A: Comment: Don't really think this is a fair complaint. In the real market you dont get filled when the price moves away from the one you want and yet its perfectly simple get filled when it moves against you. Try lifting the bund when the flipper is in there and see how many fills you thought were yours but are now just sitting in the book...
LCG are a business and businesses need to make profits. Why would they take a trade from you that makes a loss right from the start? It just doesn't make sense, they'd go bust in the long run. I agree that sometimes its an ar*e but that's life, if 1-2 ticks makes that big a difference to your trading model then DMA is probably better than spreadbetting. I'm not saying its ideal I'm just suggesting you think about it from a realistic point of view
The point about missing trades on adverse market moves will always be with us. As clients demand ever tighter and tighter 'spreads' such that the word 'spread betting' in many markets is becoming a misnomer. In many of the main markets we quote there is virtually no actual profitable spread to play with and we must in certain circumstances be sure about the levels at which trades go through. If I was quoting 5 points wide on GBP/USD then almost every trade would be 'fair' (from my point of view) as the spread would have taken out any possible price variation.
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But, as with the real markets it is much easier to buy than sell into a falling market or sell than buy into a rising one. In the real world if you click the trade button to sell your 1 contract of FTSE at 6350 (let us assume that you can see 10 contracts on the bid) if somebody else gets there before you then "sorrreee mate" you've missed the trade and will have to trade at the next price 6349 (if you can get that) and if you miss that then 6348...etc
But if you had put a buy order at the same price 6351 then of course you will be filled there and then as there will always be somebody happy to sell at your bid price.
If you convert this to the spread betting markets you can see the same effect. You will often get filled on an adverse price move because my dealers (being the market makers) are happy to take the trade (as is the case above in the FTSE futures) but if the market moves the other way (especially in times of volatility) they may reject it along the same argument as with the missed price in the example above.
My dealers were feeling very sore about this comment theme as they feel that clients do not appreciate that they work under the same constraints. As an example we had a big sell order in the FTSE and they tried to sell the futures only to miss the price twice (of course they, as with you, are not sure for a few seconds as to whether they got the trade which added to the losing move). By the time they got the hedge on the market was 4 points lower and the trade book £2000 worse off. The client still got the trade we got the loss.
This is just 'the markets'.
Of course the advantage my dealers have is that they can make a 'market' order to basically sell at the best price possible. But in general they do not like doing this. A spread betting client cannot make a 'market order' action.
Our clients can, almost, replicate a 'market' order but only via a new/limit/stop order. In these cases here CS will fill at the first tradable level open to us.
To summarize the market works the same for us as it does for our clients. Sometimes we miss the hedge sometimes clients miss the trade. Given the spreads we quote it is down to the clients skill as to whether he/she makes money. In reality whether you miss a deal by a pip or so should not invalidate the reason for the trade.
A: We have some v big punters...although our biggest online is just (!!) 300 a pip in one bet.
A: Define scalping... difficult, because it generally means different things depending on what you are doing...for spread betting companies it generally refers to a trader who attempts to trade on lagged prices (and only lagged prices) using a bank forex feed as his 'base market'.
So my definition of a scalper is not someone who attempts to make small profits in a small period of time. It is someone who only ever trades when he can see that our price (on the LCG' platform) is marginally slower than on his Direct Market Access screen and continually takes advantage of it. I am really sorry if some clients cannot get their heads around this. Every time a client trades with us he is making a bet (and so are we) the chances of either of us winning are about 50/50 (minus the spread which is, admittedly, in our favour). If a client only ever trades when he is guaranteed a profit (i.e. in terms of horse racing, managed to place a bet after the race has already been run) at our expense why should we accept his trades? If we acted like this and only ever allowed clients to make trades when the market has already moved in our favour the regulators would be breathing down our necks and the FOS would be fining us every other week.
Nowadays it is much more difficult to do but by no means impossible. The presence of 'scalpers' is the main reason that most spread betting companies will not go fully automatic and are prone to default to 'trader confirmation' in times of stress.
The word scalper should not be confused with 'arber' who generally take positions in two similar or 'fungible' markets in the expectation of reversing both trades at a net profit in the future. Arbing (in the good old days) was very profitable in the FX markets where the cross currencies calculations often created incorrect prices..(i.e. the USD/CHF would move and the EUR/USD would move but the actual EUR/CHF may not have moved to reflect the multiple of the two)...of course now computers have removed many potential 'arb' possibilities.
'Perhaps I can reverse the question - my trading pattern on the FTSE daily (not with CS, yet) tends to be around 4-5 trades a day, with 3 being 0 gains or small losses, and the other 2 being either small (1-5 points) or medium (5-15 points) wins, net result around 10-15 points a day. My positions tend to be held for between 15 minutes and an hour.No, we would not consider this scalping... scalping is when you are attempting to continuously jump on sharp price action. Because the 'quoted price' on LCG is just that, a quoted price, we cannot 'pull our price' as and when we wish...our only protection is to have a client on dealer confirm... this is the single biggest difference between spread betting and direct access as in the real exchanges there must be a counterparty on the other side to get your deal done (which means that if you want to buy there must be a seller willing to sell at that price).
Over 99% of our clients are on auto trade (not over data releases of course) if their trades are below a certain stake size (different for each market).
Editor Note: If you want to scalp you might want to consider ProSpreads which is a spread betting provider specially designed to handle day traders - note: don't even think about going this route if you have less than a year experience working with spreads.
A: Scalpers are in and out for a pip or two in a few seconds, generally before a position has any chance of being hedged. Even though we have a spectacularly fast feed it is second hand (as all spread betting feeds must be)...we get our prices from the exchanges (in the case of forex...from market makers) and then push them out to clients. This means that there will always be that fraction of a second delay from a DMA system. Effectively a scalper is watching a very good Direct Market Access and attempting to trade on the spread betting companies' fractionally retarded feed.
A scalper will buy off LCG at say 1.6305 in Cable when he knows that the price in the market is already 1.6306-1.6309 and so is taking advantage of a latency issue. If the client buys at 1.6305 when LCG would have to pay 1.6309 how on earth can we 'hedge'. we would merely be locking in a loss every time. The scalper will immediately sell at 1.6306 taking a one pip profit. LCG would then have to sell out of the 1.6309 buy with a 1.6306 sell making a three pip loss. (CS is like any client when we go to hedge ...we must also 'pay the spread'). So after the scalper has closed out we would be left with the loss to the scalper AND the loss in the hedge. So, really all spread betting providers watch for this type of activity and move to squish it. LCG cannot make trades with the market makers on old prices...so why should we allow clients be able to do it with us? A professional day trader should consider ProSpreads which is directly linked to the futures market and is a platform designed to handle day traders.
I can confirm that liquidity providers on Forex platforms also do not like the practice and they will instruct the platform hosts to remove the offending client from those able to access the prices. Banks have very, very sophisticated analysis tools and they quickly identify those who abuse the service. Spread betting providers are no different...just because we are smaller scale does not mean that we are not impacted in the same way.
A: In actual fact the words 'only some 0.776%' of them doesn't highlight the real problem. In spread/losses/hedging etc...etc we make about 1.3k a year out of an active client (in our investor presentation pack, before you shout) which is about half the amount our biggest competitor makes out of clients. A scalper, by our definition of scalper, can possibly make many times this sum each month therefore massively outweighing their relative minority. To be fair this is becoming less of a problem as systems get faster but any sensible company that acts as a market maker rather than an exchange must be continually aware of it. API links into market maker systems are not allowed even by the biggest of our competitors so the 'toxic flow' element hated by the major Bank FX market makers should never be a problem for the CFD and spread betting providers.
Scalper/latency trading is not acceptable to Market Makers not just spread betting companies but also to Market Makers in all offerings (banks will not give their FX price feeds to toxic flow customers) LCG has probably the most liquid FX platform in London with the 16 biggest FX banks on the planet adding liquidity and still they will identify individual clients and refuse to quote their prices to them.
In any market if you are frequency trading you will lose sometimes. FACT. If I have a client who trades 30 times in a day and either makes or scratches EVERY SINGLE time then statistically this is impossible. Try tossing a coin and ending up on heads 30 times out of 30 (a market can only go up or down, 50/50 at any given moment). That is why people get put on dealer acceptance. And as mentioned earlier just a tiny proportion of our clients are on dealer acceptance and this should not affect over 99% of our clients.
A: If you trade £100 pounds a point in virtually any market you will go to a dealer as we have threshold levels on auto accept. A client who trades multiple times a day may be put on dealer acceptance (multiple times means 20 times or more every day...day after day) as we might consider him/her to be overtrading their account or, finally, if we suspect a client of continually trading on price latency.
A: The opening five minute limitation is annoying BUT it really is there for reasons that the spreads in the real markets are ridiculously wide on the open (even in FTSE 100 stock) as traders for the big market makers try to gauge to market feeling in each stock. Obviously this is not the case in some of the bigger stocks but in the main this is very much the norm. Because our systems highlight orders if 'our quote' reaches the stop/new order level this means that when the spread is very wide on the London Stock Exchange (LSE) or the New York Stock Exchange (NYSE) (or wherever) a huge number of orders would be activated at very disadvantageous levels. Even only opening at 08.05 has this problem and we have to wade through a large number of unreasonable stops and reject them. Not only that but also many (less well informed) clients do not realize that these spreads are wider than the norm and trade on them which, when the usual spread is reasserted, results in a large running loss on the open of the bet. We would like to open at 08.00 as it does not benefit us at all to open 5 mins later but in reality it just causes too many problems with irate clients.
A: The common term is "first in first out" and is the normal market practice, especially if you trade in the futures markets...the exchange will close your trades in order of opening when you trade out. Some spread betting firms allow you to pick and choose but this is not actually normal and, I believe, is unique to the spread trading world.
If you look in your 'open positions' you will see a couple of 'icons' after the 'open p/l' . The second of these icons will, when clicked, give a breakdown of the individual positions making up your total open positions in that contract. Showing the P/L of each individual opening bet. The bets are recorded in order from the most recent down to the first.
In reality it makes no difference at all to your overall trading which positions are closed you will still have the same net p/l. For some reason clients always want to take the profitable bets and leave the losers (from an amalgamated position) .. in my humble opinion a very bad trading strategy.
A: We never slip prices on the live platform...you either get the price or not - the demo platform works just a little differently. Our charts are taken from the bid for technical and legal reasons and will not change.
A: Arbs on single stocks; Often arbs occur on single stocks with spread betting companies because the forward price will contain several variables. The main variable is the dividend. Most SB companies quote many thousands of markets and may miss the dividend expected before the future settlement or put the wrong expected dividend number in. (i.e. there is a dividend in RBS March 2007 expected at around 59p which will decrease the forward price by this amount). Unfortunately for the arber if the SB company realizes that it has made a mistake it will adjust the price of all open bets to reflect the correct dividend adjustment. The terms of all SB companies specifically mention this. The client will not lose a penny on the adjustment of the bet (with that SB company) as the bet price will go up or down to the same extent as the current quote will move. BUT it will wipe out the 'arb' and force the arber to close out at a loss.
I also notice that one spread trading company has, very recently, removed all dividend variables from its forward prices and will now adjust the bets on the day of the dividend payment. I would advise you to ensure that this is not the arb that you are talking about!! As this would be a costly mistake to make.
A: I was watching your fx prices this morning. I had yours, CMC's and various banks on my screens. Where do you get your feeds? It is way too slow. I don't believe you can't get better feeds than that. CMC's was pretty spot on, by the way. It is impressive actually how they mirror the real market (plus spreads, of course).
You must open a trade ticket to get the streaming prices...just looking at the trading screen will not give you the quote in the ticket.
I can assure you that our live feeds are pretty good, over data releases we tend to struggle but then so does everybody ...if we were consistently delayed on prices we would be 'scalped' all day long.
A: The Dow is not actually 'quoted' it is just an average of the prices of all its component shares. You cannot go out and 'buy' the Dow except via its derivative which is the Dow Future. The Dow future is not actually 'quoted' either as it is an exchange into which traders place their bids or offers which are a minimum of 1 point wide. The only place where you can get a 'quote' is from a spread betting company.
The only time the decimal places come into play is on the settlement of the daily markets, which we do not quote anyway as we only do the 'rolling daily' markets, which some spread betting companies quote.
A: Charts for the rolling wall street are taken from 'our bid price' not from any Dow market feed. All the charts on our site are taken from our own prices. For instance the September share prices do not actually exist outside of the spread betting companies (in most cases) and therefore the charts must come from our own quotes or just be charts of the underlying product (as on our demo platform).
A: It generally represents each 'bid' quote made by LCG. It shows the vast majority of quotes on a streaming basis but might not show every single quote.
The bid is the price (at that moment in time) where the client could have sold/made a down bet/gone short. in general the offer price will be a fixed spread above the bid price. Although this can be variable for single share equity markets where our price is a fixed spread 'around' the actual quote on the market (plus or minus interest rate and dividend adjustments).
The prices are driven in the main by the exchanges for the vast majority of our quoted markets. For FX the prices are driven by the quoting banks on the various FX platforms that London Capital Group uses for liquidity and pricing information.
Aside from the fair value adjustment to cash indices LCG has no input to the prices quoted on our platform.
In general 'a tick' on our FX price is the last quoted number so for GBP/USD at 1.4927 the 0.0001 is the tick. or for EUR/JPY at 120.68 the tick is 0.01.
A: LCG has had 24hr trading on FX for quite a while now. Aside from volatile periods we seldom reject any trades. You may be referring to times past when our FX feeds were not as robust as they are now.
We are a spread betting company not an FX company. People always complain about FX fills never about anything else. FX platforms quote about 30 markets, have major banks backing up liquidity etc... if the price moves whilst you are trying to trade you get nothing...on the other hand with spread betting companies the price is effectively held until the dealer confirms it. Frequently this means you get a good price to trade on but it also means that this 'good' price may be rejected. I cannot see how this differs from a real platform. If you trade and the market moves against you as you trade then you will be filled ...if the market immediately moves away from you, then you will miss the price. This happens to us all the time on our FX hedging.
There are some 10 spread betting companies and 100's of FX providers (we do have a private client FX unit ourselves, Capital Forex). If anyone feels that we are unfair/cheating...etc they can always move (in about 20 minutes of account opening boredom). That said, it is odd how our client retention numbers are some two times our competitors (those who give this info in their reported figures).
We always work on improving services but sometimes due to the success of our platform our trade growth exceeds our technical improvement lines. As I have said we are moving to auto trade acceptance in many markets and are constantly improving systems etc.
On the orders front, you will generally get your order fill at the price requested BUT we must check that the order has been fairly hit as there are many spikes pricing errors... and we quote over 2000 markets. It is very easy to see whether an FX price is hit but not so easy when you are talking about a 'widening' quote on a share caused by lack of liquidity. In many of the FTSE 250 stocks the bid offer can widen to 20 or 30 points due to lack of liquidity on the LSE. This may 'trigger' a stop but would be unreasonable of us to activate. I do not know how our competitors deal with this but we wait to see whether further liquidity enters the market. Sometimes a stock can remain on the triggered (red line) file for half of the trading day. This does take time but is the fairest way of do it.
If you would like to come in and sit next to our dealers and then you may be able to reflect on what it is like on the other side of the fence... The offer to any client to come in and see how everything works is still open... Various people have expressed interest but not one has actually followed through and come along.
A: No that's incorrect. My statement was that, rather like the real FX market (where you can just as easily fail to get a price) sometimes your deal is rejected. The difference between a spread betting company and the real market is that with spread betting you get the deal 'rejected' whilst in the 'real' market your order just sits there on the bid or offer waiting to be filled. Whilst if the trade was the other way round you would be filled (as with the SB company) at the price you requested.
The only difference is that with us you cannot give a 'market order' to fill at any price except through the new order functionality.
One of the big American Futures Exchanges recently made a very good analysis of private client trading on futures (direct access beloved of commentators here). As opposed to institutional trading. They discovered that 81% of private clients lose money in the futures pits. This is slightly worse than our clients overall statistics. So who is the bucket shop us or them?
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