Best Thread Capital Spreads
relation between future and underlying stock’s spot price
before going through the whole thread, I was wandering how does CS calculates their futures stock price. I mean what is the relation between futures (say March or June) contract to the underlying spot price?
Thanks
before going through the whole thread, I was wandering how does CS calculates their futures stock price. I mean what is the relation between futures (say March or June) contract to the underlying spot price?
Thanks
I'm looking into the binary bets on CS and have a couple of questions. Firstly, I assume the FTSE they refer to in this is the real FTSE100, not the FTSE Daily Cash that CS quote on. Secondly, if it is the real FTSE, does CS offer any streaming charts for the real FTSE or are we supposed to get our quotes from elsewhere. At present, I get mine from Yahoo! but sometimes this runs slowly and I was wondering if there are any other free FTSE quote sites.
Thanks,
Marc
Thanks,
Marc
capitalspreads
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Binary Bets
Some people (mention no names) must obviously be serial binarybet losers, as I can tell you that no SB company offers auto execution on Binaries to all clients. I know, as one who regularly gets rejected/or quote delayed by all of the current providers.
On rolling charges
We also get charged by our FX clearinghouse an overnight rate on spot FX positions.
If/when we go to 24hr trading the rollover charge will be at 21.15 UK time so it is pretty academic as to the comment on charging benefiting us as it must be done at some time but FXneo seem to be implying that all clients would exit their positions at just before rolling point and then reinstate them afterwards to avoid the charge ! Of course we make a profit on the roll (not much) but then we also pay clients if the rates go that way, ie. In the Dollar/Yen if you are long you will get paid 0.7 pips a day, of course if you are short you will get charged, there is no such thing as a free lunch.
But you must remember that you are taking positions on very large sums of money for which you only have to put up a limited sum. Using the maximum leverage you can trade on positions of some 300 times deposited funds in most FX products. I don’t recommend that you do so I am just stating that you can
Admittedly we make money on the rolling deal, we are not in business to lose money, but we do charge less than our competitors for the privilege. There must be some cost to running overnight positions when you are effectively using our money to do so.
mickandpete
360-day year .... mmm not sure where it came in ... I always assumed it was to do with the Bond markets and was done so that the interest periods could be made into twelve 30-day blocks (months). But I do not know sorry. We use 365 days in all our calculations
221065, pboi
as jyde mentions we seldom have any client problems with markets such as the FTSE Dow and Dax or equity markets. We also quote even our furthest dated contract at the same CS spread as the front month (except Dow where the front month is 6 pips). The only problems we have are with FX clients. But that does not stop FX being by far our largest market so we must be doing something right!
Novice
Quarterly share prices are quoted using two criteria, interest rates and dividends.
The forward price is reached by adding the interest rate cost of holding the bet from now to the expiry date and then subtracting any dividends due to go ex div between now and the expiry date.
So for XYZ plc, if the bet expires in 157 days, the interest rate, LIBOR, for that period (approx 5 months) is 4.6% and the share price is 255.5p. And there is a dividend due in 30 days of 7.4p.
The formula will be 255.5+(157 x 4.6 x 255.5 / 36500)-7.4
Or 253.2
In this case because of the dividend the forward price is actually lower than the current price. Once the dividend is out of the way the forward price will revert to being higher than the current price.
Alf
Because the FTSE charts come from ‘our quote’ and we are open for the period between 07.00 and 08.00 the system will continue to pick up prices for the charts. As you can see the charts after 17.30 are built upon other market moves which create a viable chart sequence but the pre 08.00 prices do not change that often until the lat few minutes, as there is little real price action before that time.
CCI indicator, I have requested it but the package forms part of a much larger functionality, which almost doubles the cost to us of providing the charts to you. So it is unlikely that this will be added in the short term.
Cocodude
The binary bet prices are settled against the cash price of the FTSE index at the times mentioned. So for instance the hourly FTSE at 11.00 is calculated from the last print of the FTSE index before 10.00 against the last print before 11.00. The calculators take into account many variables to give a price, including time left, volatility, cash price, futures price and fair value (FV).
The cash FTSE price quoted by CS does settle against the FTSE 100 cash settlement level but is priced during the day from the Futures price plus or minus the Fair Value (FV). Our price feed for quoting the FTSE cash never takes the index price that you see on monitors because it is not reactive enough to market events BUT it does settle at that price at the end of the day.
For this reason the high/low quoted by us (and other SB companies) are generally, but not always, higher and lower than the indicated highs or lows on Yahoo’s charts.
We may show different high lows than other SB companies because they may be biasing their prices to reflect their book or they may have a slightly different FV calculation.
Simon
Some people (mention no names) must obviously be serial binarybet losers, as I can tell you that no SB company offers auto execution on Binaries to all clients. I know, as one who regularly gets rejected/or quote delayed by all of the current providers.
On rolling charges
We also get charged by our FX clearinghouse an overnight rate on spot FX positions.
If/when we go to 24hr trading the rollover charge will be at 21.15 UK time so it is pretty academic as to the comment on charging benefiting us as it must be done at some time but FXneo seem to be implying that all clients would exit their positions at just before rolling point and then reinstate them afterwards to avoid the charge ! Of course we make a profit on the roll (not much) but then we also pay clients if the rates go that way, ie. In the Dollar/Yen if you are long you will get paid 0.7 pips a day, of course if you are short you will get charged, there is no such thing as a free lunch.
But you must remember that you are taking positions on very large sums of money for which you only have to put up a limited sum. Using the maximum leverage you can trade on positions of some 300 times deposited funds in most FX products. I don’t recommend that you do so I am just stating that you can
Admittedly we make money on the rolling deal, we are not in business to lose money, but we do charge less than our competitors for the privilege. There must be some cost to running overnight positions when you are effectively using our money to do so.
mickandpete
360-day year .... mmm not sure where it came in ... I always assumed it was to do with the Bond markets and was done so that the interest periods could be made into twelve 30-day blocks (months). But I do not know sorry. We use 365 days in all our calculations
221065, pboi
as jyde mentions we seldom have any client problems with markets such as the FTSE Dow and Dax or equity markets. We also quote even our furthest dated contract at the same CS spread as the front month (except Dow where the front month is 6 pips). The only problems we have are with FX clients. But that does not stop FX being by far our largest market so we must be doing something right!
Novice
Quarterly share prices are quoted using two criteria, interest rates and dividends.
The forward price is reached by adding the interest rate cost of holding the bet from now to the expiry date and then subtracting any dividends due to go ex div between now and the expiry date.
So for XYZ plc, if the bet expires in 157 days, the interest rate, LIBOR, for that period (approx 5 months) is 4.6% and the share price is 255.5p. And there is a dividend due in 30 days of 7.4p.
The formula will be 255.5+(157 x 4.6 x 255.5 / 36500)-7.4
Or 253.2
In this case because of the dividend the forward price is actually lower than the current price. Once the dividend is out of the way the forward price will revert to being higher than the current price.
Alf
Because the FTSE charts come from ‘our quote’ and we are open for the period between 07.00 and 08.00 the system will continue to pick up prices for the charts. As you can see the charts after 17.30 are built upon other market moves which create a viable chart sequence but the pre 08.00 prices do not change that often until the lat few minutes, as there is little real price action before that time.
CCI indicator, I have requested it but the package forms part of a much larger functionality, which almost doubles the cost to us of providing the charts to you. So it is unlikely that this will be added in the short term.
Cocodude
The binary bet prices are settled against the cash price of the FTSE index at the times mentioned. So for instance the hourly FTSE at 11.00 is calculated from the last print of the FTSE index before 10.00 against the last print before 11.00. The calculators take into account many variables to give a price, including time left, volatility, cash price, futures price and fair value (FV).
The cash FTSE price quoted by CS does settle against the FTSE 100 cash settlement level but is priced during the day from the Futures price plus or minus the Fair Value (FV). Our price feed for quoting the FTSE cash never takes the index price that you see on monitors because it is not reactive enough to market events BUT it does settle at that price at the end of the day.
For this reason the high/low quoted by us (and other SB companies) are generally, but not always, higher and lower than the indicated highs or lows on Yahoo’s charts.
We may show different high lows than other SB companies because they may be biasing their prices to reflect their book or they may have a slightly different FV calculation.
Simon
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stevespray
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Evening Simon,
Looks like you had your work cut out with a string of questions which accumulated over the last few days. Thanks again for the time and effort.
Having read your reply regarding quoting / executions procedures I’d like to make a few comments.
Firstly not all companies are the same. Secondly, with several companies you get instant quotes and executions when you first sign up with them and your quoting / execution procedures only seem to get altered if you get ‘detected’ in some way. In using the word ‘detected’ I’m not implying that the customer is doing anything wrong, just perhaps ‘beating the odds’ and turning a profit through some trading methodology. The question of ‘delaying tactics’ is therefore a very valid one. I use the words ‘delaying tactics’ very deliberately because they are certainly ‘tactics’ used by the companies to gain an advantage over its customers. If a company has an ability to process its order flow through computers then why would it deliberately chose to switch certain people to manual / delayed dealing? This appears to be a moot point with most of the spread betting companies. In essence it is cheating on their parts. It is an attempt to gain a hidden advantage which isn’t shown up in the prices which they advertise. The bottom line is, that in acting that way, they are saying that they are entitled to make a profit whatever it takes. Therefore, from the customer’s perspective, the question has to be asked… “Why trade if the playing field just gets tilted?” I feel that the spread betting companies need to answer that question and not duck or divert around the issue. Surely a spread betting company offers these markets in the ‘hope’ that it will make money? Is it a God given right….No! It seems to me that the companies are running scared from people who are potentially cleverer that they are. If you have a pricing model which you think works then stick it up and let us play it (I’m addressing all these questions to all companies by the way not directly or just at Simon). In my opinion this continual messing about with the quoting / execution is completely laughable from so called industry professionals. If you are going to act this way then why not be bold enough to stand up and say that you’re never going to rest while you have winning punters on your Binary Bets. What is the next logical step if certain traders carry on winning?
Steve.
Looks like you had your work cut out with a string of questions which accumulated over the last few days. Thanks again for the time and effort.
Having read your reply regarding quoting / executions procedures I’d like to make a few comments.
Firstly not all companies are the same. Secondly, with several companies you get instant quotes and executions when you first sign up with them and your quoting / execution procedures only seem to get altered if you get ‘detected’ in some way. In using the word ‘detected’ I’m not implying that the customer is doing anything wrong, just perhaps ‘beating the odds’ and turning a profit through some trading methodology. The question of ‘delaying tactics’ is therefore a very valid one. I use the words ‘delaying tactics’ very deliberately because they are certainly ‘tactics’ used by the companies to gain an advantage over its customers. If a company has an ability to process its order flow through computers then why would it deliberately chose to switch certain people to manual / delayed dealing? This appears to be a moot point with most of the spread betting companies. In essence it is cheating on their parts. It is an attempt to gain a hidden advantage which isn’t shown up in the prices which they advertise. The bottom line is, that in acting that way, they are saying that they are entitled to make a profit whatever it takes. Therefore, from the customer’s perspective, the question has to be asked… “Why trade if the playing field just gets tilted?” I feel that the spread betting companies need to answer that question and not duck or divert around the issue. Surely a spread betting company offers these markets in the ‘hope’ that it will make money? Is it a God given right….No! It seems to me that the companies are running scared from people who are potentially cleverer that they are. If you have a pricing model which you think works then stick it up and let us play it (I’m addressing all these questions to all companies by the way not directly or just at Simon). In my opinion this continual messing about with the quoting / execution is completely laughable from so called industry professionals. If you are going to act this way then why not be bold enough to stand up and say that you’re never going to rest while you have winning punters on your Binary Bets. What is the next logical step if certain traders carry on winning?
Steve.
BroadSword
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Great post, Steve!
I'll be interested to see the response (if any) in due course...
I'll be interested to see the response (if any) in due course...
fxmarkets
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someone said you get nowhere with fsa with spreadbets, but i have a cunning plan, ring up the office of trading standards, see if they are obligated to provide the service to a minimum standard, i mean if they advertised, fast profits with leveraged products, obviously it would be reasonable to expect that the F*cker is filled as a matter of normality and not based on a coin flip....
ie the service is not up to merchantable quality, therefore you demand any bad fills, refunded. and or also they may be required to improve the service to match the advertised offer of their service,
or your F'kd.
Fx.
ie the service is not up to merchantable quality, therefore you demand any bad fills, refunded. and or also they may be required to improve the service to match the advertised offer of their service,
or your F'kd.
Fx.
capitalspreads
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stevespray, broadsword
That always sounds so wonderful in theory. We (and any other SB company) puts up a price and should therefore be happy with that price and should stick by it no matter what. Great... I notice that the Stock Exchange this morning has sent us an apology (yet again) about their trading platform saying that there is a problem with the price feeds.
Where do you think I would get if I rang them up and said "but it gives that price on the platform so i should be able to buy the stock there". As you are well aware we would get a big raspberry .. as we would from the CME if I rang them to complain that the offer on the e-mini S&P was at 1285.0 when I hit the buy button but that I didn't get any , there would just be the sound of laugher before the phone was put down.
We only seriously have these problems in the 14 rolling FX markets which represent 0.7% of the markets that we quote. The FX market is not an exchange market it is a general free for all between the quoting banks/brokers/fx platforms etc. Yes we reject some trades in FX ... we only reject them if the trade is outside of the current spread when the dealer picks the trade up. It is all very well for some to complain about rejections but these people are generally always the same people and generally those who only ever trade when the quote on our screen has been delayed for a second and they can see that the price is incorrect. The dealers understandably get a bit jaundiced by a client who continually complains because we have failed to give him/her free money.
As we have a huge number of clients (many of whom are T2W users) it is quite instructive, in actual fact , as to how few poor comments we get. As I have said over and over if you want a completely professional FX platform then you must go and use one, not an SB company we are market makers and therefore our prices change continously. We may reject trades for incorrect prices but unlike our competitors we have never rejected or delayed a client because he or she is a winner. We treat everybody exactly the same. We have only ever voluntarily closed one account, and that was for rudeness.
As those who have been reading this thread for the last two and a half years (groan) I have frequently stated that anyone who wishes to can come in a see how everything works but up to now nobody has taken us up on it. Maybe a T2W adjudicator would like to come along.
anyway, good trading
Simon
That always sounds so wonderful in theory. We (and any other SB company) puts up a price and should therefore be happy with that price and should stick by it no matter what. Great... I notice that the Stock Exchange this morning has sent us an apology (yet again) about their trading platform saying that there is a problem with the price feeds.
Where do you think I would get if I rang them up and said "but it gives that price on the platform so i should be able to buy the stock there". As you are well aware we would get a big raspberry .. as we would from the CME if I rang them to complain that the offer on the e-mini S&P was at 1285.0 when I hit the buy button but that I didn't get any , there would just be the sound of laugher before the phone was put down.
We only seriously have these problems in the 14 rolling FX markets which represent 0.7% of the markets that we quote. The FX market is not an exchange market it is a general free for all between the quoting banks/brokers/fx platforms etc. Yes we reject some trades in FX ... we only reject them if the trade is outside of the current spread when the dealer picks the trade up. It is all very well for some to complain about rejections but these people are generally always the same people and generally those who only ever trade when the quote on our screen has been delayed for a second and they can see that the price is incorrect. The dealers understandably get a bit jaundiced by a client who continually complains because we have failed to give him/her free money.
As we have a huge number of clients (many of whom are T2W users) it is quite instructive, in actual fact , as to how few poor comments we get. As I have said over and over if you want a completely professional FX platform then you must go and use one, not an SB company we are market makers and therefore our prices change continously. We may reject trades for incorrect prices but unlike our competitors we have never rejected or delayed a client because he or she is a winner. We treat everybody exactly the same. We have only ever voluntarily closed one account, and that was for rudeness.
As those who have been reading this thread for the last two and a half years (groan) I have frequently stated that anyone who wishes to can come in a see how everything works but up to now nobody has taken us up on it. Maybe a T2W adjudicator would like to come along.
anyway, good trading
Simon
stevespray
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Simon, Thanks again for the replies. Just to clarify that the point I was making was related specifically to Binary Bets. These I assume are prices that are generated by your own ‘unique’ pricing model therefore making it pretty difficult for people to pick you off in the manner you’ve mentioned. Of course a number of different companies offer similar markets but I don’t think it’s comparable to FX as these other companies also use individual pricing models which contain a number of unspecified variables.
You mention CME. I trade through CME and although I accept your point, regarding not always hitting exactly the price which is displayed, those occasions are very rare and when it does occur there is no delay while someone looks at the order the other end, if the price isn’t there you don’t get, if it is there you get it in a millisecond. I don’t think you can compare a 10 or 15 second delay caused by ‘manual handling’ with CME’s state of the art order routing!
I’m not suggesting that you or any other spread betting company should be bound by the price which we see on the screen. What I am suggesting however is that you guys do your best to honour customers orders which are based on prices which are still valid when your system receives that order (ie you advertise your price to me and I bounce an order back based on that price which your computer instantly checks). There would be several benefits from this. Firstly, if your computers carried this check out as soon as the order was received, any invalid order could be rejected immediately and therefore the customer would become aware of the order rejection within a fraction of a second and would therefore be able to enter a new order. Secondly, any orders which then went on to your dealers wouldn’t need checking for price, the dealer would know that the price had already been checked. This would negate the effect of the period of time between order submission and order dealing which currently leads to the price ‘becoming’ invalid. (This of course assumes that you would like your customers to receive far less order rejections on Binary Bets.)
Simon, as I said before, I’m not having a go at you or Capital in particular. You have to understand the points that myself and others have made with regard to other companies which have initially been happy to offer instant quotes / executions. Why the need to change people over to manual? On that basis Capital appear to have everyone on ‘manual’. I hope you can see my point.
Take care,
Steve.
You mention CME. I trade through CME and although I accept your point, regarding not always hitting exactly the price which is displayed, those occasions are very rare and when it does occur there is no delay while someone looks at the order the other end, if the price isn’t there you don’t get, if it is there you get it in a millisecond. I don’t think you can compare a 10 or 15 second delay caused by ‘manual handling’ with CME’s state of the art order routing!
I’m not suggesting that you or any other spread betting company should be bound by the price which we see on the screen. What I am suggesting however is that you guys do your best to honour customers orders which are based on prices which are still valid when your system receives that order (ie you advertise your price to me and I bounce an order back based on that price which your computer instantly checks). There would be several benefits from this. Firstly, if your computers carried this check out as soon as the order was received, any invalid order could be rejected immediately and therefore the customer would become aware of the order rejection within a fraction of a second and would therefore be able to enter a new order. Secondly, any orders which then went on to your dealers wouldn’t need checking for price, the dealer would know that the price had already been checked. This would negate the effect of the period of time between order submission and order dealing which currently leads to the price ‘becoming’ invalid. (This of course assumes that you would like your customers to receive far less order rejections on Binary Bets.)
Simon, as I said before, I’m not having a go at you or Capital in particular. You have to understand the points that myself and others have made with regard to other companies which have initially been happy to offer instant quotes / executions. Why the need to change people over to manual? On that basis Capital appear to have everyone on ‘manual’. I hope you can see my point.
Take care,
Steve.
BroadSword
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Hello Simon, thanks for your reply,
I understand all that of course, and agree with what you are saying. But....that isn't the issue...
The issue is that if you were automated, rejections would surely be far fewer as the whole process would take milliseconds from clicking to getting filled, as it does with other automated brokers.
I can understand why for huge trade sizes you might want to confirm price on FX, but equally I cannot understand why for smaller trades you cannot auto-excute?
If you hedge your net exposure anyway - or remain within your own exposure-risk criteria, where is the risk or problem to CS?
Best wishes,
I understand all that of course, and agree with what you are saying. But....that isn't the issue...
The issue is that if you were automated, rejections would surely be far fewer as the whole process would take milliseconds from clicking to getting filled, as it does with other automated brokers.
I can understand why for huge trade sizes you might want to confirm price on FX, but equally I cannot understand why for smaller trades you cannot auto-excute?
If you hedge your net exposure anyway - or remain within your own exposure-risk criteria, where is the risk or problem to CS?
Best wishes,
wasp
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In the last three weeks, trading cable alone, I have not had a single 'expired' ticket and have had three instances where the price was far out of sync 'in my favour' and I have been filled and made near on 30 pips from the situation.... It works both ways.
I've not been looking for these situations (far from it) and the scenario has been against me a couple of times, but, as far as I can see, CS are perfectly acceptable as an FX spreadbet company. I do see the benefits of automatic trading and look forward to its instigation, especially from a 24 hour trading, or at least stoploss point of view but, in the meantime, I'm happy!
Chris
I've not been looking for these situations (far from it) and the scenario has been against me a couple of times, but, as far as I can see, CS are perfectly acceptable as an FX spreadbet company. I do see the benefits of automatic trading and look forward to its instigation, especially from a 24 hour trading, or at least stoploss point of view but, in the meantime, I'm happy!
Chris
stevespray
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Binary FTSE Hourly bets seem to have gone missing??
capitalspreads
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bintrader
in reality the chances of binaries ever being automated is very low.... other markets will (no doubt) be automated as we go along but binaries create their own problems due to the vagaries of the market. We only launched a week ago but even IG who have been around a lot longer than us do not automate trades for binaries (at least not mine). As we get more clients trading on the binary platform we will be more comfortable in accepting most trades as is already begining to occur. As systems get ever faster then the acceptances will get quicker. But I notice that Cantors IG and Fins do not auto accept so it would be strange if we (the smallest of the main SB's) did. As Binary traders are no doubt aware Cantors and Binex made a real pigs ear of their Binary launch and were taken to the cleaners by (in the main) cleverer people than themselves. Although we offer a market we are not (and never will be) a free lunch.
Broadsword
in the main I would agree with you... what difference does it make... it seems like not much. But I can assure you that we have (or, had, as our FX feeds are much better now) clients who would only ever trade on a wrong price and in FX these can happen regularly. These clients woudl trade literally 100 times a day and make £3 £4 £5 every time. This bleeding of profit every day was very difficult to just let go
Simon
in reality the chances of binaries ever being automated is very low.... other markets will (no doubt) be automated as we go along but binaries create their own problems due to the vagaries of the market. We only launched a week ago but even IG who have been around a lot longer than us do not automate trades for binaries (at least not mine). As we get more clients trading on the binary platform we will be more comfortable in accepting most trades as is already begining to occur. As systems get ever faster then the acceptances will get quicker. But I notice that Cantors IG and Fins do not auto accept so it would be strange if we (the smallest of the main SB's) did. As Binary traders are no doubt aware Cantors and Binex made a real pigs ear of their Binary launch and were taken to the cleaners by (in the main) cleverer people than themselves. Although we offer a market we are not (and never will be) a free lunch.
Broadsword
in the main I would agree with you... what difference does it make... it seems like not much. But I can assure you that we have (or, had, as our FX feeds are much better now) clients who would only ever trade on a wrong price and in FX these can happen regularly. These clients woudl trade literally 100 times a day and make £3 £4 £5 every time. This bleeding of profit every day was very difficult to just let go
Simon
capitalspreads said:
What a joke. This sums up CapitalSpreads. They are a modern day equivalent of a BUCKET SHOP in my personal opinion
Why cannot they follow these traders in the open market? i.e. Hedge like other do? Its not difficult to have backend systems that do this automatically.
What they are saying is that we don't want you if you make consistent profits. They only want losers.
JonnyT
capitalspreads
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I do love Jonny T every time he opens his mouth he demostrates his own stupidity.
Obviously a man who never heard of the saying 'it is better to remain silent and be thought a fool rather than open your mouth and remove all doubt'.
How can we 'follow' a trader who trades on a wrong price then immediately trades out when the price corrects? Answers on a postcard please.
As opposed to comments made about our competitors has there yet been a comment about us making it difficult for winning clients to trade? And I am not talking about individual trades I am talking about generally.
Cheerio
simon
Obviously a man who never heard of the saying 'it is better to remain silent and be thought a fool rather than open your mouth and remove all doubt'.
How can we 'follow' a trader who trades on a wrong price then immediately trades out when the price corrects? Answers on a postcard please.
As opposed to comments made about our competitors has there yet been a comment about us making it difficult for winning clients to trade? And I am not talking about individual trades I am talking about generally.
Cheerio
simon
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