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There’s finally a bit of good news for retail spread betting and CFD traders, ETX Capital has introduced free guaranteed stops.
Why are free guaranteed stops good news?
Well, retail traders have had a pretty rough time of it recently. ESMA has insisted that their loses are plastered all over the internet. Margin rates have gone up. Soooo many traders have lept on the cryptocurrency bandwagon and done their (for want of a better word) bottom.
But now, retail traders don’t have to pay a premium for guaranteed stops. We’ve covered what CFD and spread betting brokers offer guaranteed stops here. So now as brokers fight to differentiate themselves through costs and added value, reducing the cost of protecting your positions may encourage traders to switch to ETX Capital.
The changes come after a raft of ESMA restrictions have made it harder for retail traders to access the derivatives markets. Whilst many of the regulatory changes are in place to protect retail customers. Such as the no-negative equity guarantee. Which means that clients can never lose more than their account balance and end up owing a broker money.
Some of the regulatory updates, such as the FCA considering to ban crypto CFDs are a little overzealous as they may actually hurt retail traders by forcing them offshore.
If you’ve not seen the interview, we spoke to Phil Adler, the new COO of ETX Capital about what his plans are for the brokerage and why putting the client first is so important. It’s well worth a read.
The free guaranteed stops are not available to clients who have upgraded to professional status. One should imagine that for brokers it is easy to offer guaranteed protection on small client orders.
But for larger clients, brokers open themselves up to considerable risk if large positions that cannot be closed instantly are subject to price guarantees.
After all, market stops, on even the most liquid market rarely get filled at the price and using a limit stop in volatile markets could mean you don’t get filled at all.
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Richard started the Good Broker Guide in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.