The Fast-growing Spreadbetting Market. Is All As It Seems?

[curioustrader 10]

I am a UK-based freelance journalist and write for various newspapers and recently wrote a long article on trading for one of the UK broadsheets.

 

I’ve started looking into another issue and would appreciate any input – on or off the record – from people on this forum.

 

During my research into the last trading story I wrote I spoke to a lot of people about financial spread-betting.

 

It’s a fast-growing business, and now has lots of players. The spread-betting platforms look like the real market. And feel like the real market. But are of course clever simulations.

 

The spread-betting companies claim they’re transparent mirrors of the market. And I’m sure some of them are. But some people see them more like casinos – where the house has an advantage. I’ve heard rumours of some spread-betting companies playing tricks, tweaking the spreads, changing the stops, or locking people out of a trade – when someone makes a lot of money.

 

My question: Is this really true? Can anyone prove it?

 

(There are obviously lots of spread-betting companies out there and some may be better than others)

 

Please get in touch with me if you have any views on this and maybe we can have a quick email exchange or even a skype/phone chat about your experiences?

I look forward to hearing from you

 

David

david.c.robinson@hotmail.com

[luckystrike 10]

About skewed spreads you might want to check those articles:

 

Are Spread Prices ever Skewed?

How does a spread betting company make its money?

 

I spread bet myself and don't believe providers skew spreads - you can see this for yourself by comparing a live feed (direct market access) to their quotes - they simply add their percentage on either side of the bid/offer spread - for instance for FTSE 100 shares this could be typically 0.05% either side.

 

Note that the industry isn't really growing that much - there were just 92,000 active spread traders in 2012, the market has grown only by around 9000 accounts since 2009.