Trade2Win (Spread2Win) spreadbetting Idea

[jsd]

I notice the spreadbetting competition is hotting up with more and more companies offering spreadbetting via the web. This is good as spreads will tighten even further as as happend over last few years.

Now what about Trade2Win setting up as an affiliate via capital spreads (who offer the prospect) under their White Label Partnership scheme. Or an other if appropriate . Why bother you may ask?

Well there is a good customer base on these boards and it seems a natural extension for Trade2Win to expand into, to be able to offer the users of the site a trading option (unless they have one already out there ?)

Spreadbetters want tight spreads and this will happen as more and more entities expand out to capture spreadbet profits. Under Capital Spreads I believe potential White Label Partners get commissions (monthly) from the punters on the open and closing of the spread for each trade/bet they make.

Thats ok maybe but spreadbetters want tight spreads so we would need to alter the contract which delivers Good value for all parties, ie Punters, affiliate (Trade2Win) and Parent (market maker) Capital Spreads or an Other etc.

Potentially I see that an area that may be improved is the commission payable to the affiliate on the opening and closing of a spread. Abandon that.

Give the tightest spread possible, that say Capital Spreads can knock down to, (its only a matter of time anyway before a pioneer comes along and offers the tightest)

Pass this on to the clients in even further reduced spreads, Business will flow because of this.
The affiliate offering this unique pioneering dealability at outstanding spreads to customers, will charge its customers 1or 2% of monnies made on a trade no commissions due on losing positions.

This will create an environment of lowest cost spreadbetting which is good for all participants, losing traders pay less spread (so stand a better chance of success) winners pay a small fee on gains, (which the affilliate gets) and Capital Spreads or An Other can still front run the successful clients and profit and take the smallest spread premium doable, but volume of business will increase.

Capital spreads or An other may wish to offer this Option of account (tighest spreads , fee payable on winners) direct to the public.

Just an idea and ive just rambled it off so it may be seriously flawed, but where theres a will etc...

Pro's con's ?

jsd.

additional comments. I see clients being offered 2 options Regular Spread, or a Commissioned Spread, Commissioned spread being the tighest price available offered to deal at but commission percentage payable only on winning trades.

Thinking about it it was a bit like paying betting tax charge on horsebets years back the client had the choice to pay before or after the bet was placed. Give the CHOICE to the clients..

 

[cj12]

jsd

I believe this will happen in the near future with so much competition out there. The first to offer this will take all the business from the other spreadbet companies.out there.

Post the above on capitalspread see what simon got to say about it.

CJ

 

[Airthrey Capital]

I think there are a number of serious flaws in your proposal.......

1) If you want to provide a service which is basically a white label of Capital Spreads, the spreads will never be tighter than those of CS (Why would CS want business to flow out of their business into yours, at a less profitable rate?

2) My understanding is that you can only either deal as principal (marketmaker) or agent (broker). I believe that the regulations state that you may either charge a spread (marketmaker) or commission (broker), but not both.

3) Everyone seems to post figures that 90% of spreadbet clients lose money. Charging commission only on winning trades wouldn't therefore make a terribly strong businees case

4) There is a limit as to how tight spreads can get in order to be commercially viable.

Your proposal looks good from a client's point of view....but dreadful from a business / commercial point of view.

 

[jsd]

hmm yes airthrey, i did after this post put a comment on the capital spreads, saying go direct, no affiliate, recognising that as they already pay a commission on there current spreads to affiliate source driven business then theres room on capital spreads to fund even tighter spreads direct.

If they can lawfully offer the commissioned spread option then volumes of business will rocket and im not sure what percentage of profits are derived from front running successful clients over profits from unhedge losing clients or profits (from fatter spreads) on middle clients (breakeven category).

also with the tighter spread option a percentage of the so called 90% losers will become sustainable winners as dealing costs can be a big factor towards success or failure.

I believe arcade trading shops have schemes set up where the arcade will take a percentage of profits from the traders who trade there with the volume of trades and fractional commissions. Thats what i assume attracts traders because of the small execution costs. Providing the spreadbet can cover the positions in the market on their platforms I can see the positives of increase volumes and say 20% of profits from clients outweighing the mass of losing clients at wholesale cost.

After all its in their interests to sustain customers to assume positions.

With your point 4 I think even if they made no markup on the costs of a client dealing providing they have hedged the position then its still potentially commercially viable based on the 20% commission due to them on closing of profits.

besides they could perhaps offer the choice but the client base will increase 1000's of percent.

and that 20% commision the more i think about it 30% would still be attractive for the clients due to the tax situation.
So you just let the losers get on with it and try to become consitent gainers and take the cream off the growing winners and dramatic increase in the client base.There must be a way for this to happen. Just needs the right vision. All problems(situations) can usually be overcome.

besides they could still unhedge the losing client base and take the money as normal, the spreads on losing clients must be the smaller piece of the equation anyhow.. ??

jsd