.
 

ianhey

Member
94 0
David

As said in many of the above posts S/B companies have no need to cheat as some clients are quite capable of making the most basic mistakes. For instance I was long on the DOW yesterday coming in to the FED' s minutes, 15 points up and a few minutes later stopped for a loss of 40 points. I knew this was coming but decided to take a chance. I have been spread betting fo 3 years now, lost a few thousand but am now breaking even.

Have enjoyed reading this thread.

Ian
 

x4x

Well-known member
465 61
Hi David, interesting article.

I've traded with IG for over 10 years and apart from a short period of (unnecessary) slippage, I've never had a problem with them.

My stop loss regularly gets hit (which is fine) but it also regularly survives by 0.0001 point (I trade mostly forex) so all this about how they manipulate the price to take out your stop loss is nonsense - one man's stop loss is another man's take profit. I have no idea how many trades they have open on each market at any one time, but presumably they have hundreds if not thousands on the most popular markets - how could they manipulate the price to their advantage?

I use third party data and charts, and IG's prices match (almost) point for point.

Just about every IG complaint on T2W has been proven to be unfounded - but the complaint still gets plenty of support from the naysayers. In nearly every case the complaint evolves from abysmal money management aka greed. Most times, when someone is unsuccessful in something, they say it can't be done, then look for someone else to blame - who better than the broker!

IG are the biggest and the best, that's not by luck, it's due to them having the best trading platform, reasonable spreads and fair pricing.

And to be clear, I have absolutely no relationship with IG, other than holding an account with them.
 

0007

Senior member
2,376 663
Taking all that into account I don't think IG are dodgy, let's be honest they have more than 3/4 of the market so it's them that we are really talking about! They wouldn't fix it for the same reason online gambling firms don't fix their software and odds. Fines and bad reputation have a disastrous effect in an industry so heavily built on trust.

note, this is from a forex, futures and commodities perspective. Looking at spreadetting on shares is crazy imo, why would you trade short term in shares and pay the spread plus commission? The edge required is huge just to break even.

I've never had any problems with IG for swing trading shares -- USA one day to a couple of weeks. Very straightforward with just spreads to account for and no need for tax returns. The simplicity of it all allows a trader to concentrate on the trade and not all the distractions. Can't speak for forex and all the sophisticated instruments -- far too complicated as far as I'm concerned and seeing as urban folklore says 80% people lose, I think I'll continue to stay well clear.
 

new_trader

Legendary member
6,665 1,489
I've read that a lot of S/B companies don't like scalpers...I have concluded that the only scalper they must like is me.
 
Last edited:
L

Liquid validity

0 0
I've never had any trouble with IG either.
Had normal slippage, had +ve slippage as well
(price improvement they call it, or they did when I last used them).

Only issue I had was one instance of a level alert coming 15 mins late.
I used external alerts after that.
Other than that, no problems.
 

ffsear

Senior member
2,252 500
This is the same argument that was always used when people complained about dodgy slippage in FX, 'don't blame the broker', 'slippage is normal' blah, blah, blah. Then several FX brokers were fined for doing exactly what had been alleged all along. Now because the same brokers have not been caught defrauding their SB clients we hear these excuses again.

Does anybody really think that a broker caught using asymetrical slippage on their FX platform was not doing the same thing on their SB platform? Why wouldn't they?

The point is they don't need to play these tricks. Its a gold mine as it it is, why risk losing customers in a very competitive market?

A couple of dodgy brokers does not represent the whole industry. I have used IG for 4 years, Capital Spreads for 6 and tried various others. Never had any issues.
 
L

Liquid validity

0 0
It is an undeniable fact that certain firms have been fined
for dodgy practices, so PB does have a point there.
The MT4 plugin alone proves it does happen.
 

Triggerfish

Active member
229 14
The spreadbetting platforms look like the real market. And feel like the real market. But are of course a clever simulation.

The spread-betting companies claim they’re transparent mirrors of the market. And I’m sure some of them are. But some people see them more like casinos – where the house has an advantage.

My question: Is this really true? Can anyone prove it?
What does it take to PROVE that "Simulation" is the same as the "Real Market"?.....at ALL TIMES when the real market is ON?

Surely the question to "PROVE" must be first removed.....so to provide that guarantee?.....and not that by mere words.
 

pboyles

Legendary member
8,072 1,303
The point is they don't need to play these tricks. Its a gold mine as it it is, why risk losing customers in a very competitive market?

A couple of dodgy brokers does not represent the whole industry. I have used IG for 4 years, Capital Spreads for 6 and tried various others. Never had any issues.

FX brokers don't need to either, but they did.
 

Canulearntotrade

Junior member
21 1
David,

Nice article, hopefully it got through to some members of the public who otherwise would have been roped into something unsuitable for them under false pretences.

The spreadbetters generally use proprietary platforms and have the ability to do whatever they want with spreads, prices, execution etc it's all within the Ts&Cs. However, it really doesn't make any business sense for them to spend all day watching their clients trade. As noted above the client is going to lose anyway, why ruin their reputation by fixing it? I am talking of the big players like IG. Even if you beleive something has gone wrong like mis-pricing etc they will run an investigation and if you can prove your stop-loss wasn't reached or profit target got tagged then they will amend the trade for you. The big spreadbetters all get their prices from the big liquidity providers just like other brokers. Normal brokers have the ability to fix all of the above just like the spreadbetters do (a la fxcm positive slippage). At the end of the day it's an over-the-counter market and you are trading against the broker. It's up to the broker if they want to hedge or not. The mandatory hedging by regulation is virtually nil.

Taking all that into account I don't think IG are dodgy, let's be honest they have more than 3/4 of the market so it's them that we are really talking about! They wouldn't fix it for the same reason online gambling firms don't fix their software and odds. Fines and bad reputation have a disastrous effect in an industry so heavily built on trust.

note, this is from a forex, futures and commodities perspective. Looking at spreadetting on shares is crazy imo, why would you trade short term in shares and pay the spread plus commission? The edge required is huge just to break even.

Thanks all for your stimulating and forthright opinions. To be honest this is not specifically about IG. They dominate the market its true. But there are plenty of new players that have come in on the last few years and I'm particularly interested in some of them. As I say, its only rumours... is there smoke without fire?
Cheers
David
 

forexanalyst

Junior member
26 3
If you are looking into price fixing, you will have more luck with Binary Options, much more scandalous. Just before the option expires, the market maker can see their exposure and edge the rate up or down accordingly if it's close to strike. No snipers on binaries to keep them straight either.
 

Vasco da Banana

Established member
699 121
I've read that a lot of S/B companies don't like scalpers...I have concluded that the only scalper they must like is me.


The only scalpers they don't like are the few who make a profit. As long as you're losing, you can make as many trades as you want and have perfect execution.
 

Shakone

Senior member
2,458 665
The only scalpers they don't like are the few who make a profit. As long as you're losing, you can make as many trades as you want and have perfect execution.

Not sure that's true, I think it depends on the company.

As an example consider trading the DOW. The real market is usually going to give you a 1 point spread, but you'll have commissions to pay. So IG can quite happily accept scalpers and hedge their risk in the real market and make money because they offer a 2 point spread. But any spreadbet offering 1 point is going to find things harder and is more likely to resort to dirty tactics (all in my opinion of course).
 

Vasco da Banana

Established member
699 121
Not sure that's true, I think it depends on the company.

As an example consider trading the DOW. The real market is usually going to give you a 1 point spread, but you'll have commissions to pay. So IG can quite happily accept scalpers and hedge their risk in the real market and make money because they offer a 2 point spread. But any spreadbet offering 1 point is going to find things harder and is more likely to resort to dirty tactics (all in my opinion of course).

Agree, but this isn't only about IG, most of the rest do offer 1pt spread on the Dow. They can do this without resorting to dirty tricks (if they wanted to) because of the self-hedging effect of opposing positions, so it's only if you tried to open a very large trade all at once that they'd need to intercept.
 
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