Couple newbee questions...

[AUM: £233.54]

Hello. I want to start spread betting, but before I do, I have couple of questions.

Who determines the price I see on my spread betting screen? Is it synchronised with the exchange? I think not, but just want to confirm it.

As I understand correctly, SB companies are all dealers. This allows them to set the prices they want based on their own inventory. In this case their price of say FTSE 100 need not be the same to the price of real FTSE 100 (inasmuch the index is traded).

So if their prices do not closely follow the true underlying securities, how much do they deviate? In other words, how frequently will I see a 100 pound stock being sold for 99 pound at SB firm?

One way to test it would be to buy a real market data feed which I am not going to do.

If you start winning, you are an unprofitable client. How prevalent are the stories of winners' account being closed?

Any answers?

 

[montmorencyt2w]

Rather than try to answer this directly, I will point you here:

http://www.financial-spread-betting.com/

Have a good look round, and it will give you a pretty good flavour of what is on offer, and some SB reviews. Also interviews with reps from some of the SB firms.

 

[AUM: £233.54]

Rather than try to answer this directly, I will point you here:

http://www.financial-spread-betting.com/

Have a good look round, and it will give you a pretty good flavour of what is on offer, and some SB reviews. Also interviews with reps from some of the SB firms.

I have been to this site. Nowhere does it answer my questions. But even if it does, it is one unorganised mess and I am not going to spend 3 hours looking for an answer. So I was hoping on the good nature of people in here

 

[montmorencyt2w]

I have been to this site. Nowhere does it answer my questions. But even if it does, it is one unorganised mess and I am not going to spend 3 hours looking for an answer. So I was hoping on the good nature of people in here

I thought I was being good-natured by pointing you at that site, but clearly I was casting pearls. If you don't have the patience to spend 3 hours on research, you won't get very far. I've been looking for answers for more than 3 years and I'm still looking.

"one unorganised mess" might be a good description of the spread-betting world, and maybe the trading world as a whole as well. It may even describe T2W.

You will find the answer to all of your questions somewhere or other in this forum already, but it will take you longer than 3 hours to find them. You might try the "search" facility, and sometimes just browsing comes up with interesting stuff.

 

[0007]

I have been to this site. Nowhere does it answer my questions. But even if it does, it is one unorganised mess and I am not going to spend 3 hours looking for an answer. So I was hoping on the good nature of people in here

hmmm! Just the sort of enquiring mind and flexible, resilient approach needed for successful trading.

 

[AUM: £233.54]

Well, it is obvious you both know the answer, but are righteous pricks by trying to make me something clear that I know. The idea of a message forum is to save time for answers to your questions. Everything is on the Internet. Yes, let's close all the forums. Those god damn lazy people...

Let's recap, you give me a link to a website saying "will give you a pretty good flavour what is on offer". Oh really? A good flavour? Did I ask for that? I am pretty sure I spent enough time on that site and I asked a specific question. What keeps SB prices tied to real prices. I don't give a **** what flavours there are. Obviously you tried to stroke your ego by giving me a template answer you have saved somewhere as you saw the word newbee in the title.


Mr. 0007. Well **** yeah I have a enquiring mind. I don't think many newbees ask that kind of question. My other thread, of where to get the actual data on SB prices was unaswered. Shows that people here actually don't care about sound analysis of the prices they get form the SB firm. Yeah buddy, that MACD indicator will make you rich go for it...

Let's start anew. I sound like a bitter lazy moron. Maybe I am, but my question is pretty legitimate and Google and the pointed website did not provide me enough information. What keeps the SB prices tied to the real prices? Law of one price? I don't think so as the bet you make has in fact no legitimate underlying. Sure on a bigger scale prices might move roughly together, but what about intradaily? Although I know intradaily spread betting is pretty LOL.

 

[AUM: £233.54]

I am going to look on that website again. If I find an answer there within 3 hours, I will come here and apologise.

 

[0007]

If you Google "spread bet prices derived from" you get http://www.trade2win.com/boards/spread-betting/14415-real-prices-vs-spread-bet-prices.html as the 4th choice.

That will get you started.

 

[Shakone]

"Who determines the price I see on my spread betting screen?" The spreadbet company.

"Is it synchronised with the exchange?" Not perfectly, no, but the spreadbet will take the market price and it's own pricing will be based on that.

"In this case their price of say FTSE 100 need not be the same to the price of real FTSE 100". Correct.

"So if their prices do not closely follow the true underlying securities, how much do they deviate?" They usually follow very closely. In my experience it is rarely more than a pip difference on major currencies. Around news times things get a bit different and somtimes the difference is much larger. You should be aware though, that if at a particular time they are offering something far different from the real market, a trader could arbitrage, and so they don't want the price to get too far away for very long.

"One way to test it would be to buy a real market data feed which I am not going to do." Another way to test it would be to register for a demo account with a broker and see for yourself and cost yourself nothing.

"If you start winning, you are an unprofitable client. How prevalent are the stories of winners' account being closed?" I don't know how prevalent it is, it hasn't happened to me. I've been put on dealer referral, in two spreadbet firms, and so I moved on, but my account wasn't closed. If you win, you are not 'necessarily' an unproftable client, it depends on how the spreadbet firm operate. Considering many spreadbet firms are offering spreads far wider than the real market, then all they need to do is hedge your trade, and they're making money from you regardless of how you do. Whether they do that is another issue...

 

[hacks]

One way to test it would be to buy a real market data feed which I am not going to do.

You don't need to buy real market data. You can get free CSV historical intraday data (e.g. 2,000 x 1 minute bars) from Dukascopy.

You can download spreadbetting market data through Metatrader if you have a demo account (as Shakone correctly pointed out) with either Smart Live Markets or FXCM to compare with the real market data supplied by Dukascopy.

 

[andycon]

The spread betting companies set their prices and it is up to them, they are trying to mirror the exchange prices but if they make a mistake you have no comeback. Accuracy during market hours is very reliable. If you are trading indices be careful outside of market hours as there pricing is sometimes all over the place and you can arbitrage between companies as they will fall in to line when the markets open.

 

[AUM: £233.54]

First of all, thanks for clarifying this stuff and for the useful links. what I got from it is that the mechanism that keeps the spread betting firms' prices tied to real prices is fear to lose clients if a firm's prices deviate too much from real price.

Second of all, I apologise to montmorencyt2w and 0007 for insulting them. That was uncalled for no matter what. And I did find a description like montmeorency said. Here: http://www.financial-spread-betting.com/Spreads.html. I overlooked it first time, but found it second time within 10 minutes. Although that website is way too all over the place and way too outdated...

 

[wins23]

i agree with shakone - i found the best way to test out each provider is to open a demo. but beware some only give you a limited amount of time, so try and get one with no expiry !

 

[0007]

First of all, thanks for clarifying this stuff and for the useful links. what I got from it is that the mechanism that keeps the spread betting firms' prices tied to real prices is fear to lose clients if a firm's prices deviate too much from real price.

Second of all, I apologise to montmorencyt2w and 0007 for insulting them. That was uncalled for no matter what. And I did find a description like montmeorency said. Here: http://www.financial-spread-betting.com/Spreads.html. I overlooked it first time, but found it second time within 10 minutes. Although that website is way too all over the place and way too outdated...

Hey AUM: £233.54 - thanks for that & maybe I was too hasty in my assumptions. It takes a big man to act as you have done; welcome aboard!

 

[AUM: £233.54]

Thanks. No problem. Peace!