Best Thread Capital Spreads

badtrader said:
At the moment you got GBP.USD and EUR.USD at 3 pip spread. This to me is un balanced, The GBP/USD moves more that the EUR.USD on average for every 15 pips on GBP/USD you get 10 pips on the EUR/USD . To my question, Be first and introduce 2 pips on the EUR/USD.Before the others will, its only a matter of time. This can only make you better,1,you will take more clients from other S/B firms... 2, you will get people to over trade because of the 2 pips spread, so more money for you. Below are a few firms who offer 2 pips on the EUR/USD.I could name more.Untill I see 2 pips with a S/B Firm on the EUR/USD I will carry on trading with CME Futures with 1 pips spread.… come on simon lets see if you will be the first to offer this. 2 PIPS EUR/USD.It makes sense ;)


http://www.afxi.com/

http://www.gfspotfx.com/

http://fxtrade.oanda.com/spreads/

http://www.forexplatforms.com/

http://www.interbankfx.com/index.htm?cp1=yahoosm&cp2=ag2+forex
2 pips EUR/USD????
 
Afternoon all…

The debate rages on….

People seem to be focusing far too much on the ‘size of the spread’ in my opinion. Sure the spread is a ‘known’ and ‘direct cost of trading’ but the execution practices are equally important. Surely if a spreadbetting company tightens its spreads then its percentage of rejected trades will rise? (On the natural assumption that the price moving as little as 1 tick will make the deal unfeasible.) Logic dictates that the rise in trade rejections is exponential as the spreads tighten. Trade rejections are an added cost of trading. I’m sure that many of the companies will say that it’s a simple ‘swings and roundabouts’ scenario but my experiences tell me otherwise. No matter what anyone says you will always find that, over a period of time, the deal rejections are far more beneficial to the company rather than the punter. One only has to examine the threads relating to CMC to see the nature of this problem.

In my own opinion spreads are pretty tight on most things at present. Is one tick less on the spread of GBP/USD really going to affect the success or failure of a determined and skilled trader? I think not. (I think Simon already mentioned that.) What could effect him in the long term however is execution. Hidden costs relating to poor execution are much harder to equate when compared to equating costs relating to an advertised spread.

I’m sure that, for the most part, most of the spreadbetting services have dealing and execution which is pretty comparable to the direct access brokers. This is fine when markets are considered to be behaving normally. In such a circumstance it is in the interest of the companies to offer such a high level of service, after all, they can only make money if they allow customers to trade with them. This cosy situation can however change if certain market conditions occur. This is where the potential danger is for the customer. If the companies can simply slow or indeed stop order flow when certain market conditions occur then the burden of risk shifts sharply towards the customer. As yourself what would happen if there was suddenly an economic incident – a sudden sharp piece of breaking news? Would the companies focuses suddenly move away from good efficient customer execution? Would their focus not suddenly become the hedging or protection of their own net position? In such a circumstance the ‘cost of dealing’ would increase massively. Yes -You can be pretty sure that it’s not going to be the companies that go the loser.

The key in amongst all this remains the execution procedures. Companies don’t want to provide clarity on these issues because they want to retain the right not to be held accountable for their own potential failings or misjudgements.

Steve.
 
I see your points steve, but if the company is already passing a portion of the spread on to a white label setup clearly theres room for a trim isn't there? (unless these labels are offered cs spread + a snip to cover costs) and why not simply pass this on to, one might say the most important piece of the puzzle , the customer. why bother with labels when customer flow will be direct.... white label is just used as a way to expand gross profit through increase order flow isn't it. ?

maybe its better to push it that way under different partners I dont know... of course the companies want to maintain a spread of x for as long as possible, but its growth,growth.growth and that means one thing tighter spreads, excellent service will and should not be optional, just a standard. tight spreads and excellent service will lead to people spending with the best. CS seems to be making jolly good efforts so far...
 
Coming back to the issue of Capital Spreads execution delay issues / filter / "Price Expired" - I just read this on AC Markets: - What You See Is What You Get:

WYCIWYG (What you click is what you get) embodies the concept of total price transparency and permits the retail fx trader to shed the large hidden costs which the great majority of fx dealerships charge their customers in the form of slippage.
“What you click is what you get” means that when a customer clicks on a price, that price is “captured” as the execution price and therefore even if the market moves subsequently, the customer still gets the price he chose, always. WYCIWYG execution erases all slippage from trading activities.

WYCIWYG also applies for limit and stop orders. The price you set is the price at which the order will be executed, always.

Choose WYCIWYG execution! Don't settle for less.

ESP dealing (Executable Streaming Price feed), no RFQ (request for quote).

Most brokers still offer RFQ execution. Most customers don't even understand just how much money they lose using such a system and those brokers directly benefit from the request for quote method of execution.

RFQ works in the following manner:

- The client clicks on bid or ask to ask for a quote (therefore divulging his intention).
- The broker (knowing the client's intention) quotes him a worse quote.
- The client accepts the quote because the difference remains minimal in his eyes.
- The client probably doesn't realise that doing this repeatedly can be extremely costly.

ACM takes the onerous concept of re-quoting out of the equation. Our system is only ESP (executable streaming price) capable which means that customers click only once to trade.

ESP works in the following manner:

- The client clicks on bid or ask to execute immediately. Period.

This is purely ONE CLICK DEALING and is the most competitive way of trading Foreign Exchange.

I am just wondering why am continuing to worry about Capital Spreads filter on fills ?

Should I be settling for less ?
 
No - we should not be settling for less. Simon suggests that Capital are in the process of improving this issue of slow execution times. Perhaps it is best to wait until he announces that they have.

A good weekend to all without any damm 'Price Expired" tickets..............At least for a couple of days.

I would have thought that a SB company would strive to be as least as quick as their competitors, in this case CMC. Aparrently not.

I just checked out AC-Markets.com. Their WYSIWYG propersition looks excellent...........At least no filtering of fills.
 
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Definately.

Capital Spreads have no excuse for not providing near instantaneous fills on Forex the most liquid market on the planet...

I'm going to vote with my feet.

JonnyT
 
I'm very aware when i make my points the uk based or uk shop fronts are competing today with global companies not just, CS against, IG or Cantor, D4F, Uk punters are warming to the fact that its OK as ok can be in these things to deposit your funds safely in non uk co's who do provide instant fills, tighter spreads and have been doing so for a few years hence they have the jump on some uk fledglings who are not shifting quick enough in a now global competitive market place.

But anything over a 1 second fill, is at best not doing yourself any favours is it.. we'll see how the companies respond in time.
 
The likes of Oanda can push through as they note over 300,000 transactions automated daily, instant fills, tight spreads. they must be doing something very right.
 
fxmarkets said:
The likes of Oanda can push through as they note over 300,000 transactions automated daily, instant fills, tight spreads. they must be doing something very right.


They certainly are I have been using them with no complaints apart from logging in. which takes a bit of time sometimes. But you can open several applications on different computers which is a rare.

I am sure Simon will sort it out as most won't complain just move on.
 
I had a look at Oanda but was put off by no telephone dealing. Like to have that as back up when the Internet can fail.

The Oanda "Bill Of Rights" sums up many of these issues being discussed:

http://fxtrade.oanda.com/billofrights

In post #1771 in this thread, Simon comments in response to a question asking what is acceptable in trade acceptance delay with:

"............................I would generally say that longer than 25 secs is too long but under that is (just about) acceptable."

Just about acceptable for who Capital Spreads or the client ?

If you can get instant fills with AC-Markets.com, 5/6 sec max with CMC Spread Bet at worst, both without hardly any rejected trades, Capital really need to deal with this issue.

I have not used CMC for a while, though a friend who does says that he gets almost no rejected trades, not including NFPR Fridays and he gets the occasional instant requote.
 
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The fact is if Capital Spreads, or any broker, has faster execution, clients will be less likely to suggest that any "Fill Filter" is being used, as a higher percentage of trades will be confirmed by the broker, while price remains at what was or very close to what was quoted on the screen.

It is only when you get these long delays that it is open to manipulation by the broker, who will only fill when price is against the client or at the original quote seen on screen by the client.

So Capital Spreads ! Get competitive on execution time and clients get a higher percentage of orders filled and will be less likely to point the finger at you over "Fill Filter"

I am sure that the gains you will get by improving execution (good service) will outway the gains you make with your current delayed execution with resulting "Fill Filter".

If you speed up execution or at least bring it back to the level of your competitors the old "Price Expired" problem will go away.

I just hope that Capital Spreads do not think of execution delays and 'Price Expired" rejections as a great advantage.
 
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Blimey I take one day off....

I have actually already commented favorably on O&A..... somewhere on this thread and have frequently said that they appear a pretty good option to SB. Everyone has to wiegh up what is important in trading. Are you concerned about taxing profits (although you have to make profits in the first place! ). Do you want access to other markets on the same platform and using the same funds. Is that 1 pip worth the extra margin ? What happens when there is a problem. With CS you can just ring up and talk to a dealer on the desk. Try talking to anybody other than customer services with most companies or in some cases only being able to send an e-mail which they say they they will respond to in the next day or so!

One of the major points about our platform is the simpicity with which you can open the trading platform the ease of trading combined with (relatively) tight spreads. Of course if you hunt around on direct acess you may find a better tradable price price BUT at what cost. You could go into an internet cafe in timbuctu and still be able to just open your account and trade.

How close can you set stops on the WYSIWYG system?? If you open two accounts and only ever take one position a month just before the NFPayroll number .. one position one way and the other account having the equal and opposite position and place a stop 5 pips away on both just before the number .... I would be interested in seeing the results !

For clients to say that the spread should be enough for us is showing a slight ignorance of the markets. When we hedge our positions we still have to pay a market spread ourselves... in general the spread we get on Cable is 3 pips as well (and we pay broking costs on top) and 2 in the Euro so if we trade in the market on client positions we will just be giving the spread to somebody else. We have a model that matches all of our positions against all others in every different currency pair. So GBP/USD EUR/USD GBP/EUR USD/JPY etc etc get put into a big pot and the net position in each currency is churned out the other end. This saves us from cross hedging currencies and doubling up on brokerage. If clients have GBP/USD and GBP/JPY bets our risk may very well be USD/JPY and have nothing to do with sterling. I assume that O&A and others do pretty much the same thing.

On that point I notice that nobody asks whether O&A hedge their risk (or am I just being paranoid here) ... why is it just SB companies that get asked this question?....

I would be interested if we could get away from FX for a while which after all only covers 2.5% of our markets.

Good trading everyone

Simon
 
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Simon

I trust you had an very enjoyable day off.

I am not to concerned if I cannot get a stop placed closer with AC Markets, as if I exit at my mental stop, when I see the price, they always will execute and confirm on that price (WYSIWYG) and almost instantly. I always place a automated stop as well.

I am suprised you last post, today, did not include a comment on the main discussion point of the last few days, on slow execution and the then ability of your company (and any others) to "Filter Fills" using delays as an advantage.

Is it of interest to you to increase execution speeds ? Probably not.

While the recent discussion has an FX tilt, this issue is a global trading issue, not just FX.

Micro
 
I really like Capital spreads but I also use Oanda for spot fx, and they are simply superb. A few points on Oanda first.

One the things that impresses me most with Oanda is the interest payment. They pay close to money market rates so are not creaming anything off the top for themselves. Nearly all SB's widen the bid-ask on their interest rates you sometimes feel you are being punished. Still, this isn't the end of the world, because I enter SB future positions (vs rolling dailies) for medium term trades.

The other thing with Oanda is the speed of execution and transparency, as other folk on this board have commented on. They are extremely fast because the system is fully automated. In the strictest sense they don't execute stops order right on your stop level, but the order to buy or sell goes through when that level is hit. That means you get the next available tick price. Usually, there is no difference in the price but in a fast market you may get slipped a bit. You have a lot of control over the ordering process though. Users love Oanada and because of their technology Oanda guarantees it suffers no slippage while giving clients what appears to be instant WYSIWYG execution. There is no reason why SB's can't operate on this basis, but the technology investment would be huge. Oanda are so far ahead of the pack in FX they quote EUR/USD to two more decimal places than everyone else. They call these pipettes. The interbank market is only starting to catch up with this. In a euromomey article I read that Barclays has recently started offering pipette style trading. In the fx market, which I focus on and which I think is the most active mkt for Capital spreads (?), transparency is paramount, all the more so when you are going through an SB.

My understanding is they use a similar hedging policyof bucketing up risk and hedging out according to the risk parameters.

Now on Capital spreads:

All this said and done, I think we need to compare Capital Spreads against other SB's. CMC seems to offer WYSIWYG one-click dealing and City Index usually gives me my quotes in fx, though the latter have a 5 point spread so they can execute fast knowing they will usually still be inside the spread. Capital spread falls down on execution speed but their margining system is very good (though an IMR of 999 on Google seems a bit high!), their spreads are very tight for an SB (the best in my opinion), their range of products is great and most importantly they come across as honest. They always call back if there is a problem. They are the only SB where I don't think its a case of me against them. This is a great achievement Simon!

I think the platform could be improved by adding a bit more functionality to give the customers a greater degree of freedom:

* Trailing stop. Right now you have to put in a level, and keep adjusting that level as the price moves in your favour. This can generate a lot of ticket e-mails in the old inbox. Other SB's don't offer it. It is simple and would be a great advantage for yourselves. So I ask, why don't you offer a trailing stop.

* Like Oanda you could offer Fill-or-kill function so people's orders don't get hit at badly slipped prices. This would reduce our anxiety while we wait to see if our orders have been filled and at what level.

* Please oh please introduce consolidated end of month statements like all the other brokers.

* I've noticed that while you offer quarterly fx contracts with a Mar expiry, this was not the case for fixed income and other markets. It may be updated now, but it would be good if you could at least match the competition when it comes to adding the next quarters contracts to the list.

All these requests and yet I must say I love Capital spreads. Most of my big orders still go through City Index (yes, even with the horrible spreads), because of the robustness of their system (also, they sometimes don't kill your order if your price just touches your stop but comes straight off again, neither to Man financial). That said, I am happy to move my business your way if you can deliver on these over time and I'm sure you will because you only have to look at the evolution of this competitive marketplace over the past two years to know that all of this stuff will be coming sooner or later and its better to lead the pack than to be a laggard.
 
microsoft

sorry, i had answered that question a couple of comments ago.... We try to get the trades and orders away as fast as possible but (and its a big but) there is a small delay on confirms. We try to be reasonable about it and my instructions to the dealers is to allow trades through so long as the trade is not too out of line.

Of course if I had 300,000 trades a day I would probably also just leave the whole thing on automatic to coin in the money as any irregularities would be swamped in the rush.

In the end of course a delayed fill (no matter how honestly we try to fill trades) must work slightly in our favour.. I would be a fool to say otherwise...

We are putting alot of development work into improving all these areas and most of these points will be covered in the near to medium term future.

Simon
 
capitalspreads said:
microsoft
In the end of course a delayed fill (no matter how honestly we try to fill trades) must work slightly in our favour.. I would be a fool to say otherwise...

We are putting alot of development work into improving all these areas and most of these points will be covered in the near to medium term future.

Simon
Ah! here we go it's good money so stuff the clients eh! ;) As long as you are happy. No cancel button just stuff them and come out like "what are they on about" :cheesy:

This issue has been going on for a very long time up to 2yrs I am sure.

Nice one keep up the delay oops good work. ;)
 
Simon,

Do you hedge everything or are you just a marketmaker now and hedge what you think necessary? Cheers.
 
Spunkoid said:
Simon,

Do you hedge everything or are you just a marketmaker now and hedge what you think necessary? Cheers.

Quotes from Simon in the last couple of pages alone on this board......

post 1783..."We have a model that matches all of our positions against all others in every different currency pair. So GBP/USD EUR/USD GBP/EUR USD/JPY etc etc get put into a big pot and the net position in each currency is churned out the other end. This saves us from cross hedging currencies and doubling up on brokerage. If clients have GBP/USD and GBP/JPY bets our risk may very well be USD/JPY and have nothing to do with sterling. I assume that O&A and others do pretty much the same thing."

post 1762... "Our hedging policy has been commented on ad-nauseam and is based upon risk parameters in individual and group markets. Nowadays we tend to find that clients virtually cancel themselves out for most of the time with occasional larger positions when the markets trend in one direction......................If we continually traded in the markets to match every trade made by a client we would be paying huge amounts in brokerage to no great effect as we know that in 2 seconds somebody else would trade the other way round and we would then just have to reverse the hedge.. The dealers would probably have a nervous breakdown and repetitive strain syndrome."
 
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