Spreadbetting Companies Want YOU to Lose? Any Thoughts - You Tube Video Link

[parthaab]

Its neutral to the SB company if I win since for every 1 winner there are 9 losers. Plus they can hedge any really aggressive positions by participating in the market themselves.

How could that be, when they are actually taking your opposite position, betting you will be in the 90% of traders who lose?

However, assuming they make money by charging me a spread on my every trade, if my account is wiped out and I make zero trades next year, they will make zero spread. So how is that good business?.

If you were a chicken, how would killing you for meat at one go be 'good business'. Its the same thing here. If you win, they lose.

On top of which, every trader whose account is wiped out with SB company ABC may well open an account with SB company XYZ, so ABC have suffered a double loss - loss of revenue stream and loss of market share.

So what, as long as they dont lose. Do you expect them to lose, ( and keep losing ) in order to retain their customer? That too, a 'bad' one?

If SB company wanted to simply take my money they could set up a binaries operation registered in some tiny island jurisdiction, accept the deposits and then simply jet off to Brazil.

The fact that they are not, only shows that they have better profits in this ( broker ) business. Just to show the extent of profit they enjoy.

 

[parthaab]

Theres things called 'liquidity providers', the only time youll be a problem for your broker is if your efforts damage their relationship.

What does this mean?

 

[wisefoolx]

I know SB firms move spreads about every day, I see it every day. But if any new trader is trying to trade on such a tight margin for error that it could be negated by opening spreads, he's a fool who deserves to be parted from his money.

I disagree.

It's child's play to manipulate spreads not matter how big your stops losses are.

The quote for FTSE now is 5560 / 70 (assuming a 10 point SB spread) and I buy @ 5570 and my stop is at 5520, 30 minutes later the last traded is 5528, the SB spread " should " be 5523 / 33.

But the SB decides (and they can because that is their right) that the quote is 5520/ 30 because of " volatility ". Voila your stop has been hit and you're out the market.

Miraculously 10 minutes later the market has shot up to 5620, you lost and guess who hijacked your trade for a 50 pt profit ?

 

[EnlightenedJoe]

you lost and guess who hijacked your trade for a 50 pt profit ?

The asset holder who the bucketshop got the asset from. If the bucketshop is the holder, then the profit goes to them. You can't blindly say the bucketshop is the asset holder. Sometimes they are and sometimes they are not.

 

[tomorton]

I disagree.

It's child's play to manipulate spreads not matter how big your stops losses are.

The quote for FTSE now is 5560 / 70 (assuming a 10 point SB spread) and I buy @ 5570 and my stop is at 5520, 30 minutes later the last traded is 5528, the SB spread " should " be 5523 / 33.

But the SB decides (and they can because that is their right) that the quote is 5520/ 30 because of " volatility ". Voila your stop has been hit and you're out the market.

Miraculously 10 minutes later the market has shot up to 5620, you lost and guess who hijacked your trade for a 50 pt profit ?

Its always possible the price of an asset you want to hold can drop. The reason or mechanism isn't as important as your analysis - if you reckon this is a temporary market blip, buy more. If you think its a more significant bearish move or you just don't know what's likely to happen, then that's what stop-losses are for.

 

[tomorton]

How could that be, when they are actually taking your opposite position, betting you will be in the 90% of traders who lose?



If you were a chicken, how would killing you for meat at one go be 'good business'. Its the same thing here. If you win, they lose.



So what, as long as they dont lose. Do you expect them to lose, ( and keep losing ) in order to retain their customer? That too, a 'bad' one?



The fact that they are not, only shows that they have better profits in this ( broker ) business. Just to show the extent of profit they enjoy.

As I said, its neutral to the SB company whether I win because there are 9 traders who are not me who are losing.

Also, if I suspect the SB company is trading against me or hunting my stops or whatever else, I don't need to wait to get wiped out, I can just withdraw my capital and walk. And that's the end of the SB company.

In any case, what you're suggesting is contrary to FCA regulations in the UK; this could never be kept secret from either customers, potential customers or the FCA. Its a risk the UK-based SB companies dare not face so it is a risk I can ignore.

Where is your trading company registered?

 

[Splitlink]

As I said, its neutral to the SB company whether I win because there are 9 traders who are not me who are losing.

Also, if I suspect the SB company is trading against me or hunting my stops or whatever else, I don't need to wait to get wiped out, I can just withdraw my capital and walk. And that's the end of the SB company.

In any case, what you're suggesting is contrary to FCA regulations in the UK; this could never be kept secret from either customers, potential customers or the FCA. Its a risk the UK-based SB companies dare not face so it is a risk I can ignore.

Where is your trading company registered?

Your post eases my mind a bit. It seems, this month, as if I am one of the nine you mentioned. I'm, still, in business, though. You haven't seen the last of me yet!

 

[parthaab]

As I said, its neutral to the SB company whether I win because there are 9 traders who are not me who are losing.

To repeat, 9 / 10 traders will lose, whether the SB works against them or not. And that is not the point of the post.

Also, if I suspect the SB company is trading against me or hunting my stops or whatever else, I don't need to wait to get wiped out, I can just withdraw my capital and walk. And that's the end of the SB company.

Not at all. There are always people who are being fooled by others into trading, being convinced that they have a good chance at winning. There are educators and professionals employed by the brokers all the time, to lure more people to part with their money. The business is worth BILLIONS, and not millions! You expect them to pay such 'educators' and 'guides' as a part of their 'expenses'.

In any case, what you're suggesting is contrary to FCA regulations in the UK; this could never be kept secret from either customers, potential customers or the FCA. Its a risk the UK-based SB companies dare not face so it is a risk I can ignore.

Where is your trading company registered?

No one is claiming that there is anything illegal in what they do. They only weed out the winners, slowly, so that they do not accumulate and drain off their profits. This can take many forms, including delayed executions ( time taken to hedge their trades ). Without which, they may slowly go out of business, to the successful traders.

Gambling, for example, is not illegal, and yet people trust the house with their money all the time. And you never see the house go out of business. Why?

This is the reason you dont find any successful day and scalp traders remaining.

By the way, this applies only to scalp and day traders, and not traders with longer time frame, who are obviously hedged.

 

[darktone]

What does this mean?

It means you should do some research.

 

[parthaab]

It means you should do some research.

You wrote: "Theres things called 'liquidity providers', the only time youll be a problem for your broker is if your efforts damage their relationship."

What does this mean? What is there to research on?

 

[tomorton]

To repeat, 9 / 10 traders will lose, whether the SB works against them or not. And that is not the point of the post.



Not at all. There are always people who are being fooled by others into trading, being convinced that they have a good chance at winning. There are educators and professionals employed by the brokers all the time, to lure more people to part with their money. The business is worth BILLIONS, and not millions! You expect them to pay such 'educators' and 'guides' as a part of their 'expenses'.



No one is claiming that there is anything illegal in what they do. They only weed out the winners, slowly, so that they do not accumulate and drain off their profits. This can take many forms, including delayed executions ( time taken to hedge their trades ). Without which, they may slowly go out of business, to the successful traders.

Gambling, for example, is not illegal, and yet people trust the house with their money all the time. And you never see the house go out of business. Why?

This is the reason you dont find any successful day and scalp traders remaining.

By the way, this applies only to scalp and day traders, and not traders with longer time frame, who are obviously hedged.

I'm not convinced scalpers and day-traders get specifically cheated. I find its easier to believe that 90% of new scalpers and day-traders are so inexperienced and unprepared for trading that nobody needs to cheat them out of their money, they're going to lose it anyway.

 

[parthaab]

I'm not convinced scalpers and day-traders get specifically cheated. I find its easier to believe that 90% of new scalpers and day-traders are so inexperienced and unprepared for trading that nobody needs to cheat them out of their money, they're going to lose it anyway.

Scalpers and brokers have a bit of a love hate relationship. The vast majority of client's that scalp will ultimately lose money over the life time of their account which is why brokers put up with them.

If an ATM gave free money away it wouldn't be operational for much longer than it took the bank to realise what was happening. Scalpers treat SB/CFD firms like a broken ATM and that isn't ever going to be sustainable.

Brokers are businesses and if they haven't got a fair chance to make money from a customer what is the point of having him as a customer.

 

[tomorton]

Brokers are businesses and if they haven't got a fair chance to make money from a customer what is the point of having him as a customer.

Its great for a broker to have losing clients on their books - they keep trading, trying to gain back their losses. But its great to have a winning client on their books also - they also keep trading, generating more profits through spreads or commission, and its a client who won't feel the need to go to another brokerage.

A broker with no clients (maybe because they wiped them all out, who knows, you may be right) isn't going to make any more money.

 

[wisefoolx]

Please understand one thing here folks: the issue is NOT about market manipulation.

The issue is of brokers having a vested INTEREST in YOU losing, and the strategy they employ to exploit you. Their gain must mean your loss.

This is the way it works: Heads I win, tails you lose

market manipulation / vested INTEREST in YOU losing. Same difference

 

[wisefoolx]

Its neutral to the SB company if I win since for every 1 winner there are 9 losers. Plus they can hedge any really aggressive positions by participating in the market themselves.

Disagree, it is neutral if you make pennies but not serious money like 700-100 pounds on a 20 pound stake every time you win, in the LR they will not tolerate you.

They are Bookies and exist to win at your expense, that's what they do, you will have to accept this.

They don't really hedge, not worth it with the amount of losers they have, I know cause I worked for one (SB firm).

However, assuming they make money by charging me a spread on my every trade, if my account is wiped out and I make zero trades next year, they will make zero spread. So how is that good business? On top of which, every trader whose account is wiped out with SB company ABC may well open an account with SB company XYZ, so ABC have suffered a double loss - loss of revenue stream and loss of market share.

LOL, this is just propaganda to rope in more suckers, as if any SB firm cares about any one mickey mouse trader.

If SB company wanted to simply take my money they could set up a binaries operation registered in some tiny island jurisdiction, accept the deposits and then simply jet off to Brazil.

They do do binaries.

 

[wisefoolx]

The asset holder who the bucketshop got the asset from. If the bucketshop is the holder, then the profit goes to them. You can't blindly say the bucketshop is the asset holder. Sometimes they are and sometimes they are not.

There are no assets at play, all SB products are just positions taken on quotes SBs give, which are simply made up by SBs. That is why they are called market makers.

 

[wisefoolx]

Its always possible the price of an asset you want to hold can drop. The reason or mechanism isn't as important as your analysis - if you reckon this is a temporary market blip, buy more. If you think its a more significant bearish move or you just don't know what's likely to happen, then that's what stop-losses are for.

And in my example (let's keep it on point) - this is what they call stop hunting, triggering your stops to hijack your position, result = SB wins you lose. Simple as that.

You can do anything you want after that,but fact is you have lost a winning trade when the actual price NEVER touched your SL, only that the SB's quote shifted enough just to trigger it.

Accepted practice, you'll have to accept this.

What asset are you referring to ?

 

[tomorton]

The issue of what or who is causing a trader's losses is important as it relates to what they do about it. If they try to avoid stop-hunting by not using a stop-loss, I guess we won't be seeing much more of them on here.

On the other hand, if they recognise that the bulk of their losses are down to pip-based stops rather than TA-based, stops in the wrong place, ridiculously tight stops, trying to scalp a profit every trading day, cutting their winners and running their losers ans the other 100 ways a trader can sabotage their own performance - then maybe they can develop into a profitable trader. But if they continue to act as if they are victim of a cheating mega-industry, they will fail to adapt properly and slowly drown.

 

[wisefoolx]

The issue of what or who is causing a trader's losses is important as it relates to what they do about it. If they try to avoid stop-hunting by not using a stop-loss, I guess we won't be seeing much more of them on here.

To use SLs or not is the trader's right, you can't force clients not to use them.

Of course the SB firms would love clients not to use Stops so that client losses would be even greater and more easy money for them.

Why not stop trading with SBs altogether, that would be the best thing " to do about it ". I have.

On the other hand, if they recognise that the bulk of their losses are down to pip-based stops rather than TA-based, stops in the wrong place, ridiculously tight stops, trying to scalp a profit every trading day, cutting their winners and running their losers ans the other 100 ways a trader can sabotage their own performance - then maybe they can develop into a profitable trader. But if they continue to act as if they are victim of a cheating mega-industry, they will fail to adapt properly and slowly drown.

Again it is not for anyone to direct how SLs are placed, it's an individual choice but certainly clients should know about the SBs practice of stop hunting.

Why are against that ? Sounds like you may have suffered great losses at the hands of the SBs

 

[parthaab]

But if they continue to act as if they are victim of a cheating mega-industry, they will fail to adapt properly and slowly drown.

Wisefool has answered most of your queries, so I will take this one.

The reason why people continue to trade with SBs is because they do not know that playing against a market maker is essentially the same as going into a casino. There is always a new sucker coming along.

Secondly, there is no incentive to warn new comers that the dice is heavily loaded against their winning for any meaningful duration.

On the contrary, SBs do employ affiliates to seduce new traders to part with their money

There is very little by way of information, that SBs do use ( as Wisefool says ), nefarious means such as stop hunting, to ensure that the trader loses one way or the other.