Best Thread Capital Spreads

[Roberto]

Simon states that Cap Spreads don't ever bias prices.

I see ... thank you. I'd missed that (but I'm not at all surprised to learn it now).

 

[DaveJB]

...in that case I'd still be interested in how a realtime 46.15-46.16 on Merq ends up as 46.16-46.25 on Capspreads at the same time? If that's unintentional then they'd better sign up to a better datafeed <g>

I'm just interested really - wondering what the explanation might be if it's not a bias of a few points? Personally I'm not all that exercised by what is 3-4 points, I'd just assumed it was down to the SB company feeling the share was bullish and shifting the price a few points as a result... as I'm betting against them then it wouldn't amaze me if they tended to offset the mid price to reflect their own appreciation of the share.

Dave

 

[Roberto]

I'd still be interested in how a realtime 46.15-46.16 on Merq ends up as 46.16-46.25 on Capspreads at the same time?

That'll be because their price isderived from the futures price, not the cash price. But hey ... I'm only guessing here, and Simon will give you a better answer than I can.

 

[Spreadbetteur]

He would say that, would'nt he ! With all respect.

In post 946, Simon states that Cap Spreads don't ever bias prices.

 

[LevII]

That'll be because their price isderived from the futures price, not the cash price. But hey ... I'm only guessing here, and Simon will give you a better answer than I can.

Perhaps a plausible proposition in relation to an index but will someone please tell me where one finds the "futures price" for MERQ or, for that matter, any instrument in which there is no futures market?

Sounds like nonsense to me but I would be pleased to be corrected.

LII

 

[pkfryer]

I think it sounds like SBs are a rule onto themselves. If they are considered gambling organisations they probably aren't bound to any set of rules set by the FSA.

I'm a programmer for my sins and I think it is highly unlikely that a spread wil change for a specific individual as this would add a lot of overhead to the real time flow of data and bet processing. Roberto is right that a lot of losing traders will try and place the blame for their losses anywhere but at their own feet. Its worth asking yourself, if you are so right in your reading of the market, would a few points really make that much difference. Obviously thats taking the stand point of short to intermediate trader, not intraday. From all accounts, SB is not the vehicle of choice for intraday trading at all.

The SB remind me of the bucket shops I read about in the biography of Jesse Livermore. Only losely reflects the underlying market, a vener of respectability but dodgy and corrupt. Of course they dont want you to win! Of course they want to make as much money off you, they aren't charities and this is a capitalist society where its alright for companies to rip off the average Joe for profit. If they consider a market more likely to go up than down, they'll scew the spread. If more people gamble in one direction than the other algorithms in their systems will click in to play to balance it out.

But I think the level of manipulation is only minor as the most people will lose in the markets anyway. They could afford to be very honest and upright about everything and they'd still make a packet from people losing.

If your worried about the spread try out CFDs which give you lots of leverage and have much tighter spreads. Infact, with Deal4Free (which is what I use), the price reflects the price of the underlying market with only a very small increase of spread. If you place orders (which you should anywhere) instead of buying/selling at market you'll be pleasantly surprised how many times you get it filled.

Direct access is expensive in comparison because of the commissions and the need to fork out greater margin.

I think if you take into account the tax insentive, low margin and no commissions SBs seem like a good deal even if they do scew the bid/offer. Sit down and work out a good non-intraday system, so that it doesn't matter if a few points are added here or there.

 

[Spreadbetteur]

From a programming point of view, it would be very easy to offer two different spread bias to clinets in the market: One for short and one for long. It does not have to be for each client, just short or long.

 

[Roberto]

He would say that, would'nt he ! With all respect.

He wouldn't if it weren't true, no. Because his reputation and credibility would be totally blown and he'd instantly have undone all the good work he's done here. Think about it.

 

[DaveJB]

Based on Future - much more likely, I wondered about that but haven't actually read it (probably a case of not seeing what was in front of me). I guess the way round it is to swap to the selection of 'rolling daily' US shares which presumably match the underlying price.... I'd better make another portfolio up of them - it'd help if CS had some sort of 'export' option in their lookup tables to make it easier to maintain a note of which shares are traded? This is what I get for deciding to try spreads out after a few years of share trading.... the learning curve is okay, it's the occasional ruts that cause problems <g>

FWIW whilst a touch of cynicism is a healthy thing I've found it isn't needed so far with CS, they're in it for the money of course but they do seem to have understood that good service is an excellent way to stand out from the crowd. I chose CS based on what I read in the T2W reviews section, and I'm happy with the choice.... the 'bias' question really does strike me as very likely to originate in it being based on the future rather than anything else - I don't readily have the Merq Fut before me but I'll see if I can check that. I was looking to understand it...so thanks for the help!

Dave

 

[Roberto]

This is what I get for deciding to try spreads out after a few years of share trading.... the learning curve is okay, it's the occasional ruts that cause problems <g>

Absolutely; I know exactly what you mean. I only wish CS had been around when I made exactly the same switch a few years ago. Please feel free to PM if there's anything specific I can tell you about.

 

[cj12]

I been looking at the spread bet prices and what I see is this. if the market is going up it don't have to be fast just going up slowly, so the bias is, to the up side, and just before you place a long bet on the Dow cash it was trading at 10500. But the spreadbetters and this is all of them. on a 6 point spread they would quote 10500 to 10506

Now this is 6 ticks higher than the real market. ok as soon as you put you bet on. the futures sold off just slightly, the Dow cash is now trading 10498 they now quote you 10492 to 10498, so with in a few mins the Dow is down 2 points, but you be down 14 points, but the real market is only down 2 ticks, the future prices always over react, 90% of futures players lose,Give the trader a fair price on the cash if not do away with it, and just trade the future price.

This is why im asking for a fair deal, give us the real price on all of the underling markets, then add your spread on top after we taken the trade. This would be much better method for traders. WHO EVER BE FIRST TO OFFER THIS. YOU WOULD CLOSE DOWN ALL OTHER SPREADBET COMPAIES.who is going to be first???

CJ

 

[Roberto]

so with in a few mins the Dow is down 2 points, but you be down 14 points

It can happen the other way round, too; the Dow can be up 2 points and you can be up 14 points. Just one of the anomalies of the "cash" price actually being derived from the futures price.

Give the trader a fair price on the cash if not do away with it, and just trade the future price.

Nothing to stop you from trading the futures, if you prefer that!

 

[cj12]

Roberto Im saying price in general is Skewed. with S/B.Most are skewed the wrong way as 90% trade with the current trend. This is why they lose,If you sell in to strength or buy in to weakness you can overcome this, but 90% don't do this,

The big commercial houses look to buy in weakness and sell in to strength. All the noise intraday is done by day traders, if you want to know what the big players are doing look at the end of day trend.

CJ

 

[cj12]

Roberto Im saying price in general is Skewed. with S/B.Most are skewed the wrong way as 90% trade with the current trend. This is why they lose,If you sell in to strength or buy in to weakness you can overcome this, but 90% don't do this,

The big commercial houses look to buy in weakness and sell in to strength. All the noise intraday is done by day traders, if you want to know what the big players are doing look at the end of day trend.

CJ

 

[the blades]

The big commercial houses look to buy in weakness and sell in to strength. All the noise intraday is done by day traders, if you want to know what the big players are doing look at the end of day trend.

CJ

Isn't it true that 80% of fund managers fail to outperform the index? I certainly found that when I trusted them with my money.

UTB

 

[minx]

If they consider a market more likely to go up than down, they'll scew the spread. If more people gamble in one direction than the other algorithms in their systems will click in to play to balance it out.
I think if you take into account the tax insentive, low margin and no commissions SBs seem like a good deal even if they do scew the bid/offer. Sit down and work out a good non-intraday system, so that it doesn't matter if a few points are added here or there.

Well considering CS charge 3 ticls on the Bund it would be very difficult for them to skew the spread, I can buy 1 tick above the futures mkt and sell one tick below, I have both running side by side and trade using SB or futures depending which trade setup I see. As far as I can remember their spread has always been fair and true to the futures bid-1 / ask+1, no fraud, no skew, no trying to screw me. I like this and its pretty simple to work out. Also I know that if I wanted a stop to trigger when the bund market hits a price, sat at 14, then on CS I place the stop at 13 (futures bid-1tick). Easy!

 

[cj12]

Isn't it true that 80% of fund managers fail to outperform the index? I certainly found that when I trusted them with my money.

Blades

What im talking about is intraday trading but yes over 3 years 80 to 90% can't beat the s&p index, But when they put they money to work. You don't want to be on the wrong side. You don't want to fade the commercials intraday short term.

CJ

 

[the blades]

Isn't it true that 80% of fund managers fail to outperform the index? I certainly found that when I trusted them with my money.

Blades

What im talking about is intraday trading but yes over 3 years 80 to 90% can't beat the s&p index, But when they put they money to work. You don't want to be on the wrong side. You don't want to fade the commercials intraday short term.

CJ

I see what you say. Would you think the majority of long term fund managers are "momentum" or "contrarian"?

UTB

 

[TheNovice]

I have been trading with their simulator during the past three weeks and consistently run into the problem mentioned by cj12. I usually buy when trending starts and sell when it has died down. On average compared to Dow daily cash price I give away 10-11 points to CS (as opposed to 5 points spread). I use the ADVFN Dow cash daily chart for my charting and not the Dow future chart (if one exists). City Index prices are based on daily Dow and not future price (by comparing ADVFN and their web site). I do not know if they bias their spread but if not, although the spread is 6 points on Dow it is much more tradable (consistant) than CS. Furthermore I have not been able to set a meaningful stop-loss (based on my chart), as it could get hit depending on where in the cycle we are. Therefore, I always have to set it wider than I am comfortable with (larger risk).

 

[ChartMan]

Now this is 6 ticks higher than the real market. ok as soon as you put you bet on. the futures sold off just slightly, the Dow cash is now trading 10498 they now quote you 10492 to 10498, so with in a few mins the Dow is down 2 points, but you be down 14 points, but the real market is only down 2 ticks, the future prices always over react, 90% of futures players lose,Give the trader a fair price on the cash if not do away with it, and just trade the future price

Yes, that's about right. But you have to counter that by trading from a cash chart and taking your stops from it and NOT the price given by the SB's.