Trading the stockmarket (NO Referrals)

Fusion · 30 Mar 2020 at 10:40

Predictions of high death tolls have been around a long time (relative to the length of time we've been in lockdown).

mid_gen · 30 Mar 2020 at 11:08

There are vast amounts of magic money floating around at the moment, markets are going to be even more volatile than 2007/8.

Minusorange · 30 Mar 2020 at 13:13

413x said:
Genuinely do not understand how stocks are up

The game is rigged

TangoEchoAlpha · 30 Mar 2020 at 14:11

tlrBeta said:
Please fire the referral to my trust

As it happens, I recently opened a HL ISA, but given the fees vs 212 - seems a mistake.

How exactly do 212 make money if there is no fee's? Is there fee's/a time delay on withdrawals?

They state that they make money by charging professional traders for use of the platform. I think they probably make some money off being able to use funds when they are in the equivalent of an escrow. They are backed by the usual FSCS, so your first £85k is protected should they go belly up.

Theophany · 30 Mar 2020 at 14:15

tlrBeta said:
Please fire the referral to my trust

As it happens, I recently opened a HL ISA, but given the fees vs 212 - seems a mistake.

How exactly do 212 make money if there is no fee's? Is there fee's/a time delay on withdrawals?

Their primary business is CFDs and according to their website:

76% of retail investor accounts lose money when trading CFDs with this provider.

Click to expand...

Joe Jones · 30 Mar 2020 at 15:15

I saw 212 mentioned in this thread before I started my SIPP so had a look....I honestly thought it was a scam given the basic feel of the site and the apparent lack of fees. I later found it had been operating for a number of years and supported by FSCS.

Still, my gut says stay away so I've gone elsewhere.

TangoEchoAlpha · 30 Mar 2020 at 16:03

Theophany said:
Their primary business is CFDs and according to their website:

I've no connection with T212 other than being a happy customer. I think you will find that the vast majority of people who trade CFDs, regardless of the platform, lose money and that ~75% loss is quite common. With CFDs, you don't actually own any underlying asset at all.

Theophany · 30 Mar 2020 at 16:13

TangoEchoAlpha said:
I think you will find that the vast majority of people who trade CFDs, regardless of the platform, lose money and that ~75% loss is quite common. With CFDs, you don't actually own any underlying asset at all.

I know. That's why I invested in shares of Plus500 rather than using their platform, far better returns!

TangoEchoAlpha · 30 Mar 2020 at 16:25

Theophany said:
I know. That's why I invested in shares of Plus500 rather than using their platform, far better returns!

LOL

silversurfer · 30 Mar 2020 at 17:00

Space Monkey · 30 Mar 2020 at 17:10

Please be aware that we don't allow referrals on here, publicly or otherwise, so please don't offer them or ask for any, thanks.

dowie · 30 Mar 2020 at 17:18

Theophany said:
Their primary business is CFDs and according to their website:

indeed

Though it doesn't explain how they make money (assuming they do) from the brokerage side of the business I think they pretty much outsource the actual execution to interactive brokers.

dowie · 30 Mar 2020 at 17:19

TangoEchoAlpha said:
They state that they make money by charging professional traders for use of the platform. I think they probably make some money off being able to use funds when they are in the equivalent of an escrow. They are backed by the usual FSCS, so your first £85k is protected should they go belly up.

Where do they state that out of interest?

It is sometimes the case that free brokerage places or discount brokerages can essentially sell their client order flow to marketmakers etc... but in this case it looks as though they just pass the orders through to interactive brokers - unless they've changed things.

Theophany · 30 Mar 2020 at 17:41

dowie said:
indeed

Though it doesn't explain how they make money (assuming they do) from the brokerage side of the business I think they pretty much outsource the actual execution to interactive brokers.

It's pure speculation because they don't publish their accounts, but I would imagine there is an amount of cross-subsidy from the CFD side of the business, which is why I mentioned the retail client loss rate. I would imagine that they will be the counterparty for the majority of the smaller accounts and when your win rate is 76%, you can use that income to subsidise the other businesses. When I was trading CFDs on Plus500, for example, I was doing it in the latter half of 2017(?) when Bitcoin was a one-way bet thanks to the Reddit brigade. As soon as I started consistently winning, they started to flag my account to limit the leverage, increase my margin calls and shorten the time windows I could leave a contract open for. As much as the FCA has introduced more regulation to the retail CFD market, it is still the wild west.

For the brokerage side, given the minimal costs involved with electronic trading once they reach a critical mass of users who feel short-changed with paying ~£10 a trade with the likes of Hargreaves, they can continue to negotiate down trading costs. And as @TangoEchoAlpha said, they generate a revenue stream from professional traders, which I would assume to be those with balances or monthly trading volumes over a certain amount? Though it is unclear how they're going to generate a meaningful revenue stream from the retail side of the business.

As I see it, the major downsides would be that their platform is very basic (hey, you get what you pay for) and that they have a comparatively very limited universe of shares that you can transact on. If neither of those drawbacks are a concern, then it's probably a solid choice, akin to Vanguard's low cost SIPP being a good choice if you just want to invest in passives.

TangoEchoAlpha · 30 Mar 2020 at 18:28

@dowie - I can't remember where I read it. If I can find it, I'll edit this post

Ironic Namesake · 30 Mar 2020 at 19:15

dowie said:
Where do they state that out of interest?

It is sometimes the case that free brokerage places or discount brokerages can essentially sell their client order flow to marketmakers etc... but in this case it looks as though they just pass the orders through to interactive brokers - unless they've changed things.

From their terms it states :

Costs: Our charges may be incorporated as a mark-up or mark-down (the difference between the price at which we take a principal position and the transaction execution price with you). The Company’s price quote in many markets already includes our spread and there will be no additional fees or commissions due from you

dowie · 30 Mar 2020 at 19:27

Ironic Namesake said:
From their terms it states :

Costs: Our charges may be incorporated as a mark-up or mark-down (the difference between the price at which we take a principal position and the transaction execution price with you). The Company’s price quote in many markets already includes our spread and there will be no additional fees or commissions due from you

ah, thanks - also importantly:

"The Company’s charges are not taken into account in determining the best execution prices."

hmm - so it sounds like they might well just mark up/down any prices from IB and if they're using IB then the best execution aspect is taken care of by IB...

it seems a bit sneaky though - how is it really "best execution" if they're seemingly able to throw in a sort of hidden commission in the form of an inflated spread

regardless - no such thing as a free lunch...

Ironic Namesake · 30 Mar 2020 at 19:44

dowie said:
ah, thanks - also importantly:

"The Company’s charges are not taken into account in determining the best execution prices."

hmm - so it sounds like they might well just mark up/down any prices from IB and if they're using IB then the best execution aspect is taken care of by IB...

it seems a bit sneaky though - how is it really "best execution" if they're seemingly able to throw in a sort of hidden commission in the form of an inflated spread

regardless - no such thing as a free lunch...

Looks that way - although I've just tried the app and it is giving identical quotes to IB which aren't marked up. Unless they only mark up on the bid side ...

dowie · 30 Mar 2020 at 19:53

Theophany said:
It's pure speculation because they don't publish their accounts, but I would imagine there is an amount of cross-subsidy from the CFD side of the business, which is why I mentioned the retail client loss rate. I would imagine that they will be the counterparty for the majority of the smaller accounts and when your win rate is 76%, you can use that income to subsidise the other businesses. When I was trading CFDs on Plus500, for example, I was doing it in the latter half of 2017(?) when Bitcoin was a one-way bet thanks to the Reddit brigade. As soon as I started consistently winning, they started to flag my account to limit the leverage, increase my margin calls and shorten the time windows I could leave a contract open for. As much as the FCA has introduced more regulation to the retail CFD market, it is still the wild west.

Yeah they're basically bucket shops tbh..

Almost certainly they're not going to hedge most client trades - average trade size would likely be smaller than they can directly hedge anyway, probably more just concerned about their overall inventory risk. Various firms seem to have implemented some form of dealer surveillance tool - one of my mates was involved in developing one at a large SB firm years ago - just the process of flagging up a customer's orders to a dealer inherently slows them down significantly and of course a human dealer is prone to slipping prices when it suits and/or giving adverse fills instead if it goes against the customer etc..
One thing they used to be concerned about is scalpers - not random day trading idiots but people who might use their own price feed and spot where the SB/CFD firm is slow to update prices the try to pick them off - though easy enough to catch those people and things like dealer surveillance tools will instantly ruin their game. Not sure that is so feasible these days but years ago they'd not be on top of everything when trying to stream prices for hundreds of different products and just like a regular bookie someone paying attention could start picking off some of their quotes etc..

regulus · 30 Mar 2020 at 21:16

Skeptic said:
Stocks up even though 200K+ deaths predicted! Money > People

Stocks ≠ the 'news'.

A cursory glance of NZ news would have you think the moment you step outside the door you'll be confronted with a world straight out of Days Gone, hordes of flesh eating zombies roaming around in groups and burnt out houses and cars everywhere. New York supposedly looks like a post apocalyptic planet despite people sharing photos of it still looking and pleasant as always.

I only know about my industry and we're about to ramp up our already massive recruitment drive, despite our senior management in Australia expecting the local isolation period to increase to 6+ weeks.

Yes, I agree when looking at the 'MURDER, DEATH, KILL!!, WAR!! WAR!!!!! KILLER VIRUS!!!! BILLIONS DYING IN THE STREETS!!!!' clown headlines it does seem strange, but I'm enjoying the low stock prices while it lasts.

I'm expecting to be back in the overall green on Thursday morning.