1/ I am thinking of moving to the UK so would be interested in researching SB given it is tax free in the UK. Can you recommend a couple of reputable SB companies for me to look at.
2/ When a SB company is quoting you the DAX traded price and the ASK and BID do you have actual exchange data at the sametime to see what extent the SB company is 'making up' the market price? ie do you see spikes up and down in the SB quoted prices where they are trying to take customers out at their stops, that are spikes not matched by prices the actual exchange.
@steve2222, SB is only tax free if trading is not your main source of income. The tax man has the best of both worlds. They get tax from those that are successful (trading fulltime), and don't have to give credit to those that do it part-time, who as a group are of course losing.
One big problem with SB is the lack of transparency with their data. You can't download it and compare it to futures data. It's not available, they don't provide historical data apart from a few weeks of 1min data on their charts(progressively longer for other time frames). The only way to get data is manually record it from the charts (as far as I'm aware). I actually did this for a day on 5min FTSE data and sometimes the swing highs were higher, and other times lower. Overall it was close. I just don't think it's close enough.
One big benefit to SB is the betting increment. Instead of sizing up from 25 to 50 to 75 euro a point you can go from 2.00 to 2.01, to 2.02 etc. It offers much more flexibility in terms of money mgmt, scaling out, and therefore account growth.
The main problem with SB, as already pointed out, is you are betting using their numbers, it is regulated, so their 'shouldn't' be too many crazy spikes, but a few ticks here and there could turn a successful futures strategy into an average/losing SB strategy. As trading is all about confidence I'd be worried about testing something using one set of data, and then trading on another set of data without knowing exactly how correlated they were. And as pointed out above, sometimes the swing highs are higher, and sometimes lower. Confidence wise, you are in no-mans land.
@DAX trader, if you download Sierra chart you have access (for 15days free - there is a good chance you'll like it so much that you subscribe) of 6 years of DAX tick data. If possible I'd download that and run some backtests with your strategy to see how well the strategy crosses over. The entries/exits won't of course be anywhere near the index value you entered with on the SB (perhaps the current contract), but the older contracts won't be due to the back adjustment that occurs when stitching the contracts together. I for one would be very interested to see how the returns of the strategy compare if you can do it. If you are making money SB then you are ahead of the curve. My feeling is you would improve your gross returns, but I'd be surprised if it improves enough to cover the tax hit.
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The best idea would be to open few accounts with different SB companies and compare prices and executions. You can open account for as little as £100. Try the biggest FSA regulated companies. Also if you could do research before that - allegedly some of them use price manipulation software ('designer slippage')
In regards to charts:
SB clients should always have at least one independent charting package to check price differences. It’s easy to open fx demo account with some reasonable fx brokers that provide realistic prices and charts for free - so you can compare and see how realistic are SB’s prices (it‘s good to research what fx brokers provide realistic prices - few of them are horrible). There is one well known fx site that gives live price comparisons from different providers - you can easily see what brokers to avoid. They also tend to provide gold, silver and oil prices.
The idea is if SB’s prices are close to fx brokers' prices, they may have realistic index prices as well.
Also there are some futures’ charts available for free (demos with live prices) Sixtyseven mentioned Sierra. I used Ninja before.
Most of SB companies provide charts with indicative data - so in other words they don’t have to execute orders at charts’ levels. There are all sort of SB companies and some of them tend to abuse that a lot, some are reasonable. I can only compare that kind of charts with ‘normal’ futures’ charts (so far as I know only SB companies offer cash indices to trade).
From what I could see, DAX futures charts and some of SB companies DAX cash charts are almost the same (it’s only that DAX futures’ charts are moved up a bit from cash charts - maybe 8 points or similar). So in other words if you are TA trader, candles and indicators look similar. So far as I know these prices stay parallel most of the time (same distance).
Few of SB companies I use have realistic charts - no imaginary spikes etc. They maintain 1 point spread during normal market opening hours. One company tend to push the prices a bit up or down at extremes maintaining 1 point spread at that time, but they can’t overdo it as they may get abused by arbitrageurs.
I should think that if one can’t be profitable trading DAX with SB companies, they stand little chance of profitably trading FDAX. Assuming they don’t use some really bad SB companies.
So if there is no abuse from SB company, it’s much cheaper and easier to spread bet than trade futures. I’ve already posted about it and don’t want to repeat about all the advantages.
Last edited by DAX trader; January 16th, 2014 at 12:04 PM.
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If you feel at ease with your SB companie and make profits, stay there !
The goal is to make money !
I don't know what your trading timeframe is, but maybe you can also check the CFD from a decent broker.
Thanks the huge margin, the Lady dax future teach me 3 things :
- How to not wipe an account.
- Money management
i wish you the best.