Can you dispute suspect stock movement on your spread betting account?

adamt

I have an account with IG Index and was long on PFC , a very volatile stock,

I was stopped out of my spreadbet this morning, and i am okay taking a loss now and then,

But this 'stop execution' seems a bit suspect,

I had an automatic stop at 1337 and according to the IG chart at 08:01 it went down to 1337 and i was stopped out for a nasty loss o £1300, but it then bounced back up immediately

looking at the ADVFN chart it went down o 1339, but i do appreciate IG have their own SP with a wider spread

So i was wondering if this is just a case of misfortune, or does anyone think this slippage could be suspect?

I do assume IG don't do these tricks but wondered what others think

Biggles

IG's bid price (which is what the stop uses) would almost certainly have been below 1337 early this morning.

It's always rather risky having stops on volatile shares.

adamt wrote: »

I do assume IG don't do these tricks but wondered what others think

I wouldn't make any assumptions....

gkerr4

i've had a couple of very suspect issues with IG and this - i did write a secure message to question the values i got stopped out at - didn't really get a very comprehensive response to be honest.

I'd stop short of stating 'unfair play' on a public forum, but certainly it has left a bitter taste. On some occasions, had the amount 'not' stopped out, i'd have been considerably in pocket by the close of the day so it is very annoying. It happened once and i was annoyed, but then again an i wondered what was up - lately, it does seem to have happened a lot.

I've stopped using IG for this reason - and i'm currently looking for alternatives. I might give iii a go as my main trading account and ISA is with them.

Maybe my stop limits are too close - this is possible of course and as noted, stops on volatile stocks should be avoided as they jump around, but in a number of my cases, the price history came, on inspection of the graph no-where near the stop limit, yet it still got popped out. annoying eh.

cepheus

Examples of our dealing spreads are listed above and are added to either side of the underlying market spread for the share concerned. The dealing spread payable for shares on specific exchanges may vary due to the costs associated with trading in the underlying market. UK shares (other) 0.25% either side (DFBS)

http://www.igindex.co.uk/spread-betting/shares-dealing-spreads.html

which is 3.3p in this case, so the spread bet sell price will have been 1339-3.7=1335.3p below 1337 unfortunately, although the main market hit lower later in the day anyway.

tradetime

Can you dispute suspect stock movement on your spread betting account?

You can always query any transaction with one of these companies, although from what you have described in your post it sounds like there was nothing wrong with it. trading London stocks the LSE website will give you accurate info on what a stock did that day.
I would respectfully disagree on the idea that you shouldn't use a stop on a stock because it is volatile. I understand the thinking, but I would alternatively suggest that if a stock seems too volatile to someone to use a stop, then it is probably too volatile for them to trade.

chewmylegoff

Spreadbetting companies hedge the transactions you place by buying the underlying instrument for their own account. They make money on the spread, dealing charge and financing charges. They make the same amount whatever price you close your position out at and therefore they have absolutely no incentive to manipulate the price in order to mop up client positions with stop losses attached ( which is I presume what you are thinking).

The market moved, your stop loss was activated and you lost money. Hey did exactly what you asked. Of course you can try complaining but it seems unlikely that you will get anywhere as they have followed your instructions.

bowlhead99

When spreadbetting there is a natural desire to be greedy in pursuit of the the maximum possible 'win', and to make the best use of margin by having larger bets and tighter stops. If you can only afford to lose x amount, you could have set the stop at 1300 (two or three percent below your actual stop) and for a smaller bet size. But in search of a bigger gain, you bet larger amounts with a higher stop. The higher you set your stop, unfortunately the more likely it is that it will be hit, and it's galling when the price comes down, kisses your stop point, takes you out of the market and goes off without you.

In this particular instance, as Cepheus points out, IG have their own spread around the pure market position which is how they stay in business. The underlying bid did go down as low as 1340 within the first minute (according to trade data from ADFVN which you mentioned) and IG stopped you at 1337. If the underlying bid had gone down one more point to 1339, IG's price with their quarter percent spread would have been 1335.6 which is below your stop and too late. Surely they are not allowed to not execute your stop if the price you set to exit is available in the volume you need!

If you were willing to be still in the game at those prices, knowing it might only be temporary first thing in the morning when spreads can be wider anyway, a stop at 1300 or even 1320 would have remained intact (and if you're a sceptic about IG's practices, it would certainly have allowed you to see that they were screwing you if that price got taken out when the market was nowhere near).

Note there does not have to be any actual trades from anyone else at a particular level for your broker or spread-bet provider to follow your instructions and execute a stop or limit order. The price just has to be available. And not that it will be much comfort but I note later that afternoon there were several real market trades at 1334 so you would surely have been taken out then, even without IG's additional spread (which we are willing to pay, for the convenience of their platform and the tax advantages and margin trading ability they offer, compared to main market trading).

I've also experienced being stopped out with IG and with City index only for the market to then move back up or down without me and it can be frustrating. Some things to consider, if you are looking on a chart (particularly a third party chart) to see if it's 'fair':

- does the chart show bid and offer prices rather than mid price?

- have you adjusted the chart yourself for additional spread from your 'middleman' spread bet company?

- most importantly is the chart showing tick by tick or at least second by second rather than minute by minute or five minute intervals or whatever? Price can easily change and change back again within a minute or even within a second (there are multiple market makers who may be 'on the bid' or offer at a point in time)?

Long story short, you don't really have a complaint here but feel free to make one. You are only making the service more expensive for others if you make complaints knowing you are going to waste your time and theirs and not get anywhere. This shouldn't stop you making a complaint if you really do have a case, but this example isn't one of them.

sabretoothtigger

I'd hold the shares on this instead. If you get stopped out I think thats a reasonable idea still so long as you are not chasing it or changing your mind to suit matters

I do hold PFC anyway, nice prospects

On spreads, yes its deceptive but this is the game. Everyone complains about this, its how they make their money.

SB means wider spreads, means wider volatility which means its even harder then normal for you to be accurate in following market without being trampled. You have to give it a wider berth, take most of the profits at your choosing and I'd leave a stop loss as an afterthought.

The market is always flushing people out, its natural and like I say SB aggravates this to aid your frustrations and enhance their profit

[PFC support at 1250 and broken uptrend obviously but maybe it can break out 1360 or above?. Officially hard to trade I think no clear trend till its breaking down or up. If I was to short, sight 1320 as a top ]