SBing Prices

[adrianallen99]

I know they pretty much choose the prices, but sometimes it looks as though they move prices to tempt people to go against the trend. Ive noticed they often fluctuate it up and down within the spread when in fact there real indices hasnt moved that way.

Maybe Im imagining it, but for example say the dow has drop 50 points and the general consensus is bullish. The SBing firm prices it at down say 45. the market drops another 3 points yet the spreadbetting prices goes up.

Looking a bit like a reverse people buy and then the SB firm drops the price to what it should be.

Is it just me or do the SB firms put in fake rallies to tempt us to buy?? or are they just trying to second guess the market and move it up before it actually does?

 

[JonnyT]

No they are just trying to take your money like any other bookmaker...

The odds are always favouring the house.

JonnyT

 

[donaldduke]

adrianallen99,

Other posters have mentioned that the SB prices are based
on the Futures prices..

The futures tend to lead the cash market. Hence there may
be moves in the futures markets that reverse quickly and
are never relected in the underlying market.

 

[stevespray]

The thing you need to remember is that its the spreadbet companies market you are trading, not the underlying market.
If you read the small print then you will see that quite often they reserve the right to vary their market away from the underlying.
I have been advised several times by different companies that "You are trading our market sir, not the underlying" when I have attempted to question them on their pricing policy. It would seem that most of them factor in customers positions on their books when making the final prices or prehaps the market reaching a point of known resistance or a round number ie dow 10,000.
Again generally speaking the spreadbet companies want it both ways, they want to retain the ability to swing their markets away from the underlying but they also want to be able to telephone customers to give palpable error calls when customers spot and trade on prices away from the underlying. Again, there is no constant in the area.

Steve.

 

[adrianallen99]

DD: Im aware of that although it is odd when on a daily cash the price is going in the wrong way or moving when there isnt any movement. Strangely it was a mistake from the SBing firm.

 

[adrianallen99]

Steve: It is interesting when you look at the high/low price they are quoting sometimes, especially out of hours. For example, at what point did the FTSE drop to 4466 yesterday or last night? I would be very annoyed if I was stopped out because of a jump in price that didnt actually happen.

 

[juanbyte]

Yes SB firms prices jump +/- about the cash index.

The majority of posts seem to blame the SB company for I assume losses.

I am constantly comparing the cash price to the SB price.

Today I was looking to sell the Dow the market was at 10527 and the SB selling price was 10527, to me this represented good value, I sold at the market.

If you are quick enough you can turn this to your advantage and buy when they jump to the minus side.

Personally I always aim to trade with value e.g. it is no good selling if the selling price is 14 points below the market.

Yes they can make there own prices, their disadvantage is that they have to always give prices.

Our advantage as traders is that we have the choice to trade only when conditions are right.

 

[stevespray]

Juanbyte - I agree with what you are saying and you are correct about some companies swinging their quotes. If you are quick you can grab an element of value either long or short. Thats a system which has infact worked well for me for quite a long time but the spreadbet companies are wise to it. What you will find is that they will start to refuse your orders if they see you start to make regular money from it. As I have already pointed out on the other thread IG Index recently refused to allow me to close such a bet. The fact is that if you think you have a system which is going to make you money then the spreadbet co will spot it and de-rail it, especially if it is a system that relies heavily on split second timing and fast fills.

Steve.

 

[Scripophilist]

IME the indexes match the futures plus their spread. On individual stocks its a joke. For example if you look at IG at the moment they are quoting 2812-2832 on MSFT when the underlying is 2815-2816 so there is little way that they can lose. If would only become profitable if you wanted to trade very small numbers then the cost is lilkely to be lower than your commision but then you would make naff all anyway.