Best Thread Capital Spreads

[ian]

C'mon,Simon lad,

More of them salty sea dog tales from the treasure trove of spread-betting skulduggery.

 

[charliechan]

Add to that the fact that SB is far more accessible, more heavily advertised and has lower entry costs, so of course it attracts a higher percentage of losers than DMA. but these things don't make SB a scam. You could just as easily argue that far more kids fall off bicycles and hurt their knees than crash Ferraris, so bikes must be banned - kids fall off bikes because they're kids and they fall off stuff, and they can't afford Ferraris.SORRY, THE POINT IS MORE A NORMAL BIKE Vs A CLOWNS BIKE THAT STEERS THE WRONG WAY RATHER THAN A FERRARI

Yes, SB spreads are wide. but people pay for what they want, not what you think they should want. SO WHO WANTS TO PAY A HIGHER SPREAD??
Over leveraging positions? - Yes, OK, you can do that if you're a newbie or you can afford to keep re-financing. But if I want to eat 3 desserts, what restaurant is going to stop me? But you can also borrow on your credit card to finance a DMA account, so what?
Poor placement of stops - As I said, most traders would lose whatever platform they use, that's not the fault of the platform designer.
Re-quoting - I've been spread-betting for 8 years and never seen this.8 YEARS WITH A SB ACCOUNT??? LOL!!! PERHAPS ITS TIME TO THROW IN THE TOWEL IF YOU HAVENT MADE ENOUGH FOR A DMA ACCOUNT IN 8 LONG, SLOW YEARS. WHAT DID EINSTEIN SAY ABOUT INSANITY? HMMMM...
Overnight financing - there's no need to use Rolling positions for longer-term SB's. People pay these charges if they want, but they don't have to.
Personalised quoting - Never seen this.I NEVER MENTIONED THIS, BUT THANKS FOR BRINGING IT UP, AS I UNDERSTAND THIS IS WHAT HAPPENS WHEN THEY GET A CONSISTENT WINNER - THEY PUT HIM/HER ON A VOICE DESK. I KNOW FOR A FACT THAT FX FIRMS QUOTE DIFFERENTLY ACCORDING TO YOUR MARGIN DEPOSIT - MORE MONEY YOU DEPOSIT, THE TIGHTER THE SPREAD, SO IT WOULDNT SURPRISE ME IF SB'S DO THIS ALSO
Unreliable platforms - The Finspreads platform was pretty unstable for a while, maybe about 6 years ago. Not a bad record, and not uniquely worse on SB sites / services.
Poor staff? - Just wrong.REALLY? WHAT ABOUT SIMON FROM CS??? I have several times queried transactions with two SB firms and found that they were right and I had made maths or chart-reading errorsDOH!!. Most recently, Caps had identifed, before I even rang them, a rogue price that had been delivered when they closed a position of mine and reinstated me within minutes.

As for your statistics, maybe they are correct, but without source they are impossible to verify, and your track record on other assertions is debatable.EVERYTHING IS DEBATABLE, BUT ID BE INTERESTED IF YOU COULD DISPROVE ANYTHING I HAVE STATED HERE WITH FACT RATHER THAN OPINION

Quite a long time ago I recall that sonmeone suggested on T2W that if a trader was successful on DMA, he should carry on happily trading on DMA and basically keep his opinion of SB private. Of course, if you're not successful on either, then I suppose you're not really a trader.WELL WE AGREE ON THE LAST SENTANCE

comments in bold caps above.

i get the impression yours somehow emotionally attached to spread betting as you seem to be taking this a bit personally. my only intention was to point people to the facts of spread betting vs dma. i had no intention of causing you any kind of internal conflict.

you want to keep in touch with those emotions - they can be the death of you in the markets you know.

 

[tomorton]

charliechan - You're drawing conclusions that are just not justified by the realities. Have you lost heavily to SB firms?

 

[Black Swan]

The way i have been playing it is to take it on a daily basis rather than looking for a long term prediction so if its falling at say 9am it the moment it seems to continue that trend untill lunch or close. I think bar mistakes by myself when i started the most i lost was around 250, if i had paid attention to it rather than doing my day job perhaps i could have closed and had a bet the other way!

So i suppose just by looking at my own previous trades i should be setting a stop of around 600 at £.5?

Try and rsik 2% per trade, stick to that and you'll need a helluva series to get wiped out, in fact if you have a series of 25 losers let's all know so we can take the opposite side..

If you're feeling really brave and you regard your first account as play money, but still want to take the first adventure/venture seriously, don't go above 5% per trade.

Live longer in this game and you may prosper...

 

[Black Swan]

you want to keep in touch with those emotions - they can be the death of you in the markets you know.

erm, comparing your posts versus Tom's I'd suggest there's only one partry who needs to get a grip of his emotions..

 

[charliechan]

charliechan - You're drawing conclusions that are just not justified by the realities. Have you lost heavily to SB firms?

ive never had a sb account in my life. i cant see that i ever will. no thats wrong actually. i should really look at having 1000000's of sb accounts. none of them will be mine, they will be my customers! it looks like an easy gig to do on the side. 'theres a mug for every account'

i have looked into it on a few occasions with the opinion i must be missing something if the crowd are so keen on them. however:
every time i look into them, i see that nothing changes
every time i look on this sort of site i see the same complaints
every time i go for a drink with my pals who still work in the city or go to some industry event and meet up with brokers from various places, i hear the same story.

face it. if sb was such a great thing, professional traders like myself would use sb firms. we dont. ask yourself why.

 

[Black Swan]

ive never had a sb account in my life. i cant see that i ever will. no thats wrong actually. i should really look at having 1000000's of sb accounts. none of them will be mine, they will be my customers! it looks like an easy gig to do on the side. 'theres a mug for every account'

i have looked into it on a few occasions with the opinion i must be missing something if the crowd are so keen on them. however:
every time i look into them, i see that nothing changes
every time i look on this sort of site i see the same complaints
every time i go for a drink with my pals who still work in the city or go to some industry event and meet up with brokers from various places, i hear the same story.

face it. if sb was such a great thing, professional traders like myself would use sb firms. we dont. ask yourself why.

Are you sure your *professional* friends don't use SB firms to have a bet? I'd be very surprised if a lot of them didn't tbh..the vast majorty of business comes from private folk in that there sq. mile, it always has, that's how the industry was born, not to get business of noob SB-ers working from their back bedroom in a wet and windy northern outpost...

Moving on you've got to take on board that the securities you can trade with SB are huge, if you're singularly day-trading FX you may be making a valid argument, but Tom trades the indices and do you not accept that SB-ing cfds is a huge opportunity? And if you're swing and position trading FX, getting a 2 pip spread, little slippage and decent fills why not SB versus dma?

 

[tomorton]

Blimey charliechan, you're certainly wound up tight. There's a lot of bold and capitals in your posts.

 

[tar]

It is not really SB vs DMA , it is OTC vs Exchange traded contracts ...

http://en.wikipedia.org/wiki/Derivative_(finance)

 

[Vorbis]

ive never had a sb account in my life. i cant see that i ever will.

Until you made this statement you sounded superficially knowledgeable; but how can you justify the rest of your post if it is admittedly based on ignorance?

 

[tomorton]

Until you made this statement you sounded superficially knowledgeable; but how can you justify the rest of your post if it is admittedly based on ignorance?

A fair question. What charliechan knows about SB is what he has heard from his mates in the pub, who also don't use it, or from reading the complaints from losing traders on sites like this, who blame SB firms for their own failures, see his Post 6663. I accept it's easy to fail using SB, but the faults lie within the trader, not the firm.

 

[charliechan]

eer not quite fellas.

what i know i see from people on these boards complaining and from looking into the possibility of opening an account and then rejecting the idea because it is clear the handicap is way too large to overcome the benefits. therefore, my view is not from ignorance, but research. there are 100's of things in life we know to be dumb ideas - we dont need experience to see they are dumb ideas.

anyway, im clearly preaching to those who are emotionally committed to spread betting rather than taking an objective view. not one person has come up with one advantage of spread betting over proper, dma access. all you have done is attack someone who thinks that spread betting is the biggest scam going.

looks like i'll leave you folks struggling for another 8 years, paying massive spreads on platforms that are designed against you.

 

[charliechan]

It is not really SB vs DMA , it is OTC vs Exchange traded contracts ...

http://en.wikipedia.org/wiki/Derivative_(finance)

hmm. the similarities are close between otc and spread betting, but remember that an otc trade is done by an institution, and is often just one leg of a trade designed to lock in alpha against another position.

institutions would never (very rarely) trade directionally using an outright position. everything is always spread out - eg physical/cash vs otc, physical vs etd, etd vs otc etc etc.

however, the typical retail spread betting account has no idea of the underlying or the fundamental drivers etc, in stead relying on technical analysis or some other voodoo.

further, if an institution in a bilateral otc trade were to play the kind of clown tricks a retail sb firm does, their name would be mud on the street and no one would trade with that desk again.

 

[tomorton]

eer not quite fellas.

what i know i see from people on these boards complaining and from looking into the possibility of opening an account and then rejecting the idea because it is clear the handicap is way too large to overcome the benefits. therefore, my view is not from ignorance, but research. there are 100's of things in life we know to be dumb ideas - we dont need experience to see they are dumb ideas.

anyway, im clearly preaching to those who are emotionally committed to spread betting rather than taking an objective view. not one person has come up with one advantage of spread betting over proper, dma access. all you have done is attack someone who thinks that spread betting is the biggest scam going.

looks like i'll leave you folks struggling for another 8 years, paying massive spreads on platforms that are designed against you.

Thank you.

 

[tar]

hmm. the similarities are close between otc and spread betting, but remember that an otc trade is done by an institution, and is often just one leg of a trade designed to lock in alpha against another position.

institutions would never (very rarely) trade directionally using an outright position. everything is always spread out - eg physical/cash vs otc, physical vs etd, etd vs otc etc etc.

A popular example for OTC trading : Spot forex , NDFs ...

however, the typical retail spread betting account has no idea of the underlying or the fundamental drivers etc, in stead relying on technical analysis or some other voodoo.


further, if an institution in a bilateral otc trade were to play the kind of clown tricks a retail sb firm does, their name would be mud on the street and no one would trade with that desk again.

Goldman sachs , but yeah maybe they didnt really play "clown tricks" ...

.

 

[capitalspreads]

what i love about comments like charliechan is his complete ignorance of spread betting/cfd trading

i can tell him immediately one of the massive advantages ... no Stamp Duty. Stamp duty on trading is 0.5% (!!!) which is wider (just on its own) than the bid/offer spread on virtually all spreadbetting platforms. It does not matter how good a fill you get on DMA if the cost just wipes out any possible advantage.

In FX most SB/cfd providers are 1pip eur (fixed) 2 pips GBP (fixed) in automatic size up to around £1million (easily big enough for 99% of clients). This compares very well to all DMA platforms, just on the spread quoted, let alone when you have to take into account the commision that they would then have to add on top.

The problem with DMA platforms is that ...if you are trying to pick a precise price to trade and actually get filled it is because you are the wrong way round (!) much of the time ... (i am sorry to inform you that if you beat the Algos on the exchanges it is probably because they are going in the opposite direction!) ... and if you give a market order to get the position then you might as well have traded on a CFD/SB platform as the costs are so much lower.

Then dont get me going on margin costs of trading on exchanges ... miles higher that those required on SB/CFDs. Order functionality (?) SB platforms will allow much richer functionality on orders.

risk management? big array of tools not available to the average exchange.

etc etc

the fact is that exchanges are not built for the small to medium sized player. Whereas the spread betting companies listen and adjust to fulfill our very demanding clientelle.

As i mentioned a few months ago the client returns on SB are actually slightly better than those acheived for private clients on DMA access... [not our analysis but one from the actual exchanges themselves]... which just about clinches the argument for any reasonable person

Simon

ps i always love lines like 'clown tricks' what are these precisely ?.. and i mean exactly.. not "wot a bloke down the pub told me"

and finally if you are a succesful trader.. on SB its all CGT free

 

[charliechan]

what i love about comments like charliechan is his complete ignorance of spread betting/cfd trading

i can tell him immediately one of the massive advantages ... no Stamp Duty. Stamp duty on trading is 0.5% (!!!) which is wider (just on its own) than the bid/offer spread on virtually all spreadbetting platforms. It does not matter how good a fill you get on DMA if the cost just wipes out any possible advantage.

ERROR 1: You only pay stamp duty on UK shares. Not US shares, not FX, not futures.Looking at one of the most widely traded 'retail' futures - either ES or EC, both have a $12.50 spread, with average brokerage around $4 or lower, so cost will not wipe out any advantage at all will it? Further more, joining the bid/offer is a lot easier in DMA.

In FX most SB/cfd providers are 1pip eur (fixed) 2 pips GBP (fixed) in automatic size up to around £1million (easily big enough for 99% of clients). This compares very well to all DMA platforms, just on the spread quoted, let alone when you have to take into account the commision that they would then have to add on top.

ERROR 2: RUBBISH. Spread on GBP futures is 1 tick at $6.25 for the full size contract. so your 2 pip does not compare well at all does it, especially when considering the notional size of the contract?

The problem with DMA platforms is that ...if you are trying to pick a precise price to trade and actually get filled it is because you are the wrong way round (!) much of the time ... (i am sorry to inform you that if you beat the Algos on the exchanges it is probably because they are going in the opposite direction!) ... and if you give a market order to get the position then you might as well have traded on a CFD/SB platform as the costs are so much lower.

ERROR 3: This is just your opinion, and not factual. The fact is that if you join a bid rather than paying an offer you are getting a better price period. As for being the 'wrong way round', well at least the trader is the 'wrong way round' at a better price, and without having his quote/price manipulated by a bucket shop. At least he has the option to support the market or aggressively take the market. Cant do that in your bucket shop eh simon.

Then dont get me going on margin costs of trading on exchanges ... miles higher that those required on SB/CFDs. Order functionality (?) SB platforms will allow much richer functionality on orders.

ERROR 4: so can i trade a calendar spread or how about a butterfly, what about a put spread, a collar or a vertical? no, i didnt think so either. can i get exposure to $1m of notional with $800 if i do trade an outright?

ERROR 5: Orders! So, can you provide iceberg orders? NO!
time sliced orders? NO!
VWAP orders? NO!
TWAP orders? NO!
etc etc etc

risk management? big array of tools not available to the average exchange.

ERROR 6: it isnt the job of an exchange to provide end users with risk management tools, thats the job of the fcm/broker. you really should know that.

etc etc

the fact is that exchanges are not built for the small to medium sized player. Whereas the spread betting companies listen and adjust to fulfill our very demanding clientelle.

ERROR 7: really? funny you think that because the krx which lists the worlds most widely traded futures contracts have a predominantly retail customer base. also, have you ever heard of the london stock exchange, or nyse, or nasdaq? you will typically find 30-40% of their end customers are in fact your average joe - not even traders, but investors.

As i mentioned a few months ago the client returns on SB are actually slightly better than those acheived for private clients on DMA access... [not our analysis but one from the actual exchanges themselves]... which just about clinches the argument for any reasonable person

ERROR 8: now you're just lying. no exchange has ever done any research into spread betting customer returns. so it clinches nothing, but just shows you to be full of it. publish this report or provide a link. i dare you.

Simon the clown

ps i always love lines like 'clown tricks' what are these precisely ?.. and i mean exactly.. not "wot a bloke down the pub told me"

and finally if you are a succesful trader.. on SB its all CGT free

simon,

PLEASE, PLEASE, PLEASE get your self FSA registered. making dumbass errors like you have done will end your bucket shop career pretty damn quick, and possibly end up with your firm getting a hefty fine (which I hope comes out of the HR departments salary because they should have sent the clown CV's back to the job centre for the circus to pick up)

be lucky!
:clover:

 

[capitalspreads]

charliechan

in you r comments you are right in that i use the generic term 'exchange' when i am talking about both exchanges and platform providers/brokers. My apologies if this was not clear.

But

stamp duty only on UK stock... errrr... well as SB is only used in the UK (and Ireland) and 95% of our clients are in those countries the fact that 'other countries' do not charge it is pretty irrlevent. virtually all our equity trades are in UK stock (well over 95%)

i have already stated that you can join the bid or offer in DMA... (this, by the way, is just about the only advantage of DMA)... but the only way you get filled is IF SOMEBODY ELSE SELLS TO YOU/BUYS OFF YOU.. which basically means that unless you are the first in the queue you will mainly only get filled when your bid becomes the offer or vice versa.

yes the minimum spread in the GBP/USD futures contract is 1pip (you then pay commission of course) but as i write the spread is errr ... three... ... at 08.33, absolute prime time, the spread is two the same as Capital Spreads but then you have to pay comission ! In Eur/USD...USD/JPY..AUS/USD the quote on CS is 1pip spread, GBP is 2 (24 hrs a day from 22.05 on sunday to 21.00 on Friday). Ocassionaly the spread is narrower but this is easily (and i do mean easily) counteracted by the times it is wider and by the comm charge on top.

agressively 'take the market'? 'support the market'? what a load of tosh ! how big do u think the average spread better is ? If you are trading in this type of size i assume you are professional. Not only this but trying to aggresively move the market is generally a good way of turning alot of money into ... not a lot of money.

You can do calendar spreads in some markets with Capital Spreads but Butterflies/put spreads/Options.. in fact the bulk of the functionality mentioned ... you are talking about products the Capital Spreads does not offer ...

i.e please trade in "Google shares" on the LSE.. or even try to trade in BP options on the LSE... the LSE does not even support options on its own products. The fact is that to trade in all the markets offered by the SB companies for free you would have to pay a fortune in exchange/broker permission fees.

I agree that margin costs, if you are trading one comparable instrument versus another, might be lower via your broker. But you are again stretching the facts here to prove a point. The vast (vast) majority of clients just take positions. They are not concerned with Red Short sterling versus Black. All they are interested in is whether a market is going UP or DOWN.

Icebergs... of course you can .. not only this but icebergs on SB really are hidden from the market as even the brokers cannot see it. Time weighted, volume weighted orders... well fine .. but how many retail clients trade in this fashion?

lying am i ? You might not believe that these analyses are not made but I am afraid that your 'belief' is not proof .... please read the comment below (not provided by me) concerning analysis in countries where SB and CFDs are not permissible and therefore all these analyses were made on DMA providers.

The North American Securities Administrators Association reports that only 11.5% of traders actually trade profitably over the term of their trading. At least 70% lose money and the balance breakeven. A large majority of losers will lose everything they invest (trading account). So a new trader has a 1 in 10 chance of winning. I trade three strategies that are quite simple. There are thousands of strategy combinations that will work but still only about 12% of traders will win over the long term.

On another level I've recently been reading a staggering report from the Taiwan Stock Exchange regarding intraday traders (stocks and futures). It was conducted by the University of Cailfornia with 925,000 trader accounts being studied over a four year period. That's 100% of all Taiwan day traders from the occasional dabbler to regular everyday traders. The traders were grouped depending upon their trading criteria.

Of all traders 82% lost.
Of the winners 100% were regular traders.
Of occasional traders most lost.
Those that lost over a six month period also lost over the next six months.
Those that won over a six month period also won over the next six months.
Of those who traded every day, those who traded aggressively lost overall.
Of those who traded every day, those who traded passively (fewer trades) won.

the profit ratio of Clients with LCG (and with our quoted competitors as well) is a matter of audited fact (by Deloittes) and is generally around the 20% mark although it does oscillate a bit from 18% to 35% depending on the month.


again you keep mentioning 'tricks' ' price manipulation' blah blah blah... you really reveal your agenda.. what price manipulation? please an exact example .. what tricks? an exact example please. I note your silence on these points in your answer...

you have already stated that you do not have an SB account and never have done. It is nice to speak to such an expert!

The problem is that you obviously trade in products that require that you 'make the spread' .. i.e. get filled in both sides at the right point and then look for the spread to widen out/narrow in again. You are effectively a professional looking at a retail product that does not suit your trading strategy.
Nothing I say will convince you as there is a fundemental difference in the product requirements.

simon

 

[tar]

Although i agree SB has its advantages but here is a summary of the main disadvantages :

SB : Dealer intervention DMA : no dealer intervention

SB : conflict of interest DMA : no conflict of interest

SB : you trade with a single market maker DMA : you trade with multiple marketmakers and with other traders .

SB : your market maker has full control over your orders DMA : nobody control your orders , nobody knows who you are .

 

[capitalspreads]

tar

i would agree with your point one.. but this in reality only affects a tiny minority of our clients.. over 99% of clients have no dealer input at all

but point 2 .. this is 'perception' not actually fact. All clients seem to think that we are watching them and are interested in their individual actions. All my dealers are really watching is our risk books. After the event of the client trading, has the net efect of their action broken any internal risk limits? if this is the case then CS will go and hedge. In reality this should (in a very small way) help the client as we hedge AFTER the client trade (in the vast majority of cases) and therefore potentially 'move' the market in their favour.

single market maker .. well yes, but the SB companies generally take the best price on the market from which to quote their price. i.e. we take all the multiple market makers and use them for our clients.

control over orders... you only get actioned if the quote reaches the price of your order (the SB company cannot change this) nor can the DMA provider. But on the other hand on SB platforms the SB provider does have the option to 'let the client off' an order execution event (as happened with many US stocks on the flash crash event of May 2010) if you had had a stop order (or margin connected stop) on a DMA platform then you would have had your trade executed.

The unfortunate (and quietly forgotten) fact is that on DMA you would have to get a multitude of people to agree to reject trades on a fat finger spike so this very seldom happens. But with SB providers, as the trades are made with us, we can do this.

I am not saying that SB platforms suit every person or event (of course they do not). As charliechan points out for certain types of trading style then DMA is definately better.