UK SETS user please help me understand?

[Tuffty]

I really don’t understand this, or do I?

Lets assume a share is trading with a ‘yellow strip’ of 126 – 128. Let’s also assume the market is very steady and the share is nicely balanced trading here (i.e. no sudden moves). Also the share is traded a lot so there are trades continually going through.

When I look at the trades done I see a lot of AT trade types being done at 126, then 128 then 126 etc i.e. there still appears to be a spread of 2p in this share.

Lets also assume my trade size is so small so it won’t affect the balance of demand and supply in this share either.

If I come along with Direct Access does this mean I can deal at the favourable side of the spread i.e. I can buy at 126 or sell at 128??

 

[Racer]

Yes direct access means you can buy at the 'sell' price(126) and sell at the 'buy' price (128), but you can also go to the other side and have an instant fill and buy or sell as you would shares.. these will then be displayed as an AT trade, also if someone fills your order that you have place on the book these will also go through as AT trades..
e.g. say you have 1000 shares on the book.. these are filled in 3 stages of 300, 600 and 100.. these will all be displayed as 3 distinct AT trades not as 1 X 1000 lot

 

[Captain Haddock]

Correct Tuffty.

However if you wish to buy for example at 126 then you would enter your order and join the back of the queue waiting for a seller to hit other orders in front of yours before he reaches yours.
Another alternative is to hop above the best bid at say 126.25. Then if a seller just wants a market fill, it's your order he will be hitting. Putting a bid in rather than hitting the offer has the obvious advantage of a better price, but at the risk of not getting filled or getting a part fill.

 

[Tuffty]

I very much appreciate the replies. It doens't look like many people trade SETS via Direct Access judging by the lack of interest on the board. I did read through old threads and was impressed by the Captain - some interesting comments.

All I need to know now is how much I can negotiate comission/and financing charges down with the direct access providers (will have to be via CFD to escape stamp duty - unless the chancellor scrapped it today!).

 

[Racer]

Depends on how many trades you do. You may be able to negotiate lower ones at first to open the account but then you can re-negotiate with them if you do a lot of trading and/or big positions