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Charges more than my Profit -- Platform Advice
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Charges more than my Profit -- Platform Advice

  #1 (permalink)
Trading Apprentice
barcelona
 
Futures Experience: Intermediate
Platform: spreadex, CMC Market, Spreadco
Favorite Futures: guitar
 
Posts: 3 since Sep 2013
Thanks: 1 given, 1 received

Charges more than my Profit -- Platform Advice

So, I am new to the forum and joined initially looking for help with a problem I have, only to discover this collective of people just like me which is very exciting.

The situation is I Spread-Bet with a 'competitive' platform, however upon crunching the figures of my revenue, costs and profit, I was horrified to discover the costs equated to over 80% of my profits. The strategy I apply involves a large volume of trades (not Quant trading), so I can place sometimes 15+ trades a day. The Spread's are just killing me, since I would profit double if they were not there.

Does anyone know of a low cost platform designed for micro-trades as I do?

Also, if one wanted to start their own spread-betting firm, how would one go about it?

Any help would be much appreciated as I feel lost at sea with these issues.

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  #2 (permalink)
Elite Member
Birmingham UK
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: IG/eSignal
Favorite Futures: Dax
 
ratfink's Avatar
 
Posts: 3,336 since Dec 2012
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mnicolaou View Post
So, I am new to the forum and joined initially looking for help with a problem I have, only to discover this collective of people just like me which is very exciting.

The situation is I Spread-Bet with a 'competitive' platform, however upon crunching the figures of my revenue, costs and profit, I was horrified to discover the costs equated to over 80% of my profits. The strategy I apply involves a large volume of trades (not Quant trading), so I can place sometimes 15+ trades a day. The Spread's are just killing me, since I would profit double if they were not there.

Does anyone know of a low cost platform designed for micro-trades as I do?

Also, if one wanted to start their own spread-betting firm, how would one go about it?

Any help would be much appreciated as I feel lost at sea with these issues.

You have to be selective with instruments, probably reduce leverage and look to increase the spread/trade range ratio (e.g. if you can capture 15-20 ticks with a 3 tick spread it works well, looking to capture 5-6 with 3 will not. Be aware that the spread will tend to 'swing' and run away early, after all they don't want you getting any of the money they had or borrowed to start the spreadbet company.... (i.e. don't think about starting one, it is a deadly competitive market which will likely see a lot of attrition, imho.)

I find the same difficulty with a guaranteed stop account on IG (typical 5 tick spread on Dow/Dax) largely because I tend to overtrade, but then can nail some days on Finspreads with a 1-2 tick spread on the same instruments. Note that those are in RTH spreads, they widen significantly out of hours. There is also much debate about which companies offer direct market access and which trade against you, but at the end of the day they are all going to use internal client position offsetting so it will be a tough call to prove anything of worth.

You would need to say more about your instruments/strategies/micro-trades for me to be able to suggest much else but mostly look to develop choosier use of support/resistance/planned entries to get best effect.

Good trading!

Travel Well
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  #3 (permalink)
Trading Apprentice
barcelona
 
Futures Experience: Intermediate
Platform: spreadex, CMC Market, Spreadco
Favorite Futures: guitar
 
Posts: 3 since Sep 2013
Thanks: 1 given, 1 received



ratfink View Post
You have to be selective with instruments, probably reduce leverage and look to increase the spread/trade range ratio (e.g. if you can capture 15-20 ticks with a 3 tick spread it works well, looking to capture 5-6 with 3 will not. Be aware that the spread will tend to 'swing' and run away early, after all they don't want you getting any of the money they had or borrowed to start the spreadbet company.... (i.e. don't think about starting one, it is a deadly competitive market which will likely see a lot of attrition, imho.)

I find the same difficulty with a guaranteed stop account on IG (typical 5 tick spread on Dow/Dax) largely because I tend to overtrade, but then can nail some days on Finspreads with a 1-2 tick spread on the same instruments. Note that those are in RTH spreads, they widen significantly out of hours. There is also much debate about which companies offer direct market access and which trade against you, but at the end of the day they are all going to use internal client position offsetting so it will be a tough call to prove anything of worth.

You would need to say more about your instruments/strategies/micro-trades for me to be able to suggest much else but mostly look to develop choosier use of support/resistance/planned entries to get best effect.

Good trading!

Hi Ratfink

I think you are right about the viciously competitive market. The frustration I felt from all the money I spend on spreads just got to a point where opening my Spread-betting company seemed realistic! Yesterday, I spent £315 just on Spreads. I profited £200, so you can see how reducing it has become my priority.

At the moment, I trade the FTSE100 but have taken up gold trading. With gold, Spreadex had a 7 point spread. My strategy is based on instinct, I don't actually use an algorithms, graphs or anything like that (not yet, anyway). I normally place a large trade to represent my sentiment on what will happen and place smaller trades to capitalize on the waves as the price changes against or for my favor. Often when I make a foolhardy verdict on what will happen, my micro trading profits are greater than the loss from the big trade.

Due to the nature of my small trades, they often only skim between 2 and 20 pips per trade for gold, and given the 7 point spread, you can see how this could easily add up. After some digging, the best I could find was 'CMC Market', who offer a 1 point Spread on the FTSE100 (fairly standard) but they offer a 4 point spread on gold. I would not say I am jumping for joy, but it means I should make between £80-£100 more a day just by reducing Spreads.

From what I have said, if you have any advice or recommendations trading wise or on better platforms, it would be much appreciated.

Thanks,

Michael


Last edited by mnicolaou; September 3rd, 2013 at 04:13 AM.
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  #4 (permalink)
Trading for Fun
london
 
Futures Experience: None
Platform: various
Favorite Futures: Glockenspiel
 
Posts: 166 since Jan 2012
Thanks: 43 given, 157 received

You'll never make money spread betting. Never. Their business model is based around people losing. Where else will they make their money from? Thus they do everything they can to make sure you lose under the veil of being 'fair'.

Do yourselves a favour. Close the accounts and trade in a real, regulated market.

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  #5 (permalink)
Elite Member
Boston MA
 
Futures Experience: Advanced
Platform: Tradestation
Favorite Futures: Stocks
 
Posts: 6 since Feb 2013
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I am from the USA so not that familiar with spread betting but with your high volume level why are you trading spreads instead of using a real brokerage account to trade the actual item?

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  #6 (permalink)
Elite Member
Birmingham UK
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: IG/eSignal
Favorite Futures: Dax
 
ratfink's Avatar
 
Posts: 3,336 since Dec 2012
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TheDude View Post
You'll never make money spread betting. Never. Their business model is based around people losing. Where else will they make their money from? Thus they do everything they can to make sure you lose under the veil of being 'fair'.

Do yourselves a favour. Close the accounts and trade in a real, regulated market.

Definitely worth heeding, but the spreadbet companies make 10X more out of my stupid trades than they do out of my good trades. In that respect I have not seen anything to differentiate them from most other routes, especially as competition has finally forced spreads down and retail traders can choose what and when they trade much more easily. Yes it's easy to get caned, but from what I see that applies to futures traders in all domains/platforms/markets.

If I can enter a Dax trade with a -10 stop, close it down to -5/-2 and take +27 where is the problem? - Only in my head, I can't blame anybody else for not being able do that enough times to make a living. I lose way more from allowing myself to be comfortingly distracted by the infininet than I do from spread sizes. Had I sat 30 minutes longer this morning it would have been +70 again, whereas the spread cost me just 2. How can I look outside myself for fault/answers/blame - so far reality says it is only inside.

Always happy to discuss and learn more from your experiences though and what routes you take instead?
Cheers and good trading.

Travel Well
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  #7 (permalink)
Trading Apprentice
barcelona
 
Futures Experience: Intermediate
Platform: spreadex, CMC Market, Spreadco
Favorite Futures: guitar
 
Posts: 3 since Sep 2013
Thanks: 1 given, 1 received


TheDude View Post
You'll never make money spread betting. Never. Their business model is based around people losing. Where else will they make their money from? Thus they do everything they can to make sure you lose under the veil of being 'fair'.

Do yourselves a favour. Close the accounts and trade in a real, regulated market.

My philosophy in trading and life is always be willing to change your opinion, so regardless of the somewhat severe critique of Spread-Betting, I cannot say I disagree as others have expressed similar sentiments.

The main reason I Spread Bet is for the leveraging and ease. Also, now I have found a relatively cheap platform for trading the FTSE and Gold, my two great interests, my setup works well.

By 'real regulated markets', are you referring to actually purchasing the stocks or trading the futures? It's something I would like to look into to compare the benefits.

I have had issues with Spread betting in the past, so I always have two accounts with different companies to ensure the prices quoted are not there to rip me off (and sometimes they are!).

Where would be the best place to start learning about regulated market trading?

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