Best Thread Capital Spreads

[the blades]

Would be very grateful if you could comment on this, please, Simon.

I've had a difference of opinion with a friend about how your service works. I think a specific example - even if not completely realistic - will make it easiest for you to reply quickly, so here goes: at about 8.00pm I open a long position on rolling USD/JPY at 105.60 with a stop-loss at 104.80. Let's say the market falls steadily all night, without gapping anywhere and passing clearly and slowly through my stop-loss. At 7.00 the next morning when you open, the USD/JPY is down to let's say 103.80. At what price is my losing position closed out?

I imagined it's closed out at 104.80. My mate says it's closed at 103.80 because that's where the market happened to be when you opened for business. This can't possibly be right, can it? What would be the point of having the stop?

No doubt Simon will clarify - but my two penneth;

You would get the worst price. This is because you have only placed a "stop", and not a "guaranteed stop". CS do not offer this, IG (and maybe others) do. However, you have to pay a larger commission to pay for the "insurance" with this type of stop. For frequent trading, you may (I have) decide it isn't worth the money - but you get nowt for nowt..

Hope this helps.

UTB

 

[the blades]

since this is Capital spreads commentry page i will give a few numbers to Nicsta

the main products traded are the Dow the FTSE, Oil, £/$ and €/$

Daily Wall Street CS quote 5 pips City quote 6 pips (8 points out of hours)
Daily FTSE quote CS quote 2 pips City quote 4 pips

Oil CS quote 8 pips City 10 pips

£/$ CS quote 3 pips City quote 6 pips
€/$ CS quote 3 pips City quote 6 pips

on half of the products City's spread is DOUBLE ours

the savings are similar on the share quotes
Admittedly we dont quote shares outside the FTSE 350 but all of the ones we do quote are online.

City's service would have to be incredible to justify trading with them over us.

And from the comments on this thread and elsewhere my customer services dept is rated very highly indeed.

Good luck everyone

Simon

An interesting point you may wish to comment on;

IG have significantly wider spreads on their index bets than CS. However, you can trade on credit with them. If you factor in the loss of interest on your cash (to cover margin and stop) then there are ocassions when IG are cheaper to deal with - eg infrequent trades with wide stops?

Have I calculated this incorrectly?

I attach this to your quote as it may be that City Index offer credit?

UTB

 

[capitalspreads]

the blades

the credit is of no value (monetarily speaking) for daily bets apart from the false sense of being given free money!

if you hold a position in say £10 a point on front month Wall street with us you would require £700 on your account. CS has a spread of 6 points in the front month Wall Street contract IG has a spread of 12(!!) City have a spread of 10.
With the price difference of 6 points (against IG) this equates to £60 for every single trade ...on the minimun deposit with us of £700 to earn interest of £60 with interest rates of 4.75% (and assuming you pay 40% tax on interest income...giving you a net 2.85% real worth) it would take you more than three years to earn the interest on just one trade. (but of course you would have lost this on rollover costs anyway !!)

Credit accounts have their value but this is not one of them.

Roberto

I am sorry to say that your friend is correct here. As our terms and conditions state all stops are based on our quote and if we are closed then we are 'not quoting'.

In our defence I can inform you that the FX market is most definately run by the european markets and in most cases (not all of course) a move in tokyo is generally of the spike variety. So although your stop would attract slippage you would also not be stopped out if the market moved through your stop level and back again between 21.00 one evening and 07.00 the next morning.

This second scenario is a far more usual event than the rather extreem one that you used.

I know that you just have my word for it but.... even though currencies have had a very volatile year we have yet to have an opening slippage of anything even approaching the numbers you used (in fact I cannot even think of one of more than 20 pips or so) though no doubt somebody may remind me of one !!

Simon

 

[the blades]

the blades

the credit is of no value (monetarily speaking) for daily bets apart from the false sense of being given free money!

if you hold a position in say £10 a point on front month Wall street with us you would require £700 on your account. CS has a spread of 6 points in the front month Wall Street contract IG has a spread of 12(!!) City have a spread of 10.
With the price difference of 6 points (against IG) this equates to £60 for every single trade ...on the minimun deposit with us of £700 to earn interest of £60 with interest rates of 4.75% (and assuming you pay 40% tax on interest income...giving you a net 2.85% real worth) it would take you more than three years to earn the interest on just one trade. (but of course you would have lost this on rollover costs anyway !!)

Credit accounts have their value but this is not one of them.



Simon

My example would be a £2 / pt quarterly bet on the FTSE, (this is where my calculation could be wrong) - Equivalent bet size £10,000 (for the sake of argument) @ 10% margin, plus a 20% stop loss (I know this is large but I use it for hedging purposes) = 30% cover required, or £3k.

I have an offset mortgage so my interest saving is 5.8%

Over 3 months (a quarterly bet) I would get about £45 interest. If I place the bet with IG, I pay 8 pts X £2 = £16, with CS I pay half that, but lose the £45 interest - I am £37 worse off.

I appreciate I have used an extreme example but it is one that is real to me. I would appreciate your clarification on my numbers, specifically the cover required.

Also, I must add that most of my index bets are placed frequently with tighter stops and this makes you far cheaper - hence I place these deals with you.

TIA.

UTB

 

[Roberto]

Roberto, I am sorry to say that your friend is correct here. As our terms and conditions state all stops are based on our quote and if we are closed then we are 'not quoting'.

I see. I appreciate the subsequent points you make, and I'm aware that my example wasn't a very realistic one. Nevertheless, as someone who sits at the screen watching and trading during the day, my daytime stop-loss is really there mostly in case of a power-cut or other disaster. The only time I'd _really_ want to know it's working is when you and I are both asleep and can't be watching. Not doubting your word at all, and I fully accept your answer, obviously, but I certainly wouldn't be willing to hold an overnight position on the basis you've described. (Who would? Well ... I suppose some people must or you wouldn't have customers for "rolling currencies"?). Thanks for your prompt and decisive answer, Simon.

 

[capitalspreads]

the blades.

well yes if you require 20% margin stop on an index then of course the free credit comes into account and 'if' your 'lending' rate is actually your 'borrowing' rate that moves the goal posts a bit as well. If you are using this kind of margin on a credit acount you wouldn't have much room left for anything else !

Normally with our accounts people would bleed the money in as required. so that in the case of a hedge that actually went your way from day one the minimum you would require on this deal would be £60 which even on your calculation would only be a cost of 87 pence

for a 20% stop on a £2 bet on the FTSE (say FTSE is at 4800) we would require
4800 x 0.2 x 2 / 0.8 = £2,400 on the account. (with our 20% buffer). but as i say an exteem stop loss that is not really realistic.

anyway thanks for the questions its nice to have to use my brain occasionally

Simon

 

[the blades]

the blades.

well yes if you require 20% margin stop on an index then of course the free credit comes into account and 'if' your 'lending' rate is actually your 'borrowing' rate that moves the goal posts a bit as well. If you are using this kind of margin on a credit acount you wouldn't have much room left for anything else !

Normally with our accounts people would bleed the money in as required. so that in the case of a hedge that actually went your way from day one the minimum you would require on this deal would be £60 which even on your calculation would only be a cost of 87 pence

for a 20% stop on a £2 bet on the FTSE (say FTSE is at 4800) we would require
4800 x 0.2 x 2 / 0.8 = £2,400 on the account. (with our 20% buffer). but as i say an exteem stop loss that is not really realistic.

anyway thanks for the questions its nice to have to use my brain occasionally

Simon

Agreed with most of that. however, I'm fairly sure that stop distances don't affect your waved deposit limit with IG. With proof of liquid assetts of, say £20K, you would be provided credit of half that, £10K. At 10% margin this would allow you to place bets up to a value of £100K, irrespective of your stop position. For wide stops with yourself, there is a much more significant cash requirement and a loss of interest which must at least be considered.

You refer to "extreme" stops, yet even with no stop at all and 10% margin, a £10K bet would tie up £1K - now with interest of only 4% PA, this would cost you £10 over the 3 month bet period - greater than the saving you offer over IG and surely not as uncommon as you suggest.

That said (because i don't want to do IG's wotk for them!), these debates are only relevant under certain circumstances, though circumstances which I regulary trade in. For frequent trading, they don't compete with you.

Thanks for the response.

UTB

 

[Roberto]

For frequent trading, they don't compete with you.

That's also true with regard to my query above. I will continue to do most intraday positions with CapSpreads because they're the best and nicest. For 2-3-4-day trades, I must go elsewhere. But even there you'll get me back (and many others too, I'm sure) when you honour overnight stops during the week - maybe with the introduction of 24-hour trading?

 

[swiss]

simon

i have been using your demo account and noticed that there is a difference between the on screen conformation price and the e mailed conformation price. Today i sold cable at 1.8548 on screen conf price and the email conf price was 1.8546. On closing, the on screen conf price was 1.8531 and the e mail said 1.8535, is this something that just happens on the demo or would it happen on a live account.

Thanks

Swiss

 

[capitalspreads]

swiss

we have been informed by clients recently that this is happening on the demo site.. we are looking into it.

In the live site this DEFINITELY does not happen.

Simon

 

[capitalspreads]

the blades... roberto

well yes if somebody put, as in your example, a 1000 point (!!?) stop in the FTSE on day one of the quarter and held it with the same stop through to the final day of the quarter and you were equating your 'lending' rate with the cost of a mortgage rate you may get to numbers you are talking about.

If you are going to use the IG margin usage on your credit account against your 'hedge' then you should use the same number for our stop requirement !

So if you did the more normal 200 point margin (made by our computor) and you use a more normal interest rate for loss of interest on your bank account say at 3.5% and you take an average number of days for the quarter say 60 days the numbers become on a £2 bet 2x200x3.75x60/36500 = £2.47 ... for a SIXTY day position.
This is still (!!) a saving of £5 odd on the original CS bet spread against the IG spread...not as roberto says some choice that must be made after 3 or 4 days !!!
And when you consider that if you were to roll it into the next quarter using IGs wider spread over ours it would take you years to make the interest saving back on just ONE trade!

Simon

 

[henry766]

i can't believe anyone feels happy leaving stops in the mkt with spread betting or anyone else for that matter, i suspect old pros don't let on where thier "stop" points are /would be , it's not that spread bet firms are dishonest , just ain't a smart thing to do!!!

 

[cj12]

Henry I though you had a choice you could leave a stop at they quote price, or the screen price. (Underling market). so if you stop does get hit on the screen you would know the market traded there. Most firms offer this but I think C/P dont.

sun

 

[capitalspreads]

we dont offer stops at a market price ... but as our quote is based on the market price i am not sure where the difference is. If the market required a print at that price then the dealer could in a very thin market trigger a major client stop by selling/buying contracts to trigger the stop.

henry
pros will always put their stops in the market .. where else can they put them..unless they want to sit staring at the screen all day. Most markets are so liquid nowadays that it would take some serious volume to actually trigger a clients stop ....far more risk than any potential profit would warrant.

Also if we unfairly filled stops dont you think that these pages would be filled with vitriol? Do you really think we are so desperate to lose customers (make, very short term, money) that we would act that way. The basis for all of 'our quotes' is talked about ad nauseam on this thread and on our web site.

Simon

 

[the blades]

the blades... roberto

well yes if somebody put, as in your example, a 1000 point (!!?) stop in the FTSE on day one of the quarter and held it with the same stop through to the final day of the quarter and you were equating your 'lending' rate with the cost of a mortgage rate you may get to numbers you are talking about.

If you are going to use the IG margin usage on your credit account against your 'hedge' then you should use the same number for our stop requirement !

So if you did the more normal 200 point margin (made by our computor) and you use a more normal interest rate for loss of interest on your bank account say at 3.5% and you take an average number of days for the quarter say 60 days the numbers become on a £2 bet 2x200x3.75x60/36500 = £2.47 ... for a SIXTY day position.
This is still (!!) a saving of £5 odd on the original CS bet spread against the IG spread...not as roberto says some choice that must be made after 3 or 4 days !!!
And when you consider that if you were to roll it into the next quarter using IGs wider spread over ours it would take you years to make the interest saving back on just ONE trade!

Simon

Hmmmm.....at the risk of going around in circles here - My second example was based in "your" favour with NO stop allowed for - just the margin requirement of 10%. Even allowing for only 3.5% interest (I only used 4% the second time) then for each 90 day holding period, you are better off doing this type of deal with an IG index credit account.

As for rollovers - as the rollover spread is relaively lower for both companies, this makes it even more in IG's favour, again providing you hold for the longer period.

Note that these positions are always held until expiry in my example as they simply hedge against the value of my share bets, which are changing more frequently.

I except this isn't a majority example but I'm fairly sure my maths are correct (assuming 10% margin requirement, £1000 % 3.5% = £9 per quarter - greater than the saving you offer) and that in this instance, the credit account (IG) is cheaper.

As for Roberto's point - I think he is suggesting he won't hold overnight due to the lack of garauntee on the stop, not a "lost interest" point. Considering lost interest alone, 3-4 day bets would much more sensibly be done with you.

Henry,

Do you actually spreadbet or is this a passing interest? The quotes offered by the SB company are based on market price. I hear all these examples (probably self perpetuating myths) of SB co's playing with the price. I am yet to see an example of it.

As I'm talking about 20% stops, I don't think I'm significant enough for the players to risk taking me out. If they dropped the price so much against the market, others could have a field day.

UTB

 

[cj12]

we dont offer stops at a market price ... but as our quote is based on the market price i am not sure where the difference is. If the market required a print at that price then the dealer could in a very thin market trigger a major client stop by selling/buying contracts to trigger the stop.

Simon

Hi Capitalspread

Let me give you an example. The underling market is trading at 10550 I want to place a sell stop at 10500, OK if the market went down to 10501then rallied of this number, you would be filled if you left it as your quote price. Your quote would read something like 10498-10503. but if you left it at screen price (underling market) you would be still in the trade. I know DFF Finspreads and cityindex offer this. Maybe you would let it go, but then again, you might not, But with the screen price i would know im still in the market.but with your quote price I be left wondering.if im stoped out.

Ps I like your 5 point spread on the Daily Dow future. If you only would offer screen price I would join you, but I guess you can't please everyone in this game.

sun

 

[Roberto]

As for Roberto's point - I think he is suggesting he won't hold overnight due to the lack of garauntee on the stop, not a "lost interest" point.

Absolutely. I'm not even remotely concerned about interest (though I recognise that others may be). I agree completely with everything Simon's ever said here about interest. For the record, I appreciate that CS stops aren't strictly "guaranteed" anyway, and I have no problem with that either. My problem is that overnight they're not even in play at all.

This does not detract much from my view that CapitalSpreads is the best and nicest spreadbetting firm out there - it just means I choose not (yet, anyway) to use them for everything I do.

Also for the record, the idea (as voiced occasionally in postings here) that their dealers might "gun for stops" in order to take people's positions out is, in my opinion, absolutely laughable.

 

[capitalspreads]

sun123

well, yes, if the market traded at 10500 that would be the trigger .. BUT (and it is a big but) you would then actually be filled at 10497 with City and Finspreads and possibly 10498 (or 10497) with DFF because they then all apply their spread to the stop trigger ... which would then be exactly the same as 'our quote' or in the instance of City and Finspreads one tick worse!!

They don't give you a spread free get out (except for 'guaranteed' stops which you would have paid for anyway)

We just call it 'our quote' ... with our system you would just adjust your stop to reflect the spread of our competitors ... so for a stop at a market print of 10500 you would place a stop with us at, say, 10497 or 10498.

As we never bias our price to reflect our book or the level of business you can be assured that you will not be disadvantaged by placing the stop to mimick a 'market' print.

Simon

 

[alf25]

real time charts

Simon
When cca. you will have real time charts ?

will be charts same like now or there will be another chart tool ?

 

[cj12]

sun123

well, yes, if the market traded at 10500 that would be the trigger .. BUT (and it is a big but) you would then actually be filled at 10497 with City and Finspreads and possibly 10498 (or 10497) with DFF because they then all apply their spread to the stop trigger ... which would then be exactly the same as 'our quote' or in the instance of City and Finspreads one tick worse!!

They don't give you a spread free get out (except for 'guaranteed' stops which you would have paid for anyway)

We just call it 'our quote' ... with our system you would just adjust your stop to reflect the spread of our competitors ... so for a stop at a market print of 10500 you would place a stop with us at, say, 10497 or 10498.

As we never bias our price to reflect our book or the level of business you can be assured that you will not be disadvantaged by placing the stop to mimick a 'market' print.

Simon

Simon

Im sorry you are wrong, If you place a stop at screen price at 10500 with finspread or cityindex. you would not get filled if the bid hit 10501. You would only get filled if the underling market hit 10500 bid, then they add they add they 3 ticks on top, and that 100%, also DFF don't even add the 3 ticks on top of you stop. from my experience.

If you phone them and pretend you a new client ask them how the screen and quotation price works.

Sun