Zero Spread WorldSpreads

[gamma]

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.

Sorry to hear that.
I run 2 accounts a swing one and a day one.
On my day one, I use, and have been using the same pattern, for several years now, with no problems, albeit as I said earlier on maybe if I change my stake to 50 pounds things might change.
I can't advice you to change SB companies, as I know from your posts you are no novice and probably could teach me a thing or two.

 

[gle101]

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.

Yes I agree with gamma, with higher stakes there is no reason to stay with a market maker. I think the tax issue for SB is a little bit overrated. There could also be years you are in the red, and need that tax deduction.

 

[gle101]

Sorry to hear that.
I run 2 accounts a swing one and a day one.
On my day one, I use, and have been using the same pattern, for several years now, with no problems, albeit as I said earlier on maybe if I change my stake to 50 pounds things might change.
I can't advice you to change SB companies, as I know from your posts you are no novice and probably could teach me a thing or two.

I got quite a few SB I trade live with, and overall happy trading with them.

 

[SanMiguel]

Yes I agree with gamma, with higher stakes there is no reason to stay with a market maker. I think the tax issue for SB is a little bit overrated. There could also be years you are in the red, and need that tax deduction.

If I was in the red for a year, I think I'd be looking for another job.
No-one has done an actual study of
- SBing non tax but spread vs
- DMA but 20% CGT+commissions yet.

There must be a way of working it out.
For swing trading, it probably doesn't matter much, SB is the way for anything except individual stocks.
For the day trader who takes 20pt trades, then I can only see DMA being worth it for the markets that have more than 2pt spreads. (2pts / 20 = 10% commission charge)

 

[Ross Spur]

Losers are obviously the preferred clients, but I suspect that anyone who consistently wins without resorting to scalping will be very welcome as a SB customer.

 

[trader_dante]

Not sure why everyone thinks SB companies want you to lose.

They clean up so much on the spread, I'd imagine it doesn't really matter whether you win or lose.

Go direct market with say IB and sell a 10 lot in Crude (approx £75 per tick) and you pay market spread (1) and about £20 in commissions. So the trade costs you £20.

Do £75 per tick with a spreadbet company and you pay no commissions and 5 ticks above market (6) so the trade costs you 5 X £75 = £375.

So that's £355 over the top on every single trade you take in Crude.

The more unethical companies will try and screw you on the spread further by requoting and slippage.

VDM (now Gekko) is the only company I have had first hand experience of this with. They will shaft you silly.

At any rate, I don't think it's a bad business decision from Worldspreads.

They've cut all the markets to zero spreads that were 1 or 2 pips (with the exception of the Bund which is almost always 3).

So they lose 1 pip X stake per trade but probably get a huge amount of new client money. Undoubtebly most of the people that transfer to them are going to trade other markets at normal spreads too.

Ultimately, if you do a few trades (1 - 5) and make a decent return (e.g. 100 pips per week) its advantageous to SB.

If you are in and out all day long as most people on here seem to be, you are better off paying Tax.

There are a few minor considerations though. E.g. DMA often charge you exchange fees so if, like me, you trade markets as varied as USD/JPY one min and Carbon Emissions the next then you could rack up quite a few additional charges DMA.

Not to mention that the few hand holding elements like guaranteed stops that SB companies offer might save you in the long run if you are the kind of trader that likes to go long Lehmans on 100% margin. You don't get those in the Direct Market

Also, regarding the spread vs tax, remember you pay the spread each time but only pay your tax in a lump sum, meaning the money is in your hands for longer.

 

[Ross Spur]

I'm sure they make plenty of money whatever, but why wouldn't they want you to lose if most stops are at least ten times wider than the spread?

 

[SanMiguel]

Not sure why everyone thinks SB companies want you to lose.

They clean up so much on the spread, I'd imagine it doesn't really matter whether you win or lose.

Go direct market with say IB and sell a 10 lot in Crude (approx £75 per tick) and you pay market spread (1) and about £20 in commissions. So the trade costs you £20.

Do £75 per tick with a spreadbet company and you pay no commissions and 5 ticks above market (6) so the trade costs you 5 X £75 = £375.

So that's £355 over the top on every single trade you take in Crude.

The more unethical companies will try and screw you on the spread further by requoting and slippage.

VDM (now Gekko) is the only company I have had first hand experience of this with. They will shaft you silly.

At any rate, I don't think it's a bad business decision from Worldspreads.

They've cut all the markets to zero spreads that were 1 or 2 pips (with the exception of the Bund which is almost always 3).

So they lose 1 pip X stake per trade but probably get a huge amount of new client money. Undoubtebly most of the people that transfer to them are going to trade other markets at normal spreads too.

Ultimately, if you do a few trades (1 - 5) and make a decent return (e.g. 100 pips per week) its advantageous to SB.

If you are in and out all day long as most people on here seem to be, you are better off paying Tax.

There are a few minor considerations though. E.g. DMA often charge you exchange fees so if, like me, you trade markets as varied as USD/JPY one min and Carbon Emissions the next then you could rack up quite a few additional charges DMA.

Not to mention that the few hand holding elements like guaranteed stops that SB companies offer might save you in the long run if you are the kind of trader that likes to go long Lehmans on 100% margin. You don't get those in the Direct Market

Also, regarding the spread vs tax, remember you pay the spread each time but only pay your tax in a lump sum, meaning the money is in your hands for longer.

But that's crude, a 5pt spread.
When you trade instruments with 1-2pt spreads, the payment in spread although much more than commissions on DMA, is still worthwhile as it you won;t get taxed.
eg a 20pt day trader taking 5 trades a week to get 100pts.
1pt spread /20 = 5% commissions, no tax
2/ 20 = 10% commissions no tax
3pt spread, well now we get into the realm of 15%+ where you should swap over to DMA, get cheaper charges and just pay tax. (CGT 20%)

 

[gle101]

If I was in the red for a year, I think I'd be looking for another job.
No-one has done an actual study of
- SBing non tax but spread vs
- DMA but 20% CGT+commissions yet.

There must be a way of working it out.
For swing trading, it probably doesn't matter much, SB is the way for anything except individual stocks.
For the day trader who takes 20pt trades, then I can only see DMA being worth it for the markets that have more than 2pt spreads. (2pts / 20 = 10% commission charge)

Well, here is where I stop praising SB. After all there is some risk involved with a market maker, no reason to set yourself up for it with a higher stake at the table. At least this is my personal opinion for what it is worth. Also there is some other tax related issues involved when you make only tax free money.

 

[Tired_Of_Conmen]

there is some other tax related issues involved when you make only tax free money.

....what are they?

 

[gle101]

....what are they?

One important example, being able to get a loan, kind of hard if you haven't got a registered taxed income, not to forget to mention credit cards.

 

[Tired_Of_Conmen]

One important example, being able to get a loan, kind of hard if you haven't got a registered taxed income.

I guess the plan is to trade to a point financially that you don't even need a loan again. :cheesy:

Edit: plus of course you simply lie on the loan application like everyone else! I've never had a loan or credit application where they need to see proof of income outside of a mortgage!

 

[gle101]

I guess the plan is to trade to a point financially that you don't even need a loan again. :cheesy:

You got a lot of humor I notice.

 

[Tired_Of_Conmen]

You got a lot of humor I notice.

No I'm serious!

Why are we in this trading lark? For fun?! Not me! I'm planning on trading my way to financial freedom so I never need a loan or a day job again. I'm deadly serious.

 

[Tired_Of_Conmen]

I never understand why people say you can't trade to wealth (or take a slightly cynical view on it), yet continue to trade/contribute on trading forums! It makes no sense! Maybe not everyone will succeed who try, but some will.

Look at it this way: my life, ultimately, means nothing. Nor does yours. In 100 years from now we wont be remembered, we will be cold and dead in the ground. So we need to jump in and just "do it" before we grow old and die. We have the chance NOW.

I don't know how old you are or how long I have left on this planet, but whatever time we have left we can work WITH it to build a nice account - an account that can make an individual (ie: you/me) wealthy, relative to the "average" working man on the street.

I'm not talking about becoming Bill Gates rich, I'm talking about enough cash in the bank to never have to worry about money ever again. Never needing a loan or never needing to go back to the poorly paid rat race etc.

I'm not talking next month, I'm talking by 2020. That gives you/me just under 9.5 years. Do some math around that ... that's around 114 months. We all know about compounding, and it's possible. If you think it isn't, then no offence but it's your own mind that will ensure you never reach that goal, not the market. Your own brain is defeating itself. If you can't do it, that's an issue for you alone (not literally you Gle101 I mean the collective "you" to everyone).

Me, I'm focussed and ready and taking it deadly seriously.

Look at where we are RIGHT NOW in human history: we have internet, retail trading accounts in the world's largest markets, PC based charts at the click of a mouse, accelerated learning via the net, etc etc. it's all for the taking! We have it too good!

I look back to my dad's life when he was my age (I wasn't quite born) and he tells me the stories. You had record players back then and computers were used by the military and scienitific communities, not my dad!!

The man on the street just could not trade. He knew NOTHING of it. The stock market? It meant nothing. FX? Nothing. That was all a mysterious world of rich bankers in the City, not for the tradesman in the street going about his life.

Now we have FX accounts that can be opened for $200 by anyone over 18!! These may not be of much use, but it highlights the point.

We are living in very very very lucky and blessed times if we want to trade. We should be grateful as [wannabe] traders.

So like I said, jump in (as in jump into the belief you can make, for example, £1,000,000 through trading if that's what you truly want).

100 years from now, you wont be trading anything (!!) - yet your grandkids may be trading using machines and power and methods you wouldn't believe!!

So buy that ticket and be in it to win it!!

That's my outlook. I'm going for it! Sod what anyone else thinks/says! I know I can do it over enough time.

TOC

 

[Ross Spur]

I guess you must be a comparative yoof, ToC?

 

[lancenicolase]

A few things to notice about this Zero Spread promo:
1. How difficult it is to open a premium account? What percentage of the customers have premium accounts and what are prerequisites? I bet not many people can have premium account and thus this promotion is limited.
2. With premium account you don't get £300 promo. Thus taking into account that most of the new traders lose it's a great promotion for WS, and only applies to experienced traders.
3. Overall, this promotion may sound good, but not many traders qualify for it, thus effect of the promo will be limited. I'm trying to calculate how competitive WS are even after Zero Spread promotion.

 

[Ross Spur]

A few things to notice about this Zero Spread promo:
1. How difficult it is to open a premium account? What percentage of the customers have premium accounts and what are prerequisites? I bet not many people can have premium account and thus this promotion is limited.
2. With premium account you don't get £300 promo. Thus taking into account that most of the new traders lose it's a great promotion for WS, and only applies to experienced traders.
3. Overall, this promotion may sound good, but not many traders qualify for it, thus effect of the promo will be limited. I'm trying to calculate how competitive WS are even after Zero Spread promotion.

I tend to wonder if WS has any Premium account holders.

 

[gle101]

I agree, this will not work with such a huge deposit. They just try to make some good will for the company introducing this 0 spread offer. It is totally useless for the most of us. Also considering their view on short term traders, not many will stand in line to join. If you are a swing trader it doesn't matter that much anyway.

 

[Ross Spur]

I agree, this will not work with such a huge deposit. They just try to make some good will for the company introducing this 0 spread offer. It is totally useless for the most of us. Also considering their view on short term traders, not many will stand in line to join. If you are a swing trader it doesn't matter that much anyway.

I'd probably give it a go if I had more (any) confidence in their platform, but I think they'd need to reduce the requirement to £500 to get many takers.