what is direct market?

[squall321]

hi

i use spreadbetting but seen everyone recommending direct market instead, what is it exactly? buying and selling the shares themselves?

 

[police]

No, its direct connection to the market. The people you place your spread bets with will be using direct access to hedge your trade and make a margin. Its what they base their prices on.
With direct access you cut out the middle man.
You would need a clearing company like fortis or man financial to make this happen. Alternatively, if you are not big enough you can go to a specialist prop house.
Check out Direct Market Access ( DMA ) - an example would be trading Bund Futures with DMA via Man Group so you get and make prices directly into Eurex

 

[peto]

You would need a clearing company like fortis or man financial to make this happen.

Strange advice.
Why not simply open an account with a DMA broker (IB, OptionsXpress, Berkeley Futures etc etc)?

 

[trader_dante]

Strange advice.
Why not simply open an account with a DMA broker (IB, OptionsXpress, Berkeley Futures etc etc)?

Because his advice is a way into promoting a prop firm?

Wait for it...

 

[new_trader]

hi

i use spreadbetting but seen everyone recommending direct market instead, what is it exactly? buying and selling the shares themselves?

The simple answer is yes. But you can trade other types of instruments through a DMA broker, usually derivatives like futures contracts on things like Stock market indices, energy and other types of commodities (metals, sugar etc). With DMA you are exchanging a TRUE contract with someone (eg if you are buying then you are buying of another trader who is selling) and if it is a commodity you might be expected to make or take delivery on expiry, whereas index contracts are cash settled. With S/B you are simply placing a bet on the changes in price of a contract and will never take delivery. I doubt S/B's hedge your bet, some bets are too small to hedge and so many traders lose anyway that I think it would't be worth it. You could almost say S/B is a derivative of a derivative!

 

[arabianights]

How are you trading shares? The answer to this needs to be known before deciding which is best.