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Can you not short a stock with a spreadbetting account due to "unborrowable stock"?! Or am I going mad?

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Guest why

You can't short certain stocks even some indices. Get in touch with IG to know more about which one you can short or which one not.

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Because no-one is available to lend it to you..... probably because they all think it will fall, or are not willing to take the risk.  You need two sides to make a transaction.....

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But that's the point, I'm not actually borrowing the stock with spreadbetting, I'm literally making a bet about whether the price goes up or down. That's why there's no level 2 and you dont have to worry about getting filled etc

 

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3 minutes ago, larrytradingltd said:

But that's the point, I'm not actually borrowing the stock with spreadbetting, I'm literally making a bet about whether the price goes up or down. That's why there's no level 2 and you dont have to worry about getting filled etc

 

True you're not borrowing the actual stock but on a cfd account (spread bet) you are looking to borrow the contracts instead so amounts to the same thing, if no one want's to lend them to you who can't get filled.

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Sorry I might be wrong but I thought cfd and spreadbetting were two separate things? Speadbetting being simply betting on the price of something that IG pulls the direct data from. Hence the reason there's no need for level 2, you dont have to worry about ever not getting filled or sold and there's no need for stop limit orders? 

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1 hour ago, larrytradingltd said:

Sorry I might be wrong but I thought cfd and spreadbetting were two separate things? Speadbetting being simply betting on the price of something that IG pulls the direct data from. Hence the reason there's no need for level 2, you dont have to worry about ever not getting filled or sold and there's no need for stop limit orders? 

Hi, no sb and cfd are the same but for taxation category purposes, the underlying market for both is the cfd market which the IG market tracks. If it was as you say it would beg the question who were you betting against? IG? IG are adamant they don't take the other side of client's bets and if they did and the regulator was to find out IG's long spell as a leading broker could be at an end. So their position is that they match trades in house and any over flow is hedged, so shorts may well turn out to be unborrowable.

 

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I just mean that you are not actually buying and selling to another physical person, you are taking a 'bet' against whether the market goes up or down. So if everyone was correct on their positions then IG would lose money because when people get it wrong they make money, when people get it right they lose, right? Taking the position much more like a traditional bookies in that sense. 

Correct me if I'm wrong but it's that distinction that means it's a bit daft that you can't trade stocks because the shares are unborrowable, because IG doesn't own the shares to begin with. It tracks the market and you bet on it going up or down? 

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I suspect it's for this reason that you can never trade any of the main gainers in the US market, there's always the error "Market only available to close" 

Which is IG protecting themselves against big losses from big volatile moves. 

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Also I don't suppose you know what the s&p500 is tracking after hours? Was expecting it to be closed till Monday 

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7 minutes ago, larrytradingltd said:

I just mean that you are not actually buying and selling to another physical person, you are taking a 'bet' against whether the market goes up or down. So if everyone was correct on their positions then IG would lose money because when people get it wrong they make money, when people get it right they lose, right? Taking the position much more like a traditional bookies in that sense. 

Correct me if I'm wrong but it's that distinction that means it's a bit daft that you can't trade stocks because the shares are unborrowable, because IG doesn't own the shares to begin with. It tracks the market and you bet on it going up or down? 

you are confusing a broker with a bookie, a broker matches buyers to sellers, a bookie just takes the other side of your bet having given you 'odds'. 

If the broker can't find someone to swap contracts with you then they can't fill your order.

If the broker can't find someone to lend you stocks or contracts then they can't even start to look for someone to take your short order when you have nothing to sell.

IG have survived many major market upheavals precisely because they are not directly involve in taking bets. 

14 minutes ago, larrytradingltd said:

Also I don't suppose you know what the s&p500 is tracking after hours? Was expecting it to be closed till Monday 

Brokers use the futures market to give out of hours prices.

If you are looking for a broker that operates in a loosely regulated region and does take the other side of your bets I can recommend Plus 500 who nearly went bust just recently and had to issue urgent profits warning to their share holders due to clients 'getting it right' on recent bets during the covid and oil market upheavals. Good luck. 

 

 

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Sorry I think you're missing what I'm saying. IG isn't purchasing the actual stocks from an exchange, it's purchasing the data and then you are putting money on whether that price goes up or down. Therefore they do not need to find anyone to swap contracts with and the deals that go on with all cfd and spreadbetting accounts dont have any effect on price action as they dont effect liquidity at all.  

I'm not calling into question how IG operates, I dont have a problem with that at all, just trying to clear up the nature of spreadbetting. Although it is a little frustrating not being able to trade the main gainers of a day but I guess it is understandable from their point of view.

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That's the reason you can always get filled on a spreadbetting account, you dont need to look at the level 2 to ensure you'll get filled, market liquidity doesn't matter and there's no need for stop limit orders at all... 

Or am I completely wrong?! (It's a possibility) 

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I'm not saying IG takes a position on the other side of the trade but they only make money when customers lose money, whereas a traditional broker wants all their customers to win on all their trades because they will stick around, continue trading and they make their money off the commissions. 

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1 hour ago, larrytradingltd said:

I suspect it's for this reason that you can never trade any of the main gainers in the US market, there's always the error "Market only available to close" 

Which is IG protecting themselves against big losses from big volatile moves. 

Can you expand on this as I'm close to opening an account with IG and wasn't aware of this.

If a bio stock is up 30% on the day and I want to either buy it on a pullback or fade what I think the top is, the chances are I'll get an error message saying "Market only available to close" ?

Does it happen with big daily gainers all/most/some of the time? If so I won't bother and will just open a small SB account to take a punt now and again. Cheers. 

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1 hour ago, larrytradingltd said:

Sorry I think you're missing what I'm saying. IG isn't purchasing the actual stocks from an exchange, it's purchasing the data and then you are putting money on whether that price goes up or down

this doesn't make sense, you are saying IG is just taking the other side of your bet (who else could you possibly mean?), i've explained twice that is not how it works, IG match buyers to sellers.

1 hour ago, larrytradingltd said:

That's the reason you can always get filled on a spreadbetting account, you dont need to look at the level 2 to ensure you'll get filled, market liquidity doesn't matter and there's no need for stop limit orders at all... 

Or am I completely wrong?! (It's a possibility) 

yes, you are completely wrong, IG's spread bet and cfd track the underlying cfd market, if you place the SB chart next to the CFD chart they are exactly the same, same candles same prices, they move in the same way because they are the same. 

you are saying you should always get filled with SB but then can't understand why you didn't get filled with SB, the answer is likely to be a misunderstanding as to how SB works. it works the same as cfd, you need a buyer for every seller and if you don't get filled then obviously the broker is not just stepping in and automatically taking the other side of your bet.

loads of new traders say brokers are corrupt, brokers know retail mostly lose and so they just take the other side of the bet, but if ever the trader doesn't get a fill they blame the broker and expect them to just take the other side of the bet.

 

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7 minutes ago, Caseynotes said:

this doesn't make sense, you are saying IG is just taking the other side of your bet (who else could you possibly mean?), i've explained twice that is not how it works, IG match buyers to sellers.

yes, you are completely wrong, IG's spread bet and cfd track the underlying cfd market, if you place the SB chart next to the CFD chart they are exactly the same, same candles same prices, they move in the same way because they are the same. 

you are saying you should always get filled with SB but then can't understand why you didn't get filled with SB, the answer is likely to be a misunderstanding as to how SB works. it works the same as cfd, you need a buyer for every seller and if you don't get filled then obviously the broker is not just stepping in and automatically taking the other side of your bet.

loads of new traders say brokers are corrupt, brokers know retail mostly lose and so they just take the other side of the bet, but if ever the trader doesn't get a fill they blame the broker and expect them to just take the other side of the bet.

 

Sorry I think it's you that doesn't understand the concept of spreadbetting. Yes I know they track the same market, same candlesticks, price action etc. The difference being that you are not being linked to an exchange and actually purchasing a share of a stock from a seller. You are taking a 'bet' against which way the market will move. (Hence 'spreadbetting') Which is why you can always get filled on an order at any price, buying or selling, because you are not actually buying or selling a physical share from one of the many exchanges. 

 

My issue is not getting filled, I've always been filled obviously for the reasons I've listed, but the issue is IG not allowing you to trade many of the indemand us stocks, just saying "market only available to close" 

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1 hour ago, HappilyNorth said:

Can you expand on this as I'm close to opening an account with IG and wasn't aware of this.

If a bio stock is up 30% on the day and I want to either buy it on a pullback or fade what I think the top is, the chances are I'll get an error message saying "Market only available to close" ?

Does it happen with big daily gainers all/most/some of the time? If so I won't bother and will just open a small SB account to take a punt now and again. Cheers. 

Yep, I've found this repeatedly on all of the top gappers. I don't think I've found one that I've been able to trade yet, which is pretty frustrating if that's your strategy. To be fair to IG I really like their platform and use it to trade mid/large caps and etfs but I've opened an Interactive Brokers account for the small cappers.  

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16 minutes ago, Caseynotes said:

 i've explained twice that is not how it works, IG match buyers to sellers.

 

 

This isn't true, you are not actually buying or selling the stock in a spreadbetting account. It's why the level 2 is largely irrelevant and there is no need for stop limit orders. 

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22 minutes ago, larrytradingltd said:

Yep, I've found this repeatedly on all of the top gappers. I don't think I've found one that I've been able to trade yet, which is pretty frustrating if that's your strategy. To be fair to IG I really like their platform and use it to trade mid/large caps and etfs but I've opened an Interactive Brokers account for the small cappers.  

Shame. Oh well. You would have thought IG would be big enough to manage volatility... I've given up trying to work brokers out. 

I haven't looked at IB for years. Last time I did I'm pretty sure I really liked their platform but UK traders couldn't open accounts with them. I'll take a look now. Thanks for the heads up.

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Yeah, I mean I sort of get it, with the 500-1000% daily swings we've been getting recently, but it is disappointing though. I opened one just the other day, you might have to not be quite so accurate with the questionnaire but it's definitely doable  👍

 

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1 hour ago, larrytradingltd said:

The difference being that you are not being linked to an exchange and actually purchasing a share of a stock from a seller.

neither SB nor CFD are linked to the exchange unless you are dealing through the DMA platform and even then you are still dealing through IG.

1 hour ago, larrytradingltd said:

You are taking a 'bet' against which way the market will move

you are taking a bet on a move in the market, someone must cover that bet, who? it can only be either another buyer/seller or IG.

1 hour ago, larrytradingltd said:

You are taking a 'bet' against which way the market will move. (Hence 'spreadbetting') Which is why you can always get filled on an order at any price, buying or selling, because you are not actually buying or selling a physical share from one of the many exchanges.

you can't get filled if no one takes the other side of the bet, WHO? it can only be an other trader or IG and as I've already said it's obviously not IG or you would have got your fill automatically.

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1 hour ago, larrytradingltd said:

Yep, I've found this repeatedly on all of the top gappers. I don't think I've found one that I've been able to trade yet, which is pretty frustrating if that's your strategy. To be fair to IG I really like their platform and use it to trade mid/large caps and etfs but I've opened an Interactive Brokers account for the small cappers.  

sounds like you have been suckered in by that scammer ross cameron of warrior trading 🤕

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1 hour ago, larrytradingltd said:

Yep, I've found this repeatedly on all of the top gappers. I don't think I've found one that I've been able to trade yet, which is pretty frustrating if that's your strategy. To be fair to IG I really like their platform and use it to trade mid/large caps and etfs but I've opened an Interactive Brokers account for the small cappers.  

trading US small cap gappers as per ross cameron, here's the thread, what a ******* disaster that was.

 

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Guest MonkeyFlame

Just to add my 0.5c

when you take your position, as IG is not taking the other side, it has to place the same trade in the actual underlying market. 

so if you’re trying to short a hard to borrow small cap stock, IG would need to be able to obtain borrows of that stock for its own position. 
 

if you win, IGs position is covered by the market. If you lose, IGs position is covered by you. 
 

at least that’s how I thought it worked

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Interesting conversation about HOW IG operate. I have to agree with Larry trading here. IG always say they do not take the other side of the bet. BUT the fact is when you trade with them you are absolutely not in the real market, your money stays with 'Bank of IG' - so far as I am concerned if you lose they win and vice-versa.

As Larry said you are placing a trade or a bet against the data feed that IG supply - that's it. There is no one on 'the other side' of your trade. The only time IG put it out to the real market is if their risk model requires that, i.e. everyone is taking one side, short or long. Again as Larry states we are NOT in the 'real market' we do not provide liquidity ! WHY should IG care about matching another client to the 'other side' of your retail trade ? They KNOW all retail traders lose anyway. If I place a 'long' trade on the DAX and lose when spread-betting, where is that loss going, WHERE EXACTLY ? It goes to IG, are you (Caseynotes) saying it goes to the other IG client taking an opposing trade, i.e. someone that went 'short' ? Bearing in mind 80% of retail traders at IG lose WHERE are all those losses going ? ANSWER: TO BANK OF IG. 

CaseyNotes says ' IG matches buyers to sellers' that's a nice 'theory' ...again all the money stays with IG as we, the spread bettors, are NOT in any real market at all. You mention CFD's above and how they correlate with SB but again CFDs are not the real market they (brokers) just copy (via data-feed) the cash and futures market. As you correctly say CFDs are taxable for the rest of Europe to trade with. 

I have not got a problem - like LarryBoy - about how IG operate, but as far as I am concerned Larry is right, all the trades when SB'ing stay with IG ONLY inc. all the trades / bets placed and monies stay with them. If you loose they win. End of. You can call that 'taking the other side of your trade' ... I personally do not, as it kind of implies that they are 'cheating' their Clients which they are not. Again they do not need to: ALL retail traders lose (80 - 90%). 

 

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Posted (edited)

My interpretation (FWIW) is that a small number of winning clients get the money, and IG 'only' keeps the spreads.

But if 70 - 80% of clients are long on a market (say), and they turn out to be right (copper, recently) then I don't see how IG could stop from losing money unless it put some kind of real trade on or fund the losses from money made elsewhere (in an underlying market where most clients were wrong)

Edited by dmedin

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Perhaps someone from IG should come on this thread and explain exactly what happens on both sides of the market when retail place a SB/CFD order because the following doesn't answer in full.

Untitled.jpg

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you could try doing a search as the question has been answered on the forum probably about half a dozen times by IG.

As pointed out before, brokers who take the other side of the bet are at risk of going bust and do so routinely. Brokers who don't take the other side tend stay in business and keep their license, so given the longevity of IG as a company the later business model is the more likely.

IG gets prices from the big players in the market and pass them on to you with a widened spread, simple really.

They have an A-book and a B-book, essentially profitable and non-profitable traders. B-book has far more traders but they use far less size, A-book has fewer traders but they use far greater size. 

The business model is to match in-house shorts and longs as much as possible which is often matching A book to B book and IG takes the spread off both parties. Any over flow is parallel hedged which means IG taking the same position in the larger market, if you win so do they so they collect and pay you, if you lose so do they so they collect off you and pay whoever provided the hedge, but don't worry IG still turn a profit as they get far tighter spreads than they pass on to you.

Good brokers, bad brokers, take you pick. Bad brokers are cheaper but eventually get flushed when their clients suddenly 'get it right' during a market upheaval, clients might get their money who knows, clients of Iron FX certainly didn't.

Good brokers are never the cheapest but the business model they use is sustainable and so they tend to last. 

 

 

 

 

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A better question is 'Why on earth do retail punters keep doing this to themselves', given that they are inveterate losers.  😲

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