IG, Finspreads, other...

atypical

bowlhead99 wrote: »

No, this is exactly the point. The bets made /positions taken by customers are hedged against the market to elicit a profit per person or per bet. Clearly the more people participating, the more made by the middleman. So more IG customers equals more IG profits for Gadget's wife.

But they don't make money from the hedge do they? They just make sure they don't lose money and take the spread. Or have I got it wrong?

plunt

Just looked up spreadco and haven't used them myself but impressed to see the financing cost is libor+ 2% rather than the typical libor + 2.5% also no financing costs on short positions meaning it may be beneficial to use when you are hedging any holdings you may have else where

If any had experience on using them I would appreciate feedback ( good or bad ! ) looks like the founder is an ex employee of CMC markets

bigadaj

atypical wrote: »

But they don't make money from the hedge do they? They just make sure they don't lose money and take the spread. Or have I got it wrong?

Yes you're right, the theory is that hedging reduces the risk by more than the cost of the hedge. So simplistically more money could be made without hedging but the risk in doing this would be relatively very high.

atypical

bigadaj wrote: »

Yes you're right, the theory is that hedging reduces the risk by more than the cost of the hedge. So simplistically more money could be made without hedging but the risk in doing this would be relatively very high.

They seem large enough to generate a free 'natural' hedge too. I guess they prefer people to be successful then as it is likely to lead to more trades.