Hello All!
I want someone to give me some further explanation. Please reply back with your thoughts.
Reading through some of the threads on this here forum I've come across the topic of whether it's in the interest of the Spreadbetting firm wanting their clients to lose money. Some people have said that the Spreadbetting firm makes money through the spread alone and commissions (I.E DFT) so that they don't care whether you win or lose.
In contradiction to this, I recently watched an interview of a very knowledgeable and successful trader. He's the bloke behind the million dollar trader tv series. He was one of the top trader's at Goldman, and he knows the Industry inside and out.
I want some clarification about something he said in the video interview. I also included the video link below. The extract below appears in the video between about 1:30 to 2:50 of the way in. The points I want further clarification on I have underlined.
Question: When you want to start trading, the first issue that comes with it is that you have hundreds of different brokers. In your opinion, which criteria should we use to find the right broker?
Answer: "I think it's important to know whether the broker's taking the other side of your trades, first of all...so I mean what you'll find, there's a lot of conflict of interest in the industry when you're a retail trader...ummm there's obviously the commission situation and the spread situation. Errr..just because spreads are tight and the commission's low doesn't mean it's a good thing. Because all that means is that the broker's are going to try to turn your account over more aggressively so that you pay them as much money, so they'll be telling you to do things that aren't necessarily good for you. Ummm so obviously cost of trading is an issue, errr... but I think that it's really important that you find brokers that aren't aggressively taking the other side of your trades, because that's a huge conflict of interest, so you know in the products like spreadbetting and cfds a lot of them still do, so they go unhedged on the other side of your positions, so that they would actually prefer that you didn't make money...(muffled hmmyph and smile)!"
From my own analysis, correct me if I'm wrong, if you go short, they (the spreadbetting company) goes long to nullify the loss on the account. But this wouldn't make sense if you go long because they wouldn't go short would they? They'll just lose either way, so they wouldn't want you to win? If that makes sense.
So if what he were saying is true, some unscrupulous companies might have a few tricks up their sleeves to try and prevent you from profiting (off their money as essentially with leverage you're borrowing money they provide?).
So back to companies that go "unhedged on the other side of your positions" as he was saying, do you think CityIndex is one of these companies?
I opened an account with them back in May 2012. I blew all my money in 3 and a half months. I gave up for 5 months. When they rang me 5 months later to check how I was doing, but obviously with the ulterior motive to get me back trading, I decided to give it another try. Then from Feb 2013 I blew all my account again this time though I lasted longer than 3 and a half months. Now I haven't traded for 5 weeks, but am thinking of going back to them to try again within the next few weeks.
I haven't had too many issues with them, but there were a few questionable incidences such as slowness to closing an order resulting in loss of profit. And other issues like stopping me out below my specified level, but the frequency of these anomalies as a percentage was small, and the amount of money lost as I was only placing micro trades didn't really warrant a cause to complain to the point to make it worthwhile to take the time and trouble. Plus the fact most of these incidences occur whilst placing trades during important economic annoucements when there's a sudden spike of 100 or more pips (DOW) within the space of a couple of minutes. This is usually the time when the system freezes up and prices start going anomalous - for example inconsistent prices showing on the charts as compared to the quoted rates on the order form. Other than that trading at normal times I have not really had too many problems.
Now if CityIndex was one of these companies that go "unhedged on the other side of your positions", I might think twice before depositing any more money, because obviously this guy in the video knows something, and basically if the Spreadbetting companies want you to lose, there would be no way to ever be successful would there?
Anyone else had issues with CityIndex here? I would not really regard them less if you did because more than likely it'll be the same with all the other spreadbetting providers out there, and CityIndex is probably one of the best even if I have encountered the sporadic questionable incidences. I would imagine if I just moved to another provider, the same issues would invariably crop up and maybe be even worse or more frequent...
So to cap things off, Do you think Spreadbetting companies would prefer you lose, or do they not care if you win or lose? How do you think CityIndex operates, are they one of these companies that as he says in the video "go unhedged on the other side of your positions" whatever that means?
Here is the video link:
I want someone to give me some further explanation. Please reply back with your thoughts.
Reading through some of the threads on this here forum I've come across the topic of whether it's in the interest of the Spreadbetting firm wanting their clients to lose money. Some people have said that the Spreadbetting firm makes money through the spread alone and commissions (I.E DFT) so that they don't care whether you win or lose.
In contradiction to this, I recently watched an interview of a very knowledgeable and successful trader. He's the bloke behind the million dollar trader tv series. He was one of the top trader's at Goldman, and he knows the Industry inside and out.
I want some clarification about something he said in the video interview. I also included the video link below. The extract below appears in the video between about 1:30 to 2:50 of the way in. The points I want further clarification on I have underlined.
Question: When you want to start trading, the first issue that comes with it is that you have hundreds of different brokers. In your opinion, which criteria should we use to find the right broker?
Answer: "I think it's important to know whether the broker's taking the other side of your trades, first of all...so I mean what you'll find, there's a lot of conflict of interest in the industry when you're a retail trader...ummm there's obviously the commission situation and the spread situation. Errr..just because spreads are tight and the commission's low doesn't mean it's a good thing. Because all that means is that the broker's are going to try to turn your account over more aggressively so that you pay them as much money, so they'll be telling you to do things that aren't necessarily good for you. Ummm so obviously cost of trading is an issue, errr... but I think that it's really important that you find brokers that aren't aggressively taking the other side of your trades, because that's a huge conflict of interest, so you know in the products like spreadbetting and cfds a lot of them still do, so they go unhedged on the other side of your positions, so that they would actually prefer that you didn't make money...(muffled hmmyph and smile)!"
From my own analysis, correct me if I'm wrong, if you go short, they (the spreadbetting company) goes long to nullify the loss on the account. But this wouldn't make sense if you go long because they wouldn't go short would they? They'll just lose either way, so they wouldn't want you to win? If that makes sense.
So if what he were saying is true, some unscrupulous companies might have a few tricks up their sleeves to try and prevent you from profiting (off their money as essentially with leverage you're borrowing money they provide?).
So back to companies that go "unhedged on the other side of your positions" as he was saying, do you think CityIndex is one of these companies?
I opened an account with them back in May 2012. I blew all my money in 3 and a half months. I gave up for 5 months. When they rang me 5 months later to check how I was doing, but obviously with the ulterior motive to get me back trading, I decided to give it another try. Then from Feb 2013 I blew all my account again this time though I lasted longer than 3 and a half months. Now I haven't traded for 5 weeks, but am thinking of going back to them to try again within the next few weeks.
I haven't had too many issues with them, but there were a few questionable incidences such as slowness to closing an order resulting in loss of profit. And other issues like stopping me out below my specified level, but the frequency of these anomalies as a percentage was small, and the amount of money lost as I was only placing micro trades didn't really warrant a cause to complain to the point to make it worthwhile to take the time and trouble. Plus the fact most of these incidences occur whilst placing trades during important economic annoucements when there's a sudden spike of 100 or more pips (DOW) within the space of a couple of minutes. This is usually the time when the system freezes up and prices start going anomalous - for example inconsistent prices showing on the charts as compared to the quoted rates on the order form. Other than that trading at normal times I have not really had too many problems.
Now if CityIndex was one of these companies that go "unhedged on the other side of your positions", I might think twice before depositing any more money, because obviously this guy in the video knows something, and basically if the Spreadbetting companies want you to lose, there would be no way to ever be successful would there?
Anyone else had issues with CityIndex here? I would not really regard them less if you did because more than likely it'll be the same with all the other spreadbetting providers out there, and CityIndex is probably one of the best even if I have encountered the sporadic questionable incidences. I would imagine if I just moved to another provider, the same issues would invariably crop up and maybe be even worse or more frequent...
So to cap things off, Do you think Spreadbetting companies would prefer you lose, or do they not care if you win or lose? How do you think CityIndex operates, are they one of these companies that as he says in the video "go unhedged on the other side of your positions" whatever that means?
Here is the video link:
