Trading without the middle man?

matt101uk

Junior member
14 0
Hi all,

Is there a place where one can spreadbet or trade CFDs without the middleman taking their large cut? I guess LMAX was an attempt at this, but you need huge amounts for an account. Or is this simply not viable due to lack of liquidity? I.e. you'll need a huge amount of people to start off? Is there no type of "people's exchange" out there? Does it work? Could it work?
 

moka2

Established member
529 14
Matt there are Exchange Traded CFDs on the ASX.. but you are still paying the Exchange and your broker
A public Exchange is Betfair it has few financial bets where people can trade against each other but again winnner pays a fee
 

matt101uk

Junior member
14 0
Thanks. Seems everyone wants to charge - which I guess is their business model. Perhaps I'll don a Joseph Jacket and do my own!
 

moka2

Established member
529 14
Thanks. Seems everyone wants to charge " ??? what did you expect? you woudl charge a fee too if you were an exchange won;t you?
 

matt101uk

Junior member
14 0
Yes, realize they have to charge, but it does seem to be a bit steep sometimes. You either pay through commissions, spreads, re-quotes, financing, or all of the above.

Surely charging less commission (commission is always there despite 'Zero Commission') and looking for the masses and let people drive the liquidity would be a good idea. Not quite sure why LMAX haven't capitalized on this more....?
 

instant

Junior member
37 1
LMAX (when you add the comms charge) is often wider than the fixed spreads ... margins are quite high as well

making a £1 trade generates $0.40 a side in comms charges which is 0.8 of a point before you have even started. So what if the spread is 0.5 or 0.4 ... it still works out as wider than my spread bet company.

placing a trade in the FTSE gets me a .5 a tick charge (i.e 1 point round trip) so the fact that the 'spread' is 0.7/0.8 at good times is academic as this works out as 75/80% wider than the spread of capital spreads / IG index etc

if i trade bigger sizes and/or more frequently i get a better comms rate ..... surely an inducement to overtrade and anyway hardly treating small clients fairly

the fact that i am trading with other market participants is not a good enough 'come on' to pay such a price.
 

gle101

Veteren member
3,717 84
LMAX (when you add the comms charge) is often wider than the fixed spreads ... margins are quite high as well

making a £1 trade generates $0.40 a side in comms charges which is 0.8 of a point before you have even started. So what if the spread is 0.5 or 0.4 ... it still works out as wider than my spread bet company.

placing a trade in the FTSE gets me a .5 a tick charge (i.e 1 point round trip) so the fact that the 'spread' is 0.7/0.8 at good times is academic as this works out as 75/80% wider than the spread of capital spreads / IG index etc

if i trade bigger sizes and/or more frequently i get a better comms rate ..... surely an inducement to overtrade and anyway hardly treating small clients fairly

the fact that i am trading with other market participants is not a good enough 'come on' to pay such a price.
Yes at a low entry level of stake size SB and CFDs is quite unbeatable.
 

matt101uk

Junior member
14 0
Certainly some good points. You're right, spreads tend to be smaller on a market making provider. If you get a good spread at your provider and don't get put to dealer then it's certainly handy. However a lot of people on this forum have been put to dealer in the past because they started to make some money. If the market maker gives you a price on the platform and you trade on it that should be the price you get. Not... oh dear.. that wasn't right... let's cancel you.... No point having small spreads if when you click the button it's not allowed..... So, just need small spreads, small commission, and fast execution with no requotes, no cancellations and an open API maybe?! So that would leave....... ummm...... anybody?!?!
 

gle101

Veteren member
3,717 84
Certainly some good points. You're right, spreads tend to be smaller on a market making provider. If you get a good spread at your provider and don't get put to dealer then it's certainly handy. However a lot of people on this forum have been put to dealer in the past because they started to make some money. If the market maker gives you a price on the platform and you trade on it that should be the price you get. Not... oh dear.. that wasn't right... let's cancel you.... No point having small spreads if when you click the button it's not allowed..... So, just need small spreads, small commission, and fast execution with no requotes, no cancellations and an open API maybe?! So that would leave....... ummm...... anybody?!?!
Take Capitalspreads for instance, very few problems with prices and no slippage. The real market DMA will at times give you slippage and the entry level will be much higher as you probably will be trading futures. Prospreads might be a middle path that might suit your trading requirements.
 

moka2

Established member
529 14
"the fact that i am trading with other market participants is not a good enough 'come on' to pay such a price."

But with MM model you are trading against the house with LMAX ( or other True Exchanges) you are not
 

gle101

Veteren member
3,717 84
"the fact that i am trading with other market participants is not a good enough 'come on' to pay such a price."

But with MM model you are trading against the house with LMAX ( or other True Exchanges) you are not
You pay a price where ever you trade and the MM model does not mean the market maker is your enemy. That you are trading against the house is not correct description of the MM model. In fact they provide liquidity at a very low entry price. Sure one can trade the futures, but you have to invest more. Take your pick, but either way you have to pay out in order to get into the game.
 
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