By TraceyShort · Posted
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
The value of shares, ETFs and ETCs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.
CFD, share dealing and stocks and shares ISA accounts provided by IG Markets Ltd, spread betting provided by IG Index Ltd. IG is a trading name of IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. Both IG Markets Ltd (Register number 195355) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
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This afternoon the Australia 200 CFD was adjusted down for dividends as shown above. The problem I have with this is that, whereas our cash account is adjusted to compensate for this, our stops are not adjusted so I was triggered out of a trade thereby losing my risk margin. The real market made no such move and, in fact, rose to the level I had set minutes earlier to get out of the trade for breakeven.
So I lost money on the trade only because of the adjustment made by IG. I checked FXCM and OANDA platforms to confirm that they had made no such adjustment, and the cash market did not reflect this adjustment either.
Really, if these arbitrary index adjustments are to be made, stops should automatically be adjusted by the system also. Further, if we have open positions in any index that is about to be adjusted, we should be sent a notice at least 24 hours before the adjustment so we can decide to exit our positions as we do not know how much the error will be.
I believe that we should be compensated for losses on such trades as the stop was not really hit. Further, the new arbitrary price level of the index going forward no longer relates to the real-world price on the exchange, and the support and resistance levels form the historic prices on the charts become meaningless. This is all very confusing and I am unclear as to how IG expects us to deal with these factors.
I would welcome some comments on this as I am unsure how to move forward in such an environment.
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