The truth about trading arcades

Directional

Experienced member
1,992 251
martin brown said:

That link is for forex, I'm talking about futures trading. There is no such thing as direct access anywhere in FX, whether its an FX bucket shop or a currency ECN. Stick with currency futures.

martin brown said:
until such a time, i believe in paying for real direct maket access, real market spreads, real market commisions, with a real front end, with real support, in a real trading enviroment.

http://www.twowayfutures.com/Spreads Vs Futures.html
 

charliechan

Experienced member
1,008 119
how would this work if trading spreads? seeing as most arcade traders seem to trade spreads for a tick, adding a tick would surely make this a lot tougher.

someone mentioned a ladder earlier - how would that work if the inside quote is removed as the company makes its spread here?

just curious - i dont trade in an arcade or scalp.
 

Directional

Experienced member
1,992 251
the commission is added on as a spread - you trade the underlying at the futures market prices, but on your statement the prices are adjusted to reflect the addition of the commission to the spread - so say if euribor is sep6 is bid at 96.670, if you sold it at market on your statement your entry would be 96.66976 which reflects a €0.60c commission which is 0.00024 onto the market price.
 

Parky

Well-known member
260 32
Be warned, if you are spread betting your money is held by a company with a face value of very little, so you have absolute counterparty risk.
Also it is traded over the net meaning you are at the mercy of the internet, if a Septembet 11 happens you will be stuffed, the internet did and will again, in the same circumstances, grind to a halt. Although some people are making a living from spread betting, serious traders will continue to see the benefits of fixed line exchange traded solutions in terms of reliability ans security.
It is also expected that spread betting, as far as tax avoidance is concerned, is living on borrowed time and with the current US wrangling over internet betting in general and the punishment being dished out to shares in Bet on Sports and Partygaming attention will focus even more on these types of companies and their activities.
 

charliechan

Experienced member
1,008 119
thanks arb - looks like a good solution - i was assuming they would take a full tick on the spread making the arcade model a bit more tricky!

it seems they just call the commission a spread - tony bliar eat your heart out - traders spin better!

parky - valid points. but if your t1 is right into the sb company who have a t1 straight to the exchange....but you still need a solid platform rather than some java web based thing.

point about the usa screwing things up for us - i think the nat west 3 would agree with us on that.

how about the business model though? im sure a sb has to do more than call its commission a spread. doesnt it have to hedge itself in the market? i thought the very principal of a sb was the handicap that the best traders in the world like to put themselves under - you know - pay way more on a spread, have price misquotes regularly, stops ran more than in a fair market, mysterious platform crashes just before they can hit a submit button etc. after all, these sb companies like all bucketshops are out for your money as you are not trading in a real market as we know.

so how do these companies differ from the regular bucket shops? they cant be taking the other side of trades unless the majority of arcade traders are net losers - something the gaffers wouldnt care for too much.

guess i just dont know the truth about how these new sb companies make their money. would be interesting to find out.
 

adrianbuthee

Junior member
43 1
Hello CharlieChan

It basically works like this...you trade on a futures trading platform and execute orders straight into the market. This trade is then instantly booked and allocated to your account as a spreadbet at the spreadbet price. The difference between the two being your spread rate. Commissions cannot be charged so a fixed quantity of spread is charged on the price at which you were filled in the market. The amount of spread charged is based on your monthly volume.

i.e. You buy FTSE at 5800 on Liffe. You are on band 2 and thus charged 0.25 per side, this means the trade is booked at 5800.25 and there is your spreadbet.

The hedge has been placed from the original trade and then booked as a spreadbet to your account. For the client, it is practically the same as trading the underlying futures, but as a spreadbet.

Trades are 100% hedged and no proprietary positions are taken, all the broker makes is the small, fixed amount of spread each time you trade.

There are video example on the website if you want to take a look (Not allowed to give a URL). I can also offer seminars and remote webinars for all those interested in taking a further look. Please PM me if so.

All the best

Adrian Buthee

P.S. Nothing wrong with re-inventing the wheel if it makes it more efficient!
 

martin brown

Active member
144 2
adrianbuthee said:
Hello CharlieChan

It basically works like this...you trade on a futures trading platform and execute orders straight into the market.

.
.
.

Trades are 100% hedged and no proprietary positions are taken, all the broker makes is the small, fixed amount of spread each time you trade.

I think this needs more explanation...

Do client trades ever reach the REAL market?

IF so, and TWF then ALSO takes the opposite side of clients positions (ie "hedge") in the REAL market, that would then double the costs of commission to TWF?

Unlike a real market trade which is matched "anomalously", SB client trades will have no effect on market supply & demand since in reality trades are matched with the TWF "hedge"?

If this is the setup then it is open to client abuse just like any other SB company.

Please Post TWF Terms & conditions for all to see and highlight those terms that sets TWF above the rest (i suggest you open this on a new thread in the SB forum, this is NOT the place).
 
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Directional

Experienced member
1,992 251
I'm not sure what you arent getting about the TWF arrangement - consider them as a direct access futures broker, so if you understand how a normal futures broker works, you already know how TWF works.

The only difference is that the commission is charged as a spread added onto the price you got your fill on the underlying at.

Sold Euribor futures at 96.670 with a commission of 0.60c ... whether that commission comes out of the account as a "commission", or as a 0.00024 "spread" added onto the fill price, it still costs you 0.60c
 

Farside

Newbie
1 0
Is anyone here famiiliar with equity prop/arcades? I'm in the US, and I hear prop traders trade 200K shares a day on NYSE, and make 1K to 2K (5 or 6 cents/share) doing it. What are they doing, buying the bid, sell the ask? Is there no directional trading involved? Just curious if I go prop what I can expect.

Thanks
 
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martin brown

Active member
144 2
Arbitrageur said:
I'm not sure what you arent getting about the TWF arrangement - consider them as a direct access futures broker, so if you understand how a normal futures broker works, you already know how TWF works.

since when do "direct access" brokers "hedge" against their clients positions?

either they allow clients direct access to freely execute & match trades on the open market or they dont.

once the broker takes an opposite position in the market trading against clients positions then market abuse easily follows.

TWF is not a "Normal futures broker", so i doubt you know how they work...

...unless that is marex let you go, and you now work for this bucketshop?
 
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A Dashing Blade

Experienced member
1,373 170
adrianbuthee said:
Hello CharlieChan

It basically works like this...you trade on a futures trading platform and execute orders straight into the market. This trade is then instantly booked and allocated to your account as a spreadbet at the spreadbet price. The difference between the two being your spread rate. Commissions cannot be charged so a fixed quantity of spread is charged on the price at which you were filled in the market. The amount of spread charged is based on your monthly volume.

. . .

With the caveat (at least with Futuresbetting.com) being that your bet size has to be in units of the underlying future ie 10EUR/tick for the Bund.

martin brown said:
I think this needs more explanation...

. . . blah blah . . .

Martin, if you are having a problem with this concept, then I suggest that the financial markets are not for you at the moment.
 
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