What offers best value

[kevin546]

If daytrading this topic does not really apply as I am looking at positions taken for longer than a day.

Even short term traders holding for several days may find that they have entered at a good point and this deal becomes a longer hold than they expected.

What then offers the best value.

Is it shares with the associated costs. Futures or CFD's allow for bigger positions but what about the financing costs involved in these products. What of SB.

 

[darrren]

Kevin

I believe Spread betting wins hands down on US stocks.

Unless you enter in the first 10 mins of the opening or when the stock is running one way strongly, then despite what you read, you can often get in with a 5-10 spread. For position trading this is reasonable.

You will be told that this is terrible and if you use a direct broker you will pay a few just a few points spread. Rubbish.

Just watch a level 2 screen and see the spread open and close by horrific amounts, so you can't always have total control over your choice of entry point.

Sb's only allow you to trade in top 100/500 stocks so you can't play the whole market with them.

SB gives instant profit (or loss) into your account and here's the biggy

You don't lose 40% of your profit on USD/GBP exchange rate and you also don't lose 40% of your profit in Capital Gains Tax.

So even if you couldn't get as tight a spread with an SB as with a broker, what's a few points compared to exchange rate and/or tax you will save.

Of course, daytrading is much more difficult and risky due to all the tricks the SB's play to try and stuff you.

 

[darrren]

Kevin

Omitted to mention the tight spreads apply to cash bets and D4F are the tightest - and the trickiest.

 

[Trader333]

darren,

You don't lose 40% of your profit on USD/GBP exchange rate ............

Where has this come from ? If you have a Universal account with IB then your base currency is in GBP so there is no exchange rate issue at all.

But I do agree that if you are position trading SB can be more economic. One thing I will say though is if on the level II screen you have a wide spread then the spread by the SB companies is usually massively above this and much greater than they normally quote.



Paul

 

[kevin546]

I assume the financing costs with SB and in particular with D4F are on the cash and not the quarter.

Capitalspreads - new boy to SB is matching D4F on some spreads such as the FTSE index. Not sure about companies but they are claiming they are aiming to set tight spreads from an SB perspective.

Darren

Why should US position trading be any better than UK. I think Paul has stated in the past that some of the US companies can gap sometimes over $10. That's a lot of points and bound to hit a stop loss if it goes against. Do you therefore have a stop in place during the session but cancel stop towards close and re-set after the silly period next day.

 

[darrren]

Trader333

While your base currency will be in GPB, If you trade US Stocks the profit you make stays on your account as USD and when you convert that profit back to GPB you stand the exchange rate loss.

Currently, that loss is 44%. So when you make 100 points with IB you take home £560 but take home £1000 with SB (less comms/spreads in both cases)

Or are we talking at cross purposes?

Darren

 

[darrren]

Kevin

If you re-read my post you will see that I said that I believe Spread betting is better for trading US stocks, not that US is better than UK.

Darren

 

[Trader333]

darren,

It is all relative and the advantage to me is that when you get a loss I get much less for the same movement. So all you are saying is that I trade at the equivalent of £5.60 per point rather than £10 per point by trading US stocks. So if I want to trade at the equivalent of £10 per point I will just trade with more shares.

I dont lose anything when converting back maybe £2 maximum in commission costs but that is nothing on a $5000 transaction. The only loss would be if the GBP / USD rate changed dramatically during the trading day but it can always go the other way so it is swings and roundabouts.


Paul

 

[darrren]

Paul

I see your point, but by near doubling your shares purchase to get the equivalent profit, you would have to have a very large pot of money in your account. On AMGN that would be $123,400 of margined purchase and you may not get a fill either getting in or out of that many shares.

I agree with you that converting on the same day will give negligible cost, but only on your original stake. The profit still loses the exchange rate.

This is why I think (IMO) SB is more profitable for position trading US stocks.

Darren

 

[Trader333]

darren,

I have always said (earlier on this thread I think), that for position trading SB is better. I trade intra-day so it is that I was referring to. The spreads though are always better with DA and you are right I would need a lot in margin where-as with a SB comapny you can do it on about 5%


Paul

 

[darrren]

Paul

Sorry, didn't realise you only traded intra-day.

My misunderstanding

Regards

Darren

 

[ragl]

Darren

New to trading, but learning fast(!!) as in..... out of the frying pan,etc. Anyway, I am using SBs at present for reasons you stated, however, you mentioned dirty tricks, could you elaborate as I may well need the guidance so as not to get stuffed!!

Many thanks

Alan

 

[darrren]

ragl

All you need to do is search this site for posts/threads on D4F (Deal 4 free), Finspreads, etc.

Then read through the New Spread Firms thread on this site.

Then go to www.incrediblecharts.com and read the experiences of their forum members dealing with D4F.

After doing that you should then, hopefully, be ready to trade knowing that generally, they will do anything to avoid you playing on a level field.

A few tips;

Record all conversations with them.

Don't trust them.

When your trade is confirmed check the price is correct, as you can easily click at say $56.35 (long), get filled instantly, feel pleased you didn't get a requote and not notice until later that the price you were filled at was $57.35. This has happened to me and many D4F clients.

Don't trust them.

Don't get angry and shout when they are trying to stiff you for a few hundred pounds as they will close your account or make trading very difficult for you.

Don't trust them.

Oh, and one more thing

Don't trust them.

 

[kevin546]

Darren

If D4F are so bad why stay with them why not use another company that may prove more reliable or are they all the same.

I only have experience of CityIndex and D4F, there have been a few hi-cups with D4F yet I have come away ok. CityIndex had better customer service but no hi-cups although I have put much more business through D4F than I did with CityIndex.

 

[ALROB]

Got to get this off my chest and I apologise to anyone reading this that my first post is negative. Every deal I tried to place with D4F (Deal for Fleecing) today, they offered me a worse price than was quoted. Just thought I'd let everyone know...ah I feel better now!
There seems to be support for Capital Spreads on the boards here, mind you there is so much to read on this site and so little time!!
Sorry if I'm on the wrong thread here.

 

[schoe]

ALROB, Your trading must be better than mine if they are requoting you all the time I traded several times today and it was instant. I have been with them for a few years and never touch wood had any problems that hasn't been sorted to my satisfaction.

 

[ALROB]

Schoe,
Many thanks for your reply but I don't know that my trading will be any better than yours!! Will see what happens over next few days. It is good to hear that your trades were instant though.
Good luck!

 

[kevin546]

Alrob

What instrument were you trading on D4F - If on the FTSE index anything above £25 gets a negative requote. Capitalspreads suggests this would not happen or at least not all the time.

But then D4F said no problems trading large sums as well so you will have to try them and see if they live up to the claims made on this site. As for D4F I have come to accept if I want normal trading then it has to be £25.

Kevin

 

[ALROB]

Kevin,
I was trading Ftse100, Ftse250 shares @ £20 per point. Too much? I don't think so.

 

[kevin546]

Alrob

Quite agree, you could understand it if it was way over the NMS or large deal on an index but they are not. You can take larger deals with them but at the cost of delays and less favourable prices which is far from suitable for intraday dealing. Obviously if you are trading from a longer time frame then this is not a problem to you, although it costs you in terms of lost income from a 2 or 3 point slip in the requote at each end. At £100 for example you are being charged £400 - £600 for the privilege.

For intraday trades with larger sizes it would appear better to go for direct access, at least the spread will be better and the fill instant. You will also be able to consider much larger sizes than you would with a SB firm without the games and the cost.

As for longer term deals with the cost of slippage with SB not sure which offers the better deal. The cost of the SB without the tax or financing charges from the direct access brokers or tax up front with direct access or shares without finance costs.