Zero Spread WorldSpreads

[gle101]

Ross,

I can tell you, sincerely, that we dont place clients on Dealer Referral without good reason and, for those that we do place on Dealer Referral are still quoted the market price. OK, it may take a couple of seconds longer, but we are only talking about a couple of seconds.

I do need to present the facts in relation to Dealer Referral and the concerns that clients have about prices being called against them. When a Trade pops up in front of our dealers, they are not aware whether a client is opening a new position or closing an existing one. If you are in any doubt about that, you are welcome to visit our offices and I will show you. All our dealer is interested in doing is quoting you a correct, two-sided price. If I thought I was being 'read' by a firm, I would simply sell if they called it up or buy if they called it down. With 1 points spreads, and now 0 point spreads, we simply cannot call the price away from the market price. We would be arbitraging ourselves.

Conor Foley
CEO
WorldSpreads

Haven't you heard of MiFID? Don't you know you aren't allowed to discriminate clients by putting clients with an undesirable trading style on referral to a dealer? Close the account instead, at least by doing that you will not brake any exciting rules. For all I can read from the posts by the CEO, WS have not understood in what way and in what direction the industry is heading.

 

[Conor Foley]

Conor

Thank you for your reply, althoough I think it an unlikely explanation because of:

1. The way I trade.
2. My data feed from Prorealtime and my other account with a major SB company were not affected by the use of a 3G card.

Like it or not, clearly Worldspreads has a reputation for discouraging clients who make money and personally, I think this is the biggest hurdle your company needs to overcome.

I think we all appreciate the increasing trend for company representatives to take an active part in these debates and for that I am grateful.

Regards

Charles

Hi Charles,

Firstly, thank you for the constructive feedback about WorldSpreads having a "reputation for discouraging clients who make money". I wasn't aware that there was this perception in the market-place, so we clearly need to address it. I can tell you that it is a not a company 'policy' and I am very happy to review any instances where it is purported to have occurred.

In your own case, I would be similarly happy to examine where the issue is with regard to your own account. If you would like me to do this, feel free to contact me directly here in the office (0207 398 5220) or on [email protected].

Regards,

Conor Foley
CEO
WorldSpreads

 

[Ross Spur]

Ross,

If you send me a screen shot with the issue you experienced about "different prices in different windows", I will happily look in to it for you.

Conor Foley
CEO
WorldSpreads

It's a long time since I used the platform, but from memory prices updated at different intervals in different windows, which was confusing.

 

[Tired_Of_Conmen]

Like it or not, clearly Worldspreads has a reputation for discouraging clients who make money and personally, I think this is the biggest hurdle your company needs to overcome.

I know it's a typical thing for me to say, but most SB brokers, in my experience and hearing the story of others, have this outlook. For some reason they don't want clients building large accounts... I think they see the $$$ in an account and think "we've only earned a small amount in spreads while this b*stard customer has made loads! Let's take some back he wont mind..." and away they then go with their tricks to claim it for themselves, bit by bit.

It's such a shame. Not ALL brokers (SB) do it... the more modern ones (whether new or revamped) seem intent on not doing this (or at least telling us they wont) by claiming they truly do hedge in the underlying and have no interest in stealing from customers. They seem to indicate they want clients for long term business so they want them to win and keep what they win.

The challenge for us retail traders is to find which ones not only say it, but mean it....

Harder than I thought 🙁

TOC

 

[gle101]

I know it's a typical thing for me to say, but most SB brokers, in my experience and hearing the story of others, have this outlook. For some reason they don't want clients building large accounts... I think they see the $$$ in an account and think "we've only earned a small amount in spreads while this b*stard customer has made loads! Let's take some back he wont mind..." and away they then go with their tricks to claim it for themselves, bit by bit.

It's such a shame. Not ALL brokers (SB) do it... the more modern ones (whether new or revamped) seem intent on not doing this (or at least telling us they wont) by claiming they truly do hedge in the underlying and have no interest in stealing from customers. They seem to indicate they want clients for long term business so they want them to win and keep what they win.

The challenge for us retail traders is to find which ones not only say it, but mean it....

Harder than I thought 🙁

TOC

No I don't think this is the case. Most SB today behave satisfactory, they have to do so in order no to lose clients. What bugs me is their never ending excuses to put certain clients on referral to a dealer. Discrimination of certain clients is not allowed, period. Closing the account is something we can do nothing about, and the SB is entitled do do so if they wish. The first SB that proclaim they will not act in a way it will go against the MiFID will have an advantage and will attract new clients. It is not enough only signing the MiFID agreement, they have to promote it and in action show they act accordingly to its regulations.

 

[SanMiguel]

I know it's a typical thing for me to say, but most SB brokers, in my experience and hearing the story of others, have this outlook. For some reason they don't want clients building large accounts... I think they see the $$$ in an account and think "we've only earned a small amount in spreads while this b*stard customer has made loads! Let's take some back he wont mind..." and away they then go with their tricks to claim it for themselves, bit by bit.

It's such a shame. Not ALL brokers (SB) do it... the more modern ones (whether new or revamped) seem intent on not doing this (or at least telling us they wont) by claiming they truly do hedge in the underlying and have no interest in stealing from customers. They seem to indicate they want clients for long term business so they want them to win and keep what they win.

The challenge for us retail traders is to find which ones not only say it, but mean it....

Harder than I thought 🙁

TOC

Here comes the SB doesn;t want their clients to win argument - how long have you been trading?
If you believe that, swap to a SB broker that matches your bet in the market place.

 

[Ross Spur]

MiFID is largely ignored because it's so open to interpretation, I think.

 

[gamma]

As a retail trader realize your insignificance.
Unless you are trading more a decent amount a point, you are lumped together with all the other traders taking a similar position to you,pitted against the opposite position and then and only then, does the company need to hedge what's left over.
Most traders close both positions long before at a loss.
I have seen this take place first hand at a very well know SB co.

It would be economically nonviable to watch every 2 pound a trade account.
Traders don't need any help from the SB co. to be parted from their money they have spent many hours and tons of money preparing for this job

 

[gle101]

As a retail trader realize your insignificant ce.
Unless you are trading more a decent amount a point, you are lumped together with all the other traders taking a similar position to you,pitted against the opposite position and then and only then, does the company need to hedge what's left over.
Most traders close both positions long before at a loss.
I have seen this take place first hand at a very well know SB co.

It would be economically nonviable to watch every 2 pound a trade account.
Traders don't need any help from the SB co. to be parted from their money they have spent many hours and tons of money preparing for this job

Yes, I agree on the point of monitoring a small stake, but not on the point of being insignificant. The retail traders are very important for the SB and they should therefor not be practicing any kind of manipulation (referral to a dealer being an example of this) of individual accounts.

 

[gamma]

The point I am trying to make is not so much about the small stake but the aggregate sum total.
If you have 25 traders going long on the ftse and 32 going short at an average of 5 pounds a points then the SB.Co. needs to only hedge 7 positions at 5 pounds a points.
Most traders will probably close their positions at a loss.
Why should the SB Co put all these positions in the open market.
its easy money just being given to them.
I have traded with the same company for 10 odd years and make a decent living from it, I have never been put on dealer referral.
Maybe if I upped my stake to 50 pounds a point it might be a different matter.

 

[SanMiguel]

The point I am trying to make is not so much about the small stake but the aggregate sum total.
If you have 25 traders going long on the ftse and 32 going short at an average of 5 pounds a points then the SB.Co. needs to only hedge 7 positions at 5 pounds a points.
Most traders will probably close their positions at a loss.
Why should the SB Co put all these positions in the open market.
its easy money just being given to them.
I have traded with the same company for 10 odd years and make a decent living from it, I have never been put on dealer referral.
Maybe if I upped my stake to 50 pounds a point it might be a different matter. I had assumed many people doing it for a living would be at £500 a point - not saying you can;t make a good living on less of course

Couple of related q's:
1/ If you go with a SB company that matches your bet to another punter then it doesn't matter either way. They hedge the net position, no? ie the SB company takes no profit from anyone unless they are the one matching your bet on the other side.
2/ Don't you compound your account?

 

[gamma]

Couple of related q's:
1/ If you go with a SB company that matches your bet to another punter then it doesn't matter either way. They hedge the net position. no?
2/ Don't you compound your account?

I am sorry I do not understand your question

 

[SanMiguel]

I am sorry I do not understand your question

Well, the bet/trade is matched. If I buy at £10 a point, someone else matches it with a sell at £10 a point, the SB company doesn't do anything apart from facilitate the trade, they don't win anything apart from the spread. They just hedge the net position of all their punters. The only way a SB company could win by you losing your trade is by taking the other side of the trade?

Re: compounding, I just assumed that most making a living were doing £100-500 a point, not saying you can't make a good living on less of course.

 

[gamma]

Couple of related q's:
1/ If you go with a SB company that matches your bet to another punter then it doesn't matter either way. They hedge the net position, no? ie the SB company takes no profit from anyone unless they are the one matching your bet on the other side.
2/ Don't you compound your account?

If you go with a SB company that matches your bet to another punter then it doesn't matter either way. They hedge the net position, no? ie the SB company takes no profit

They are still making a profit as you are buying at a higher price than someone is selling and the opposite for you selling.

As you say earlier the spread.

 

[gamma]

Well, the bet/trade is matched. If I buy at £10 a point, someone else matches it with a sell at £10 a point, the SB company doesn't do anything apart from facilitate the trade, they don't win anything apart from the spread. They just hedge the net position of all their punters. The only way a SB company could win by you losing your trade is by taking the other side of the trade?

Yes but its never a 1to 1 match, and its more than likely that both trades are closed at a loss

Re: compounding, I just assumed that most making a living were doing £100-500 a point, not saying you can't make a good living on less of course.

Phew! 100 to 500
I was in the offices of a SB Co. a while back and although it was a quiet time the sum total of all their bets was 500.

your average trader does not trade more than 10 pounds a point.
Anything more than that and you should be going DM.

 

[gle101]

The point I am trying to make is not so much about the small stake but the aggregate sum total.
If you have 25 traders going long on the ftse and 32 going short at an average of 5 pounds a points then the SB.Co. needs to only hedge 7 positions at 5 pounds a points.
Most traders will probably close their positions at a loss.
Why should the SB Co put all these positions in the open market.
its easy money just being given to them.
I have traded with the same company for 10 odd years and make a decent living from it, I have never been put on dealer referral.
Maybe if I upped my stake to 50 pounds a point it might be a different matter.

Of course they hedge only what is necessary from a viewpoint of an unbalanced book. I don't see what that has got to do with manipulation of certain clients in the first place? Maybe you are a swing trader, anyway referral to a dealer as a mean of restricting the trading success of selected clients is not allowed, and there are quite a few out there who is affected by this practice.

 

[SanMiguel]

Yes but its never a 1to 1 match, and its more than likely that both trades are closed at a loss




Phew! 100 to 500
I was in the offices of a SB Co. a while back and although it was a quiet time the sum total of all their bets was 500.

your average trader does not trade more than 10 pounds a point.
Anything more than that and you should be going DM.

That's interesting. Of course £10 pp and 5000pts a year is 50k so most would be happy 🙂
I know GFT allow a maximum of £500 a point on almost all their instruments.
I have heard talk of compounding an account up but you'd be somewhere at £250pp + very soon and run into liquidity problems I imagine.
At 20points per day and 2% risk, one could be at £100 pp after only 4 months.

 

[gamma]

Of course they hedge only what is necessary from a viewpoint of an unbalanced book. I don't see what that has got to do with manipulation of certain clients in the first place? Maybe you are a swing trader, anyway referral to a dealer as a mean of restricting the trading success of selected clients is not allowed, and there are quite a few out there who is affected by this practice.

Have you been manipulated?

 

[gle101]

Have you been manipulated?

Yes I have been put on referral to a dealer and restricted in some other manner as well. The stake is not the main issue here, but trading pattern is. But, don't get me wrong, SB companies have really improved significantly over the years and today there aren't many areas in which they need to improve their service.

 

[SanMiguel]

Yes but its never a 1to 1 match, and its more than likely that both trades are closed at a loss




Phew! 100 to 500
I was in the offices of a SB Co. a while back and although it was a quiet time the sum total of all their bets was 500.

your average trader does not trade more than 10 pounds a point.
Anything more than that and you should be going DM.

Why would you go DM after that, just because it's cheaper...even with tax? Depends on the instrument of course. 1pt spreads might be acceptable and beat the taxman if SBing but 2-5pt spreads can get tricky depending on whether you are a day/swing trader.

I have heard talk of compounding an account up but you'd be somewhere at £250pp + very soon and run into liquidity problems I imagine.
For example, at 20points per day and 2% risk, means one could be at £100 pp after only 4 months.