Deal4free / CMC

[TheBramble]

But JT - we (punters & SBs) are not both in the market to make money (together). SBs are not brokers - they do not 'profit when you profit' (despite their blurb). They rarely hedge your position with them - they will often than take a contrary position if they feel you are on the wrong side of the market. Nothing wrong with that.

But don't make the mistake of thinking it is or should be a level playing field with SBs.

They are bookies. If it was a level playing field they couldn't exist.

Use SBs for what they should be used for.

 

[raf110]

They use the law of large numbers and therefore do not hedge most positions.

 

[JTrader]

If all clients trades were automatically hedged and the sb company made their money through the spread sb companies would profit when the client traded (regardless of whether the clients trade made the client a profit).

 

[scpope]

JT,

I don't think anyone is disagreeing with your proposition, it's just not the way SB comapanies operate and therefore they should only be used in the correct way, ie holding positions for medium/long term, not day trading. It's unfortunate that a lot of people seem drawn into trading via SB's (easy to set-up, no tax to worry about) and lose money due to making basic trading mistakes.

Stephen

 

[raf110]

SB companies cannot hedge all trades as this does not yield enough profits. Firstly there is a cost involved in hedging all trades. The SB companies would have to widen there spreads to make any money and this in turn would put punters off.

The name spread BET (also the FSA classifies these firms as a bookmaker), should give something away. They have to hold positions as this is the only way they can make a decent profit.

 

[stevespray]

Also JT, CMC offer to let you trade stocks at market prices. If they hedged then how would they make any money. All they would be doing is offering you a free brokerage service which allowed tax free winnings. The only way they can make money is if they take the position on and bet directly against you, atleast initially. As this is the case there is a conflict of interests when it comes to closing it, especially if it has gone straight into profit and they havent had a chance to lay it off - in this situation they lose and you win. Obviously if you do this on a regular basis they you are detected as a scalper and trading starts to slow down. Initially CMC said they were happy with all timeframe traders but they have, over the last year or so, informed the very short term traders to seek a service 'closer to the market'. This is again a problem for them, how do they encourage the scalpers not to trade with them, all they can do is hinder them in certain ways. Obviously the best way is to remove 'instant execution' and hence send them to 're-quote hell'.

Steve.

 

[ctrimble]

cmc don't answer my emails

I have a query about my my account balance which is less than I think it should be!!. I have 3 times sent my question to CMC via Dealer/helpdesk chat, but got no reply. I have also emailed them twice about it, again no reply. Is this usual?

I've only just started to trade with them, and so am only trading £1 per point till I get some experience. At the start of trading on 27th February, my account balance was £246. I then sold the FTSE100, held the postion for a week and then closed it with a 31 point loss. I would have expected my balance to be £215, but they show it as £210. They have previously told me that they pay me approximately 15p for every day I hold the postion, because I went short, so the balance should surely be more than expected not less?? Could some FTSE100 companies going ex-dividend have caused my balance to go down this much? I know the sum involved is minimal,but if I was trading £100 per point for example this would be a big loss.

Can anyone let me know if these figures are likely to be OK, or should I pester them till I get a reply?

Thanks,
CT.

 

[raf110]

its most probably down to the dividends, give there back office a call they are very helpful

 

[gmca686]

ctrimble,
You get an e mail statement from them every morning. Look at the one that arrived on a Wednesday morning, ie it covers the close of the market on Tuesday when FTSE 100 stocks go ex dividend.
On your statement there is a section titled "opening price adjustment for next business day" Look at "Corp Action adjustment" if it is 5, the question is answered.
If you haven't got a statement, get their back office to give you the figure. If your holding period does not cover a Tues night/Wed morning, then you have a valid query.
regards, G McA

 

[chump]

It was an indices trade.There are no dividends to consider. Was the loss inclusive or exclusive of the spread?

 

[raf110]

when dividends are paid out from the companies that constitute the inde the index has to be recalculated. This is what we mean by dividend payout.

 

[JTrader]

I think that my long term future lies in Direct Access CFD's. However, I do hope the likes of GNI touch and etrade lower their commissions, because covering commissions and still making a profit on a trade becomes that bit more difficult.

 

[gmca686]

Sorry Chump, but you are wrong.
At 2200 hrs on every day that a FTSE 100 stock goes ex dividend the FTSE value is recalculated by D4F. If you are short, you lose the dividend effect. which means your opening sell price is reduced by their calculation of the equivalent weighted dividend value. The same applies to the DOW.
For the FTSE, the dividend effect normally happens at 2200 on a Tuesday evening. Have a look at last Tuesday. From memory the FTSE did a step change from 4535 to 4525, ie an effect of 10 points.
regards, G McA

 

[gmca686]

Further to the reply above.
At 2200 hrs last night the D4F FTSE price did a step change from 4424 to 4410. My statement this morning shows a 14.17 point Corporate Action and my short "sell" prices have been reduced by that amount. Anyone long would have gained 14.17 points.
I must stop holding FTSE shorts over a Tuesday night because the FTSE never opens the dividend amount down.
regards, G McA

 

[stevespray]

CMC's "UK100" Index is a cash index and not a futures based index therefore it is subject to dividend payments and adjustments as people have stated. As G McA has also noted, I find it totally unrewarding to be short FTSE over that time as the gap caused by the xd payemnt almost always fills very quickly next morning leaving you with absolutly no value whatsoever.

Steve.

 

[jonray]

if you close your short position just before 22:00 how long would you have to wait before you can re-open the short position and not have the dividend effect?

 

[stevespray]

Just a few moments but why re-open at that point. Far better to wait till next morning when ftse closes its gap and touches the point where cash closed pre xd.

Steve.

 

[jonray]

Point taken steve but does the gap always close?

 

[assers]

Re: Deal4Free - delays

I had a problem last thursday when I ended up with three open bets that I thought I had closed. It turns out that D4F had executed stop orders on these bets but this was not reflected in my open positions blotter nor in the pending trades blotter where I was allowed to cancel stop orders that had been executed more than an HOUR earlier. Anyone else suffered this?

Had the same problem last Thursday, suddenly found an open position that had closed 2 weeks previous, it remained on my account for 2-3 hours generating a profit, I'm currently waiting for a response from CMC as I put a stop in to protect the profits, but the mysterious position then disappeared leaving me with a loss. Perhaps serves me right for being greedy!

 

[emasiello]

Stop loss lesson learnt

I'm new to all this, but am picking it up very fast, I learnt a very valuable lesson yesterday and wish to share it.

Have been trading dow/ftse for last 6 months quite successfully. Anyway had a good day yesterday (thurs) on the ftse (+30pts) and had to go to a seminar in the afternoon. Following some research decided to put on two pending trades

Stop sell @ 10307 (finally decided on 10298)
Limit buy @ 10380

Silly boy, never again. When I left the office it was at 10317 (approx), hence the reduction on the safer, lower stop sell. By the time I got back the stop sell had been executed (spiked!) and the buy had been executed and it was on its way down. Fantastic, a double whammy. Yes I have heard the rumour that SB Co's spike the spread to activate stops, but did not listen. Anyway, whilst this was going on I was at the CMC/deal4free offices on a TA induction, what a coincidence

Is there a easier way to setup pending trades or was I just unlucky? Next time I will not attempt to trade unless I have full access to the software, its not worth it, stops in place or not.

Apologies if I have not made myself clear, a 1to1 with Mr Rich is my next stop (oops!). Oh by the way I have just sub'ed to Esignal Basic and it seems pretty good so far.