FX: Spreadbet v Retail Bank

I am currently using spread bet, at 20 pounds a point, to trade the spot FX market.

Please could someone explain how that relates / compares to contracts, if switching o AC Markets / Saxo / Refco ?

Also any chance of a simple explanation of margin levels at the later. With CMC Spread bet they need to have 150 pound per point in my account.

Micro

Trading through a spread betting firm you are not acutally trading in the spot fx market. You are trading via a book makers making bets thats why its tax free.

If you are going to trade in the acutal fx market you will need to trade £200000 per trade which equals £20 per tick (point)

Your account will need to have margin of £2000 @ 100:1 leverage to trade that amount.

20 pounds a point, to trade the spot FX market

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Do you mean "20 pounds margin per contract" or "20 pounds per point minimum per contract"?

Also:

150 pound per point

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100:1 margin means that any amount of cash you deposit in your tarding account is timed 100 times e.g

£2000 x 100 margin = £200 000

If you were to buy £200 000 eur/usd every tick up would be £20 profit.

If you do not understand these simple aspects of fx trading i suggest you trade a lot smaller amounts as the market is very volatile.

Anonymous said:

Do you mean "20 pounds margin per contract" or "20 pounds per point minimum per contract"?

Also:

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Minimum FX trade is a single contract which is $100,000 US Dollars = to $10 per pip.

So is he currently trading 20 pounds a point of GBP/US$ or EUR/CHF or US$/Yen or what?

microsoft said:

I am currently using spread bet, at 20 pounds a point, to trade the spot FX market.

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Well done, why change?

microsoft said:

Please could someone explain how that relates / compares to contracts, if switching o AC Markets / Saxo / Refco ?

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Depends on the pair your trading, and their current rate. Most are expressed in $ per pip, typically $10 per pip in the case of EUR/USD etc... for a standard lotsize 100,000

microsoft said:

Also any chance of a simple explanation of margin levels at the later. With CMC Spread bet they need to have 150 pound per point in my account.

Micro

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1% has been mentioned and is typical $100,000 * 0.01 = $1000 (100 : 1)
some "bucket" shops will allow (400 : 1) or $250 for $100,000 exposure.


So assuming your doing cable... your £20 per point equates to something like....
SB...
20 * £150 = £3000 margin

FX
rate: 1.7735
£20 per pip = 1.7735 * £20 => $35.47 per pip
$35.47 / $10per contract => 3 standard lots (with 5 mini lots or 50K leftover)
Margin: $300,000 exposure * 1% => $3000 margin (£1,692 )

If your fx broker supports mini-lots or flexible lots you could do 3.5 lots (35 mini)
$3,500 margin( £1,973)

else you have to decide between 3 or 4 lots....

0FXTrader0 said:

Trading through a spread betting firm you are not acutally trading in the spot fx market. You are trading via a book makers making bets thats why its tax free.

If you are going to trade in the acutal fx market you will need to trade £200000 per trade which equals £20 per tick (point)

Your account will need to have margin of £2000 @ 100:1 leverage to trade that amount.

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You are not actually trading in the forex market regardless of the type of firm you select, spreadbet book or retail fx dealer. In both cases, you are trading the quote made by the shop. The shop is not laying your position off in the interbank market: it's the counterparty and simply is holding the other side. Your loss is its win. For that reason, the fx dealers make the quote as good for themselves as they can in every instance, including against particular positions of individual customers, regardless of the price they are making at that same instant for other customers in the same currency pair. At least that was my costly experience with Saxo Bank, the retail fx dealer mentioned by the thread starter.

We opened a trading account with Saxo after demo-trading the Saxo Trader for more than one year. After a successful first week of real-money trades, Saxo cheated us out of more than 12k USD by manipulating prices against our orders and refusing to fill profitable limit orders. The latter occurred three times, in each case after the limit price of the order was breached with room to spare. Saxo called the breaching prices “misquotes.” Saxo's own charts -- showing the prices it made for other customers in the same pairs -- showed otherwise. The charts proved the breaching prices.

Here's an illustration of what we encountered that may be useful to the thread starter:
________

- Man in a casino plunks down three black chips ($300, the size, say, of a fx mini-account) at a blackjack table. The hand is dealt: he gets nineteen.
- Dealer has a ten showing and turns his hole card, an eight, for total of eighteen. Man smiles.
- “Mis-card,” dealer says as he fans the deck, pulls out a ten, and lays it face up squarely on top of the eight. “20” dealer says as he rakes in the three black chips.
________

The above is one trick in the bag of tricks facing customers of fx dealers. It’s the trick Saxo used against us. Now, knowing those are the rules that operate, why would anyone open an account with a fx dealer?

The above is one trick in the bag of tricks facing customers of fx dealers. It’s the trick Saxo used against us. Now, knowing those are the rules that operate, why would anyone open an account with a fx dealer?

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Sorry to hear about your experience with Saxo. It is for this reason that I only trade with FX operations where the quoting is entirely automated at all times otherwise there is always the temptation on their part to tweak the quotes, run for stops or avoid limit orders.

FYI I use OandA: automated quotes, trade any size and the smallest spreads that I've come across (1.5 pips in EURUSD).

Can someone confirm this is correct:

If I trade 1 contract (US$100K) every pip movement is +/- US$10

So at 50/1 Leverage, I would have to deposit US$2K

How many pips can I be down, before my position is closed, assuming I am with AC Markets, who do not let accounts go into the negative ?

So if I want to trade at a 10 contact level, what difference is it to me to have 50/1 or 100/1 leverage, as long as I have ready funds to top up the account as needed ?

My losing days are under 30 pips, based on my history in 2005.

microsoft said:

If I trade 1 contract (US$100K) every pip movement is +/- US$10

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Correct

So at 50/1 Leverage, I would have to deposit US$2K

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Correct

How many pips can I be down, before my position is closed, assuming I am with AC Markets, who do not let accounts go into the negative ?

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Assuming ACMs variation margin is the same as their initial margin requirement you must maintain at least $2K in your account. Some 50:1 brokers will allow 100:1 leverage once the position is open. Ie. you will get a margin call at $1K. You should read ACMs small print.

So if I want to trade at a 10 contact level, what difference is it to me to have 50/1 or 100/1 leverage, as long as I have ready funds to top up the account as needed ?

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Erhmmm simply that you will need to deposit less with the 100:1 broker, OR you can trade larger with the same margin. ....double edge sword alert.. If you've got the money in some high yielding account thats easy to access in a hurry then 100:1 leverage may be an option.

My losing days are under 30 pips, based on my history in 2005.

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as long as your winning days are more or you lose less often well done

0FXTrader0 said:

Trading through a spread betting firm you are not acutally trading in the spot fx market. You are trading via a book makers making bets thats why its tax free.

If you are going to trade in the acutal fx market you will need to trade £200000 per trade which equals £20 per tick (point)

Your account will need to have margin of £2000 @ 100:1 leverage to trade that amount.

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Sorry but thats Rubbish!
- trade the financial futures, simple