Will spreadbetting companies cancel your account if you are too successful?

[devlin0]

I am very new to spreadbetting but so far i have been doing very well and i am considering going fuul time with it.

however i am worried if i continue to make constant profits that finspreads, who i trade with may cancel my account. do they have this right? and has anyone had this happen to them??

 

[RunTheNumbers]

In the last 6 months my account has increased 300%. I do not day trade, and so have none of the complaints often directed at the spreadbet companies. I do not trade with an insubstantial account, although it is not in the £100K level. I use Capital Spreads and I consider their platform and their service to be excellent.

I have not yet had any correspondence with Capital Spreads over my successes. In fact I believe that they barely register my account vs complete indifference. I would certainly be surprised if they suggested my account be closed.

HTH

Ben

 

[options]

Yup, they have the right to do whatever they want to.

It was all clear in the small print when you signed up to trade with the company.

Don't forget. The SB's of today are the bucket shops of the day of Jesse Livermore; When a 10 point run was considered a major move.

I do know of people who have had their account closed...( because it is not in the best interests of the the company to continue in this manner,")

But... It does not happen that often... because people, mainly do not do that well.

The majority of trades are in the low poundage bracket. so are not a problem to the companies.

Do very well though... get your account closed and then you may get offered a job with the sb company themselves.

I have heard of that as well. Though why ... if you were doing that well, would you deem to work for a boss again!

You would simply move on.

But before you get to that stage. They do play 'tricks'.

win too many trades and you will suffer from 'lag'. Meaning they will 'hang' the price and be slow to respond,

This has nothing to do with voilitility whatsoever and can and does happen whatever time of day or night.

The answer?

Use a couple of different companies.

When one tries to play you, switch to the other.

 

[juanbyte]

Good post options, spot on.

They may also stop you from trading over the internet and put you on telephone trading only.

FuturesBetting.com have a different setup and all trades are placed in the market so it doesn't matter how much is won.

The other option is to trade futures with lower spreads.

 

[capitalspreads]

No.... at Capital Spreads we have never closed / put to telphone only / diliberately delayed / changed your status or whatever. Run the Numbers was quite correct in that we really do not do that much checking of client accounts. In the long run we know that some clients will win but more will lose. If we got any kind of name for closing down winning accounts this would be all over these threads.

In the main the only serious checking that client accounts are subject to is money laundering / fraudulent card use etc...

We have thousands of accounts and as i have mentioned before on t2w about 21% are winners of one form or another, this is almost exactly the same as private clients on the futures (direct access) exchanges, (actually 21% is slightly better).

The fact is that if you were of a size that would become noticable then we would be hedging you anyway as your trades would put our models over our risk parameters. Below this level all clients just form part of the whole book (winners and losers all together).

In reality the 'tricks' that SB companies are reputed to get up to are usually the exact opposite. It is the fact that SB companies do not let clients get up to 'tricks' that seems to grate. A client finds a little edge because of an incorrect price or a delayed feed or somesuch...the SB company cottons on to that clients activities and then 'bosh' he can no longer do it. For some reason 'ripping off' a spread betting company is considered to be fair but the SB company not letting the client do it is somehow unfair. I have worked in the industry for many years and have seen every trick in the book. 99.9% of them are attempted by clients not by the SB's (who, after all, do have the FSA and the financial ombudsman looking over their shoulders).



simon

 

[Splitlink]

If they close your account, does it matter? As long as they don't hang on to it! If you are making more money than they like then move over to a broker.

Split

 

[JillyB]

No.... at Capital Spreads we have never closed / put to telphone only / diliberately delayed / changed your status or whatever. Run the Numbers was quite correct in that we really do not do that much checking of client accounts. In the long run we know that some clients will win but more will lose. If we got any kind of name for closing down winning accounts this would be all over these threads.

In the main the only serious checking that client accounts are subject to is money laundering / fraudulent card use etc...

We have thousands of accounts and as i have mentioned before on t2w about 21% are winners of one form or another, this is almost exactly the same as private clients on the futures (direct access) exchanges, (actually 21% is slightly better).

The fact is that if you were of a size that would become noticable then we would be hedging you anyway as your trades would put our models over our risk parameters. Below this level all clients just form part of the whole book (winners and losers all together).

In reality the 'tricks' that SB companies are reputed to get up to are usually the exact opposite. It is the fact that SB companies do not let clients get up to 'tricks' that seems to grate. A client finds a little edge because of an incorrect price or a delayed feed or somesuch...the SB company cottons on to that clients activities and then 'bosh' he can no longer do it. For some reason 'ripping off' a spread betting company is considered to be fair but the SB company not letting the client do it is somehow unfair. I have worked in the industry for many years and have seen every trick in the book. 99.9% of them are attempted by clients not by the SB's (who, after all, do have the FSA and the financial ombudsman looking over their shoulders).



simon

It's very reassuring to know this, if I ever start to get any problems with CMC I'll be straight over to you.

I've often wondered if SB firms hedged their really top clients in the markets - it would make sense to, in my book. You know the ones who make consistently correct trades so, you could follow their trades in the real markets.

 

[dc2000]

Simon
may I ask at what £pp your dealing ticket floor level is ? ie the price at which the dealer has to manually confirm rather than auto

 

[zuke]

Simon
may I ask at what £pp your dealing ticket floor level is ? ie the price at which the dealer has to manually confirm rather than auto

DC, check the "Capital Spreads" thread. Much to the chagrin of many of their clients, CS do not have auto fills even on £1 pp. All must be confirmed by dealers. For this reason, many professional traders will continue to stay away from them.

 

[capitalspreads]

zuke... dc200

zuke is correct that we do not currently auto accept trades....this is about to change....but in reality unless you are attempting a trade over a US number it makes little difference anyway.

we will not actually divilge our minimum auto accept level...no doubt somebody on this discussion site will inform dealers soon enough anyway. We will probably start small on day one to test it out and then raise it as we gain confidence in our system. (not everything is the clients needing confidence...we do as well !!).

Professional traders using entry and exit strategies use our platforms extensively. As (presumably) they do with other SB companies. We tend not to be the favorites of the 'scalpers' or 'in out' clients because of the dealer acceptance currently in place. But you never know ..things change!

this is not actualy the CS thread so I will sign off here. I just wanted to answer the original question.

Simon

 

[theEdge]

IG Index used to give me really poor option prices. The price on the screen would be 1-4. But when I clicked to trade it would automatically re-quote me something like 7-9. I closed my account as a result of these silly games.

 

[Pippppin]

silly games? from a spreadbetting company?

 

[halier]

"Will spreadbetting companies cancel your account if you are too successful ? "

YES - Finspreads !!!

http://www.trade2win.com/boards/showthread.php?t=18259&highlight=finspreads

 

[CFDplayer]

:-0, what's the reason or under which FSA rules the SB close your account?

 

[SuddenDeath]

Wouldn’t the SB companies just shadow your trades, when you buy they buy and when you sell they sell,

Why don’t we start a cooperative Spread bet company, run for the benefit of traders,

Trade2Win Spreadbetting Ltd

Direct access, and just pay a monthly standing charge, it will be so popular.

 

[CFDplayer]

Wouldn’t the SB companies just shadow your trades, when you buy they buy and when you sell they sell,

Why don’t we start a cooperative Spread bet company, run for the benefit of traders,

Trade2Win Spreadbetting Ltd

Direct access, and just pay a monthly standing charge, it will be so popular.

Sounds interesting,

I knew some HNWs who wanna invest in this industry, but can you explain your business model first,i.e. principle or agent? or White label ? MM or DMA?

 

[Hoggums]

This has been gone over and over. I am a successful trader with Sbs - never had a problem with them and never had a trade refused. The occasional requote but nothing sinister - just bad timing on my part.

The only people I've ever heard from or met that have had accounts closed/limited are the ones that have been making money from SBs with pricing discrepancies - opening a trade for a few seconds to make a quick killing because their system is a couple of seconds slow.

Of course an SB is going to try to prevent you doing that - it's pure loss to them and no way to hedge against it.

 

[hot_property]

Spread betting companies play a deep game, you can only really know what is true and false is you have worked for them.

Discussions are discussions.

Only wish to write one example, don't have time to write massive articles at the moment. I am not here for an argument, but this is one tactic and I have many more.....

Let me give you an example for scalping the client.

Your trading DOW, you're in a BUY position, the DOW moves in your favour and hits your limit. Your trade is exactly settled at the price you requested, although DOW climbs higher after your exit as well.

However, let's take this scenario, you BUY DOW but it falls against you, when your non guaranteed stop is hit the price you get out at has slippage attached to it (always, even when the price was traded). Most spreadbetting companies do this, therefore the spread on say the DOW is really 4/6points spread plus slippage 3 = 8/10 points + loss. The guaranteed stop already has the slippage programmed into it as the companies are aware that during market hours the price does not gap hugely

One of the chaps for Capital spreads said 21% of people win, so the identified looser accounts are not hedged they want them to loose money quickly and fast! They even asign managers to loosing accounts or people who trade big to smash them.

This is a fact, the game is deep..The algorithms they use are ingenious pieces of work that are created by high level of math mathematicians...

The main markets manipulated and the SB companies manipulate the price, therefore your system must bypass 2 price variations, I have an image in my head, its a spiders web overlayed with another spiders web which is offset. Your finger needs to go through them without touching the sides to be successful.

 

[SuddenDeath]

Hoggums, you are a high roller they need you more than you need them, they would probably lend you the company jet if you wanted it.

CFDplayer, I dont have any plans about SB company just thinking out aloud.


SD

 

[£10kLoser]

I notice a lot of long extablished members here take every opportunity to knock spread betting! It's almost never on personal experience, either. Just urban myths and heresay from years ago.

At one time I was making around £10k a month from spread betting and never had the slightest problem that wasn't there when I was tading £1 a point and losing money. These companies have a maasive turnover and it's fantasy to think that they are bothered about 'losing' a few tens of thousands when they hedge any imbalances anyway.

Now, if you 'Legendary' and 'Veteran' Members actually had any facts, I'd like to hear them - personal experience in the last year or so. All I hear is rumours and moaning from small timers who've lost all their money and try to blame it on someone else.

Even if there are drawbacks to spread betting, whatever they are must be better than paying 40% tax, which is what I would have to do if I used an ordinary broker. Maybe tax is not so much of an issue if you're not making much money...