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IG CMC offer DAX indice CFD 1 pip spread without commission,where they get liquidity from?
- Thread starter JACK1985
- Start date
Lots of market makers offer DAX CFD 1pip spread with no commission which is better than future@EUREX raw feed(avg.1.3pip spread+a commission), where they get liquidity from? ETF or future@EUREX?
the vast majority of IG's customers are consistent losers therefore there is no need to hedge them at all, it's easy money for them, just check out their public accounts to see the solid profits they make. For the few % of customers who are profitable these are placed into a separate 'book' and a decision is made on whether to hedge the net exposure. They made £169m in net profit in their latest accounts so it's reliable money for them.
Forex,stocks,gold,oil,other indices(SP500,nikkei225) trading costs, DMA/ECN acess via IB are much better than market makers. Why DAX and us30 are exceptions?the vast majority of IG's customers are consistent losers therefore there is no need to hedge them at all, it's easy money for them, just check out their public accounts to see the solid profits they make. For the few % of customers who are profitable these are placed into a separate 'book' and a decision is made on whether to hedge the net exposure. They made £169m in net profit in their latest accounts so it's reliable money for them.
Forex,stocks,gold,oil,other indices(SP500,nikkei225) trading costs, DMA/ECN acess via IB are much better than market makers. Why DAX and us30 are exceptions?
CFD / spread bet is a competitive business in UK so I think its a commercial decision that is made to offer the tightest headline spreads on these instruments. The spread is only one way IG can make money there are plenty of other ways.
Lots of market makers offer DAX CFD 1pip spread with no commission which is better than future@EUREX raw feed(avg.1.3pip spread+a commission), where they get liquidity from? ETF or future@EUREX?
The dax future trades in 0.5 point ticks half that of the 1 point cfd, granted the bid/ask is normally 2 ticks wide.
Lots of market makers offer DAX CFD 1pip spread with no commission which is better than future@EUREX raw feed(avg.1.3pip spread+a commission), where they get liquidity from? ETF or future@EUREX?
IG and CMC et al are Bucket shops.
If you start to make big money in an instrument that they cant hedge easily.
Then you are put on delayed fill, where your orders will be held and often rejected if the market moves through in your favour.
Buckets shops will always allow consistently losing punters to lose as much money as they can. They will be free to trade as large size as they want to.
But will make it really hard for consistent winners to trade size and fast markets.
Has always been like that as everyone who has read ROASO will recall.
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US30 Dow Jones Industrial indice spread after US market open is 1.4pip@CMC with no commission,YM future@CBOT is avg.1.5pip+0.8pip round commission via IB, a big difference.The dax future trades in 0.5 point ticks half that of the 1 point cfd, granted the bid/ask is normally 2 ticks wide.
The most popular largest volume indice sp500 spread is 0.4pip@market makers, ES future@CME is avg.0.25pip+0.08pip round commission via IB.
Theoretically market makers should offer the tightest headline spreads on sp500 instead of US30. Where they get US30 liquidity from？
US30 Dow Jones Industrial indice spread after US market open is 1.4pip@CMC with no commission,YM future@CBOT is avg.1.5pip+0.8pip round commission via IB, a big difference.
The most popular largest volume indice sp500 spread is 0.4pip@market makers, ES future@CME is avg.0.25pip+0.08pip round commission via IB.
Theoretically market makers should offer the tightest headline spreads on sp500 instead of US30. Where they get US30 liquidity from？
You are not comparing apples with apples. You cannot buy the bid and sell the ask at CMC. Your theory hypothesis is incorrect. CMC & IG make most of their money from losing traders and hence they want to encourage more of those customer types to trade. They offer the tightest spread in the most appealing instrument to the punter, which is the Dow. Hedging is of secondary concern, they can hedge using the YM or ES futures, they can trade the ES for size leaving them with a highly cointegrated YM/ES spread position.
IG and CMC et al are Bucket shops.
If you start to make big money in an instrument that they cant hedge easily.
Then you are put on delayed fill, where your orders will be held and often rejected if the market moves through in your favour.
Buckets shops will always allow consistently losing punters to lose as much money as they can. They will be free to trade as large size as they want to.
But will make it really hard for consistent winners to trade size and fast markets.
Has always been like that as everyone who has read ROASO will recall.
You know this because? If so many people lost money trading with these companies they would have no customers left and would not longer exist. IG and CMC at el have been running for quite some years and have now got full computerised dealing systems. They are also required (in aus) to create a guaranteed market for all their products. As far as I know CMC hedge 80-90% of their positions as it is not practical to do 100% (according to them). If you know what you are doing using CFD's is an effective use of capital as you cannot get the same leverage anywhere else. Like with anything with associated risk, if you do not know what you are doing then you may get into trouble.
You know this because? If so many people lost money trading with these companies they would have no customers left and would not longer exist.
I been a spreadbetting customer for over a decade, placed 1000s of bets with them.
There is another sucker born every minute.
Never a shortage of fresh meat for these sharks to feed on.