Boydell: What is the average trade size among your clients? What kind of people are your customers - ie do they tend to have City experience?
Moczulski: There is no average as such. Our minimum trade on www.binarybet.com is £1 a point but there is no upper limit. However I would suggest that those wishing to start trading should be considering playing with at least £100 of money they could afford to lose.
Binaries bets are a remarkably easy product to understand - in fact I believe they are the easiest financial product to get involved in - however the sophistication of the pricing leads option traders to take an
interest, so there is no typical client.
Farrant: Average deal size is $250,000 in FX but deal size in futures is dictated by the minimum contract. We have varied client profiles and the costs associated are determined by the size and frequency of trading. Customer profiles vary from individuals to very large institutional clients.
Scott: It depends on the customer. Investors new to CFDs might start off as low as £5K, whereas corporate accounts might trade hundreds of thousands of pounds worth of exposure.
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Morrison: Obviously there must be an average bet size, but I've no idea what it is. Some clients place a minimum bet once every few months or so, others take extremely large positions every day. We come across all kinds of traders - some are day traders, some run positions for much longer. All I can say is that all types of trader are welcome - it's good for us to have such a broad cross-section of clients.
Boydell: What types of underlying investments, markets and events can I trade or bet on?
Moczulski: We quote binaries on indices, commodities, currencies and equities, political events, sporting events and even other entertainment events. I gather trading on The X Factor winner was very popular!
Scott: At E*TRADE, we offer CFDs on UK, European, US, Asian and Australian markets including indices. The coverage is included in both types of CFD service that we offer - direct access CFDs and quote-driven CFDs.
Farrant: FX for the use of hedging underlying cross-border asset exposure, financial instruments, equity indices and commodities - the list is endless. If there is an active accessible market GNI will provide a means of trading.
Morrison: We're basically a one-stop shop where you can bet on individual shares, stock indices, currencies, bonds, interest rates and commodities such as oil, coffee, gold and silver - all on one account, and in the underlying currency of your own choosing. The bets we offer on shares include the major US and European stocks and the majority of UK stocks with a market capitalisation of more than £6 million.
Boydell: Do your products involve telephone or online trading, or both? Is there a cost difference if both are offered?
Scott: E*TRADE offers both telephone and online trading at no cost difference.
Moczulski: We only trade binaries over the net. Due to the speed in which prices move, by the time we have quoted someone over the phone, the price is no longer relevant, so all trading most be done online or over a browser-enabled mobile phone. However if the web site went down we would allow phone trading.
Farrant: We offer both. Where an exchange is accessible electronically GNI will provide access. Where a client prefers a phone broker service this will be provided on a 24-hour basis - though trading over the phone carries a slightly higher charge due to the additional resources required to offer this facility.
Morrison: We offer both online and telephone dealing and there is no cost difference between the two services. In fact, I can't think of any difference between the two methods of dealing, and both are completely interchangeable.
If you open a bet online you can close it over the telephone if you wish, and vice-versa. We're very proud of our online platform - its speed, reliability and many trading features - but we know sometimes people prefer to talk directly to a dealer, and our dealers all started before the advent of online trading. If something does go wrong, you've got someone who knows what they're doing at the end of the phone.
Boydell: How much leverage do your products give me? Is margin available?
Moczulski: Leverage is not really relevant to a binary bet. Those who use leverage are looking at how much exposure they are taking for a much smaller deposit, ie. putting down £1,000 will give them access to £10,000 worth of stock. If the stock went bust they would owe the firm £9,000. Due to being limited risk this does not apply to a binary. However what may be of interest is gearing, in that a one-point move in the underlying index can be worth up to 100 points in the binary.
Scott: We offer variable leverage depending on the volatility and liquidity of the underlying stock. For example, we provide 20x for indices and 10x for the majority of the FTSE 100. Variable margin on CFDs is employed by most providers and is a great way of promoting risk awareness.
Farrant: A leverage of 40x on FX and approximately 20x in futures, depending on the contract and volatility. Again, for more sophisticated clients this can be minimized through our 'complex client' risk analysis desk.
Morrison: All our markets are traded on margin and credit accounts are also available. In terms of leverage, different instruments carry different margin rates, but as an example, you could do a £2 per point bet on the FTSE or a £10 per penny bet on Marks & Spencer for an initial margin of less than £250.
Boydell: What sorts of strategy orders - such as stop losses or limits - are available?
Moczulski: Binaries are limited-risk products, so no stop loss is needed. Like an option, a binary bet cannot be worth less than zero, meaning a market can go heavily against you but still be worth something if the market returns - unlike a stop loss which, when triggered, would close the trade instantly.
Scott: For CFDs, E*TRADE offers stop losses, limits, if-done, OCOs (one cancels the other) and If-Done OCOs.
Farrant: FX all-order functionality, limits, stops If-Done OCOs and alerts. Futures also offers multi-order functionality through various ISVs. If it is available in the market GNI will offer it to a client.
Morrison: We offer simple stops and limits, guaranteed stops, OCOs and contingent orders - over the phone and online. The facility is there to build up any number of complex trading strategies.
Boydell: Can I trade different types of vehicle through a single account?
Moczulski: A spread betting account with IG Index can trade binaries, A CFD, forex or futures account through IG Markets can trade binary options, but a binary bet account through www.binarybet.com can only trade binaries.
Farrant: Yes, but all three assets need to be funded separately for the purposes of monitoring risk exposure. Each asset class has different margin requirements but we will look at a client's overall net equity before enforcing any detrimental restrictions.
Scott: Yes, you can also trade FX, Futures and Direct Market Access CFDs.
Morrison: No. Your Man Spread Trading account allows you to do financial spread betting only.
Boydell: What sort of research, charting tools can you offer me?
Scott: E*TRADE offers a comprehensive package including streaming news, analysis, streaming charts, free Level 2, daily market and weekly market reports. This is available at no charge to our CFD customers.
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Moczulski: I think all the firms here recognise the importance of education, and tools to aid clients in the decision-making process, and we are no different. IG provides streaming charting, news and research along with various seminars to help people make the most from our product range.
Farrant: Full streamed FX news with with word search, a full comprehensive charting package, daily commentary and data calendars, as well as extensive daily and monthly research for all asset classes.
Morrison: We offer a news service, charts and company data on our internet platform and we are constantly looking at ways to add to the service we provide.
Boydell: Do you provide any training for new clients? Are there any virtual trading facilities?
Moczulski: No, our thinking is that you can open a live account in minutes and have access to real prices instantly. Then people could paper trade and test strategies safe in the knowledge that these prices are not 'virtual' or 'demo' but live dealing prices.
I have lost count of the number of clients I have spoken to who make fortunes on demo accounts only to lose money when they start actually trading, and I think this is for two reasons. Obviously, people trade differently when there is no risk but secondly and perhaps more tellingly, demo accounts rarely have the actually dealing prices available on them. Having the wrong price on a demo dealing platform does not cost firms money so understandably it's rather low on the priorities of firms to make sure the prices are correct 24 hours a day.
Farrant: Yes - we offer a full demo platform with attached user manual for both futures and FX. Each asset class has a variety of demo/training applications that can help a client to understand the risk and help with trading a new online based product.
Scott: Yes, all CFDs clients are given an account manager and free trading to help get them up to speed. We run regular seminar programs - which you can find on our website www.etrade.co.uk - and we offer a fully-interactive, live streaming demo with an £100K balance.
Morrison: We're working on an online demo but won't be offering a virtual trading facility. It costs nothing to open an account and look at the system, so we recommend that. We don't provide training, but if clients would like to visit the office and meet our team, they need only give me a call.
Boydell: Which type of products have the most attractive charging structures and carry the narrowest spreads?
Farrant: Euro/$ we offer down to two points depending on the client profile. The futures are determined by the contract liquidity and tick size. We will always provide a competitive cost structure according to the client's trading profile.
Morrison: Our daily markets all have very competitive spreads - stock indices such as the FTSE, Dax and CAC have a spread of just two points when the underlying market is open, with no spread to pay if you leave them to expire. We also do very good spreads on the Dow, S&P, Nasdaq and Russell 2000.
But perhaps our most popular bets are those on Daily Individual Shares that automatically roll forward each day. For FTSE100 companies, our spread is 0.1% when you open and 0.1% when you finally close. For
all other UK shares down to a market capitalisation of £6 million, our spread is 0.15% when you open and 0.15% when you close. These spreads are wrapped around any market spread, and we charge daily funding on long positions, and credit you funding for shorts.
Scott: In general we offer very tight spreads on CFD trades. Our most competitive offer is on the FTSE100 CFD, where we do not charge a spread. In terms of commissions, we offer cash market prices with £9.95 commission on our quote-driven CFDs. Our Direct Market Access CFDs start from 20bps with a £20 minimum ticket.
We're also now offering UK Equities for a £4.95 flat rate through to June 30 when you sign up with us.
Boydell: Finally, why should our readers become your customers?
Scott: E*TRADE is a one-stop shop for online traders. Whether it's CFDs, speadbetting, equities or all three, our focus is competitive costs and reliable service.
Moczulski: Everybody is aware of the need to diversify your portfolio to lower risk and in the same way it makes sense to diversify the methods and products you use to lower risk and increase returns. Whereas a trade on a stagnant equity market will generate very little return in the short term, a binary on a flat market is guaranteed to be volatile. In markets that are already volatile, we offer a limited risk way of trading. For traders who have not got the time to trade 10 hours a day five days a week, a profitable binary bet can, and often does, last five minutes.
For inexperienced traders just dipping their toe into financial markets, binarybets remove unexpected surprises. For experienced traders who are trade volatility, this provides an opportunity to trade short-term time value in a tax-free manner. Essentially I believe it can compliment any trading style or strategy.
Farrant: We can offer a proven track record over a number of years, the latest technology, full 24-hour support, and a well-capitalised FTSE100 company with assets of more than $6bn. GNI were the first, are the biggest, and the clients tell us we are the best.
Morrison: At Man Spread Trading we offer a comprehensive spread betting service with competitive spreads and prudent margin requirements. We also combine a fast, secure and efficient online platform with what we hope is a first-class service over the phone.
Brought to you in association with MoneyAm Shares Magazine
