Who pays the profit?

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Viewing 15 posts - 1 through 15 (of 16 total)
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  • 02/12/2017 at 12:37 AM #24822
    cusack

    Hi All

    Rookie question here …who pays the profit you make from IG Markets?  Eg. if someone is trading CFD’s and consistently profiting, who’s pocket is that money coming from?

    thanks

    02/12/2017 at 8:10 AM #24837
    Elsborgtrading

    IG will take the otherside of the trade

    02/12/2017 at 10:15 AM #24842
    cusack

    hmmm. …so they’re the ‘house’?  just like a casino.  If that is the case, they wouldn’t want anyone to be consistently profiting right?

    02/12/2017 at 10:48 AM #24847
    Reiner

    over 90% of the cfd guys lose their money, it’s a save bet for the cfd providers and the few who survive are still paying with the spread and overnight fees.

    I can’t complain about IG, but you should not trade without a strategy or it’s only a matter of time until you belong to the 90%!

    02/12/2017 at 11:50 AM #24854
    Nicolas
    cusack wrote:

    so they’re the ‘house’? just like a casino

    Unless you want to trade “real” centralized market and pay the price for, that’s what you get with market making brokers. CFDs are contracts made by brokers.

     

    02/12/2017 at 11:52 AM #24855
    cusack

    Yep I understand the vast majority lose, but I’m wondering about the whole concept of the traders vs IG.  Am I right in comparing it to gamblers vs a casino?  If someone at the casino is consistently winning (because they’re using some sort of system or have an edge), the casino will try to break that system and put a stop to it.  Or is that an incorrect comparison?

    02/12/2017 at 2:05 PM #24868
    GraHal

    @Cusack No you’re right, except that as 90% traders lose then I guess IG have got it made!? 🙂 Read the ‘trade2win thread’ referenced in the PRC thread below … takes a while, but it’s well worth reading!

    Mmm seems the PRC link goes straight to trade2win (weird?).

    https://www.prorealcode.com/topic/5-min-mini1e-dax-spread-1/page/13/#post-22492

    Trade2win thread

    http://www.trade2win.com/boards/spread-betting-cfds/220766-interview-highbury-fx.html

    Cheers
    GraHal

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    02/12/2017 at 2:17 PM #24869
    Eric

    in the most popular CFDs like dax or eurusd they have probably thousands of traders some are long and others are short (like in the real market) and if the total volume is 50-50 they can sit on their hands and wait for the money from spread and other fees, if the total volume is 90% long and 10% short they probably need to hedge in the future (depending on how other correlated CFDs are traded)

    thats how i hope it works with IG?

     

    02/13/2017 at 11:54 AM #24953
    cusack

    Great info, thanks everyone for the replies.

    03/14/2017 at 12:43 PM #28509
    BestAlgoTrader

    us vs IG – listen man,,,,,, with OTC brokerages like IG any all of them – whenever someone is consistenly profiting, they start placing the same trades as them to offset the wins

     

    so if u start making mad money all day , IG will place the same trades as you so they make that same money and its OK .. look it up

    03/14/2017 at 12:50 PM #28510
    cusack

    that’s actually a pretty good strategy for IG  🙂   interesting

    03/14/2017 at 10:21 PM #28568
    Elsborgtrading

    Interesting theory ImAlreadyRich 🙂 however since IG is a marketmaker and will always take the otherside of your position, they had to place the copy trades in the direct market to win. There is no guaranties they will get filled. I’m really looking forward to my turtletrade strategy starts placing 40000 lot orders..hahaha

    03/15/2017 at 12:38 AM #28571
    manel

    Actually both theories are true in reality.

    As a CFD or SB marketmaker you should traditionally run a flat book so would hedge yourself in the open market anytime the long/short got very unbalanced – in reality though they get a bit of VaR limit to trade with so that they are not constantly in the market having to hedge themselves. Clients with DMA access at IG trade directly with the exchange so that IG make purely the commission/spread and financing without having to conduct any risk positioning exercise. In the rest of the cases, if you have a big operation like IG you will have positions coming in from all sorts of direction – spread bets, cfds, options, sprint etc etc for each market and this all gets fed into a Global risk monitoring system which will then highlight to the desk which side and by how much risk they are exposed to and what amount they need to hedge.

    However, most of these firms also have a separate Prop desk that will trade the firm’s own capital where they do indeed mirror the best traders positions and make money for themselves. If you think about it, they are in the best position to assess which traders are indeed consistently making money (ie. not just by luck or fluke) as they see all the accounts. It’s well known that up to 90-95% of traders either lose or make very little so it’s not that difficult for them to follow the ones that do. I am talking with having had experience of this happening 🙂

    1 user thanked author for this post.
    avatar GraHal
    03/15/2017 at 11:58 AM #28624
    GraHal

    So Manel, you have to tell us now … is your experience of being in the 95% losers 🙂 or that elusive 5% and you have been mirrored by IG!?

    Or is it British humour again! ha

    Cheers
    GraHal

    03/15/2017 at 12:32 PM #28629
    BestAlgoTrader

    do any of you have individual indicators for candlesticks? eg one indicator for bullish marubozu? and one indicator for bearish marubozu? i want them in separate indicators not all in one so that i can make a auto trading strategy in simplified creation! thanks

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