Spreads Changing Overnight

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iandh2010

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Hi Guys,
I'm new here but hoping to get some good advice and feedback from t2W forums.

I am a day trader and as such each evening I set up orders for the following days trades.

I have noticed recently that a certain well known very profitable spread betting company has been significantly increasing its spreads on me overnight or certainly first thing in the morning.

In fact today I managed to cancel an order because the spread had jumped from 1.4 pips at 22.40hrs to 5.1 pips by 07:45hrs the next morning.

I am only a small trader and 5 pips could wipe out 50% of my profit and therefore makes it impossible to trust this company anymore.

Has anyone else experienced this type of behavior, is it common practice or just greed?

Anyone recommend a company that would be better to day trade with?

Thanks
Ian
 
iandh2010 said:
Hi Guys,
I'm new here but hoping to get some good advice and feedback from t2W forums.

I am a day trader and as such each evening I set up orders for the following days trades.

I have noticed recently that a certain well known very profitable spread betting company has been significantly increasing its spreads on me overnight or certainly first thing in the morning.

In fact today I managed to cancel an order because the spread had jumped from 1.4 pips at 22.40hrs to 5.1 pips by 07:45hrs the next morning.

I am only a small trader and 5 pips could wipe out 50% of my profit and therefore makes it impossible to trust this company anymore.

Has anyone else experienced this type of behavior, is it common practice or just greed?

Anyone recommend a company that would be better to day trade with?

Thanks
Ian
Click to expand...

Hi - this is common practice - it's normally done to reflect lower liquidity overnight - If you were trading on the underlying markets you would also notice spreads are wider and there's less liquidity .
 
dealer911 said:
Hi - this is common practice - it's normally done to reflect lower liquidity overnight - If you were trading on the underlying markets you would also notice spreads are wider and there's less liquidity .
Click to expand...

Providing the underlying is actually open.
If its closed, personally I wouldn't place any orders, market or limit,
as you are just trading the brokers own book.
Unless its FX most of the underlying markets will be closed outside
of regular trading hours (U.S. pre/post market aside, even then I wouldn't bother).
 
Thanks dealer911 and Liquid validity,

However, I would have thought that the liquidity would be less overnight and therefore the spreads higher overnight but what I am seeing is the other way around, lower spreads at night when the market is closed.

The company that I am referring to does not trade these stocks overnight so any stop orders that I place are not fulfilled until the markets open at 8am (LSE) and the trigger price hit anyway.

Ian
 
Ian

If you are trading UK equities you will find that the spreads widen on the open until things settle down after the initial flurry of activity. There's nothing untoward in that, it just reflects what is happening on the "real" market.

It follows that it is quite dangerous to have orders pending if they are near the price because you are likely to be triggered in (or out) because of the widened spread rather than because mid-price has moved. Safer to wait until things have settled down and spreads are back to normal.
 
barjon said:
Ian

If you are trading UK equities you will find that the spreads widen on the open until things settle down after the initial flurry of activity. There's nothing untoward in that, it just reflects what is happening on the "real" market.

It follows that it is quite dangerous to have orders pending if they are near the price because you are likely to be triggered in (or out) because of the widened spread rather than because mid-price has moved. Safer to wait until things have settled down and spreads are back to normal.
Click to expand...
+1 agree.
Thats one of the reasons I stopped trading stocks - open gaps...:cry:
Just reminded me of a few nasty stings on AIM a few years ago caused by that...
 
Hi Guys,
OK thanks well that blows my trading method out of the water then as I have always set my trades up the previous night so that I can go off to work and leave them to sort themselves out. Yes they do sometimes get triggered when I didn't really want them to but assumed that that was the initial movements in the price not the spreads widening.

Thanks
Ian
 
iandh2010 said:
Hi Guys,
OK thanks well that blows my trading method out of the water then as I have always set my trades up the previous night so that I can go off to work and leave them to sort themselves out. Yes they do sometimes get triggered when I didn't really want them to but assumed that that was the initial movements in the price not the spreads widening.
Click to expand...

If the 'Well known SB co.' is who I think it is, you have 2 choices.

1.Guaranteed stop (not sure if it applies to limits, never used it), downside wider spread.

2. Wider stops and targets (if you use targets), and increased holding time, that way any spread / slippage affect is reduced.

Obviously you will have to asses and test the impact of those changes before going live again.
They may solve your problem, or create bigger problems.
 
Last edited:
You cannot trade a market when it is closed.
Spreads overnight will be wider due to low volume, if your price gets hit overnight and your order filled then you will pay higher spreads.
Spreads widen during extreme volatility (NFP)
 
Hi SlowlyButSurely,
That is correct. I don't TRADE when the market is closed but you can set up a stop order with a target price at which level the order gets fulfilled. Therefore if you set it higher than the current price + 1/2 spread then the market has to open to let the price change which if it reaches the target, then fulfills the order.

So therefore I used to set up a few stop orders as above with attached stop losses and then just left them to run in the morning. Then if the price moves the wrong way the order doesn't get fulfilled unless the price hit the target before reversing and going the wrong way.

The biggest issue is that I was expecting a spread of 1.2pips and it actually got fulfilled with a spread of 5.6pips which obviously can wipe out any gain for several days.

Interestingly the SB company involved had much tighter spreads than another company I use. However, that company doesn't seem to vary its spreads that much........
Ian
 
If you are not around for the London open due to being on your way to work etc perhaps you could go in earlier/later. It would totally depend on your schedule and having no knowledge of your routine I can't really comment but it's just a suggestion. If you pre-plan every trade at night still you can just leave the actual execution until the morning which shouldn't take too long. By around 7:15 things have usually settled down.
 
iandh2010 said:
Hi Guys,
I'm new here but hoping to get some good advice and feedback from t2W forums.

I am a day trader and as such each evening I set up orders for the following days trades.

I have noticed recently that a certain well known very profitable spread betting company has been significantly increasing its spreads on me overnight or certainly first thing in the morning.

.....
Thanks
Ian
Click to expand...

Know what you say. I got caught ONE time in my 'buy' being executed before the real market opened. Never again have I placed an order before the market opens. It's about the same with trailing stops. Got caught on that once as well with the overnight spreads. Day orders only for me.

To each his own.
 
Hi Bill,
OK thanks for that tip.
I am off work for the next couple of weeks so will try placing day orders and having checked thorough this t2W forum it looks like I might shop around to find someone offering tighter spreads. I only used this particular SB company as they offered almost all of the LSE stocks. Whereas my other company offered pretty tight spreads on most stocks that THEY LISTED but often I would find a stock using my data mining software only to find that they did not offer it.............

Thanks
Ian
 
Spreads Changing Overnight - IG INDEX

iandh2010 said:
Hi Bill,
OK thanks for that tip.
I am off work for the next couple of weeks so will try placing day orders and having checked thorough this t2W forum it looks like I might shop around to find someone offering tighter spreads. I only used this particular SB company as they offered almost all of the LSE stocks. Whereas my other company offered pretty tight spreads on most stocks that THEY LISTED but often I would find a stock using my data mining software only to find that they did not offer it.............

Thanks
Ian
Click to expand...

Hi Ian

I believe the SB you are talking about is IG.....i took a look online when they changed their spreads from fixed to floating a while back & didnt see any threads about it, oddly.

In the room i used to trade in i know all the guys with IG have since left cos they were slipping stupid amts on tier 2/3 figures during v liquid times (ie a few mths back), one got slipped 140 pips, plus slipping often on normal mkt time trades. Complaints got straight batted back to them, so it was an easy decision to wave gdbye.

IG have joined the mainstream - they do MT4 now, they have sold themselves out down the slippery route of a business model primarily focused on bagging newbies (perhaps cos number of full time traders has dwindled??). They are not for serious day traders. Some brokers are offering edit: soz ECN not DMA..but with SB benefits ie no tax liability, these wld be gd to look at (eg FP markets - i have no alliance with them whatsoever).

Happy trading.
 
Last edited:
Re: Spreads Changing Overnight - IG INDEX

rsh01 said:
one got slipped 140 pips, plus slipping often on normal mkt time trades.
Click to expand...

140? -- wtf...
Not used them properly for a long time, mainly use it as a p1ss about account,
or to flatten exposure if primary acct. servers screw up.
 
Re: Spreads Changing Overnight - IG INDEX

Liquid validity said:
140? -- wtf...
Not used them properly for a long time, mainly use it as a p1ss about account,
or to flatten exposure if primary acct. servers screw up.
Click to expand...

wise man!

yep apparently their t&c's are now aligned with the rest of the bucket shops, but at present it seems their performance may even be a level below the norm newbie stop hunting bucket shop.

shame cos they prided themselves on being a cut above.
 
Hi rsh01 and Liquid Validity,
I wouldn't like to comment on your guess as to the IGdentity of the SB as being IG.... but their actions do appear to be exactly the same.......allegedly!!!!

I have just been onto the FP Markets website that you mentioned and see that they are a DMA whatever that is. I have just requested the download of their DMA Spreadbetting book to read.

Sounds likely that they probably deal in much larger trade sizes than I do, I am only just working up from £1 - £3/pip at the moment. What is FP's smallest trade size?

Ian
 
Re: Spreads Changing Overnight - IG INDEX

rsh01 said:
yep apparently their t&c's are now aligned with the rest of the bucket shops, but at present it seems their performance may even be a level below the norm newbie stop hunting bucket shop.
Click to expand...

Yeah I noticed the adoption of MT last time I logged in a few days ago
to check what they were quoting on a U.S. stock for someone.
Wonder if they use that plugin...:innocent:
 
iandh2010 said:
Hi rsh01 and Liquid Validity,
I wouldn't like to comment on your guess as to the IGdentity of the SB as being IG.... but their actions do appear to be exactly the same.......allegedly!!!!

I have just been onto the FP Markets website that you mentioned and see that they are a DMA whatever that is. I have just requested the download of their DMA Spreadbetting book to read.

Sounds likely that they probably deal in much larger trade sizes than I do, I am only just working up from £1 - £3/pip at the moment. What is FP's smallest trade size?
Click to expand...

You could try LMAX, pure DMA, very low initial deposit (£50 I think), 1 contract = 10,000 base,
a minilot in other words.
Lowest trade size is 0.1 contracts = 1000 base (microlot) 10c pp (6 pence).
Best for FX really although they do offer indices, gold, silver, crude, UK brent and gasoil:
http://www.lmax.com/

As you will be trading in the base currency of that instrument,
you will need a position size calculator to give correct size in GBP:
http://www.babypips.com/tools/forex-calculators/positionsize.php
I knocked up my own in excel, checked it against the one above so the above does work fine.
 
iandh2010 said:
Hi rsh01 and Liquid Validity,
I wouldn't like to comment on your guess as to the IGdentity of the SB as being IG.... but their actions do appear to be exactly the same.......allegedly!!!!

I have just been onto the FP Markets website that you mentioned and see that they are a DMA whatever that is. I have just requested the download of their DMA Spreadbetting book to read.

Sounds likely that they probably deal in much larger trade sizes than I do, I am only just working up from £1 - £3/pip at the moment. What is FP's smallest trade size?

Ian
Click to expand...

FP you trade with 10k lot which equates to about £1/pip, just need slightly more capital to stick a trade on than an SB. i reckon SBs are a dying breed though esp if this is now the industry standrard, unless like LV you use them for the occasional trade / hedge etc. its all about marketing - which sounds vm like what most scams are about.

not sure why you are coy re naming the SB firm, thats the whole idea of a forum - sharing experiences, ideas etc?
 
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