Pipedream

rstan · Dec 8, 2011

Some time ago, I traded e-mini futures intraday, moderately successfully, using IB as brokerage & eSignal for charting. I'm considering resurrecting those days, ie. to trade S&P futures, but without the commitment required in terms of exchange fees, data fees, record keeping and tax issues.

I'm interested to see whether a spreadbet platform can provide the sort of functionality I'd need...

I used CMC's MarketMaker several years ago, and found this to be pretty solid in terms of functionality, although with some slippage and obviously without the spreads of trading at the actual exchanges via IB. Those issues aside, it seemed to do a reasonable job of simulating a real platform, and might possibly have been suitable.

I understand that MarketMaker is being scrapped, so was interested in looking at CMC's latest spreadbet platform, expecting thhings to have progressed. Having had a look, this sadly appears to be a major backward step from my perspective. It seems to be geared towards a more "casual" punter, and wouldn't be suitable for me.

Is there any other spreadbet platform worth me looking at?

If so, and if I then start to make money on a consistent basis, am I going to find myself getting shown the door by the spreadbet company?

In short, is this search a pipedream?

capitalspreads · Dec 8, 2011

if you classify yourself as professional (under Mifid) i.e €500k of assets then prospreads in Gib would suit you Direct Market Access Functionality Spread Betting For Professionals | ProSpreads

to be honest you would need to be a real pain for any of the big spread betting company's to actualy notice you. as long as you do not trade dozens of times a day you would not really cross the radar screens so Capital Spreads etc would do just as well as any other

Ross Spur · Dec 8, 2011

capitalspreads said:
if you classify yourself as professional (under Mifid) i.e €500k of assets then prospreads in Gib would suit you Direct Market Access Functionality Spread Betting For Professionals | ProSpreads

to be honest you would need to be a real pain for any of the big spread betting company's to actualy notice you. as long as you do not trade dozens of times a day you would not really cross the radar screens so Capital Spreads etc would do just as well as any other

We've been here before, but on the face of it, if SB providers really made their money from the spread then why wouldn't they want clients to trade as much as possible? Dozens of trades a day isn't a lot, really.

Can't say about Capital Spreads because I haven't used them much and haven't made any profit from them (might be a connection there!), but it seems to me that it doesn't take much to trip the SB radar.

counter_violent · Dec 8, 2011

capitalspreads said:
to be honest you would need to be a real pain for any of the big spread betting company's to actualy notice you. as long as you do not trade dozens of times a day you would not really cross the radar screens

What exactly does this mean ?

rstan · Dec 11, 2011

Thanks for the responses.

It's possible that DMA might be the appropriate route for me. I satisfy the "assets" requirement, but the "professional client" box may be trickier to tick - although I have a decade+ market experience, this is trading my own account and the full-time management of my own investments, not "employed" in this capacity by someone else. How are the MIFID requirements interpreted in practice? The other negative for DMA is that for S&P500/ES I'd prefer to be trading smaller size than $50 a point.

I'm interested in the regular spead bet companies' definitions of "scalping". For my index trades, they may be open from a few seconds (in the worst case of a position immediately moving against me sufficiently) up to several days in a trending environment. Within this range, perhaps half may be toward the shorter timeframes, perhaps several (3-60) minutes on average, with a minority of shorter timeframes (seconds to a few minutes) and a yet smaller minority of much longer timeframes (hour to a few days).

I'm also interested in someone expanding on capitalspreads' comment regarding what I'd need to do (or not do) to avoid appearing on a regular spreadbet company's radar...

pboyles · Dec 11, 2011

rstan said:
T

I'm also interested in someone expanding on capitalspreads' comment regarding what I'd need to do (or not do) to avoid appearing on a regular spreadbet company's radar...

Lose money regularly and they'll never bother you. Start making money and the fun will start.

rstan · Dec 11, 2011

pboyles said:
Lose money regularly and they'll never bother you. Start making money and the fun will start.

From what I understand of things, the old spread bet business model was to entice novice punters with the prospect of close-to-zero costs of trading, only for those real costs to be hidden by a myriad of techniques and policies that hindered profitable trading - the contemporary equivalent of techniques with which I expect Jesse Livermore was acquainted in the old bucket shop days.

At what point does this old model fall foul of MIFID? When do the regulators step in, enforce the rules, and change the industry?

Trading involves real participation costs to the trader - far better IMO that spread bet companies be upfront and transparent about this (as the legislators seem to agree), then everyone knows where they stand. It's naive of punters to think that somehow the spread bet company can absorb those costs in a manner that isn't passed onto the punter in some manner. And the problem with hidden costs is that, since they're non-transparent, they can be passed on with an additional hefty hidden mark up to boot, to the benefit of the spread bet company but at the expense of the punter.

Perhaps we're in the twilight days of this old model, and there are progressive spread bet companies who've moved forward onto what I consider more sustainable business models. If so, I'd like to know which firms these are, and consider taking my business there - if they meet the other platform requirements I'm looking for, in terms of charting, order management, "ECN-esque" liquidity. Or maybe that's a pipedream afterall...

gle101 · Dec 13, 2011

rstan said:
From what I understand of things, the old spread bet business model was to entice novice punters with the prospect of close-to-zero costs of trading, only for those real costs to be hidden by a myriad of techniques and policies that hindered profitable trading - the contemporary equivalent of techniques with which I expect Jesse Livermore was acquainted in the old bucket shop days.

At what point does this old model fall foul of MIFID? When do the regulators step in, enforce the rules, and change the industry?

Trading involves real participation costs to the trader - far better IMO that spread bet companies be upfront and transparent about this (as the legislators seem to agree), then everyone knows where they stand. It's naive of punters to think that somehow the spread bet company can absorb those costs in a manner that isn't passed onto the punter in some manner. And the problem with hidden costs is that, since they're non-transparent, they can be passed on with an additional hefty hidden mark up to boot, to the benefit of the spread bet company but at the expense of the punter.

Perhaps we're in the twilight days of this old model, and there are progressive spread bet companies who've moved forward onto what I consider more sustainable business models. If so, I'd like to know which firms these are, and consider taking my business there - if they meet the other platform requirements I'm looking for, in terms of charting, order management, "ECN-esque" liquidity. Or maybe that's a pipedream afterall...

Good post, yes one must realize that we are dealing with the gambling industry, market making and in most cases fixed spread. There are different problems associated with this, issues that do not altogether go side by side with transparency and trading with financial instrument (which can be argued if not SB products really is just that). The industry have changed a lot in ten years and I expect it to continue, as more people is getting involved in this growing industry. Eventually the regulators must enforce their own rules of regulating an industry, that is in the grey zone between gambling, and dealing with a market of financial instruments.

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Pipedream

rstan

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capitalspreads

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Ross Spur

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counter_violent

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rstan

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pboyles

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rstan

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gle101

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