With tomorrow’s imminent and, not very welcomed margin slash to 1:2 ratios I’ve been thinking over and over is this in effect going to create a minor downtrend?
A lot of users on the platform are Long in a lot of different stocks and shares which, hazarding a guess I would imagine 100s of millions of shares.
If everyone starts closing their trades wether in profit or loss to mitigate the damages to their accounts, are we in effect going to create a downtrend lowering the value even further than it already is due to huge sell offs?
“huge selloffs” why cant i find anything regarding this on net internet? Where you seeing this?
As you don’t own the underlying asset with a CFD it has no bearing on the price of the instrument.
Even if it was options, where it would be trading the underlying stock, the total value of these investments in the platform would not be significant enough to make a change in the prices. It takes a lot of money to cause any movement
The sell offs coming from people closing their trades. I don’t know the exact numbers of users here but it’s in excess of 300k. If you where to take a conservative figure of 30% of users using cfd thats 90k people accounts going to be effected tomorrow at 3.30 and, with US market opening at just an hour beforehand that’s going to be some serious volatility in a very short space of time
we’ll still be a bet to close off any trade in the green during premarket I assume?
Absolutely as market in general seems to be on the up
Is this margin requirement is only for Trading212 platform or other platforms as well?
Can you or someone confirm this?
It’s Trading 212 choosing to do this, not sure what other platforms are doing
There is no pre-market tomorrow for US stocks
Friend, i know you know a lot. I know.
So tell me, you think t212 are in hard times?
Or is it just a general thing there doing in these times?
Just t212 as far as I’m aware
Google what a CFD is. Margin changes impact CFD accounts, CFDs are contracts between you and Trading212, those are not actual shares, even if company A had only 10 million shares and trading212 users had 1mil long positions on A closed it would not move the stock, no shares would be liquidated as neither the users nor trading212 owned the stock to begin with but just had entered into a contract for difference.
Look into what you are investing. Trading 212 Invest accounts that hold actual shares are not impacted by this.
@Cashurkash what you say, in fact will create a small micro uptrend instead.
A true CFD or a derivatives MM, will go and hedge a big part of their bets/exposure on the real primary market. And because everybody is going long on stocks in CFDs, T212 is forced to go and purchase these stocks, let’s say TSLA. A big number of shares, if not exactly equal to total exposure.
They’ve to keep buying as more people go long. So now if people exit their positions, all at once, that could mean 10-20$ million dollars (40K shares) worth of long exposure to TSLA is un-needed. The risk mitigation dept might keep them or start dumping them in the market.
TSLA being super liquid, 40K shares are traded within a minute or less. So don’t worry
Yes and no. Most likely this is a liquidity problem. To many people have gone all in. In the past common practice was that you have 20-40% cash in your portfolio. Just like a bank. The money in your deposit is not actually there. The bank uses it for various transactions and is only brought back into your actual account when you want to withdraw.
Based on some of the screenshots people have posted in the past 24 hours there are too many CFD accounts that have been running on 90-100% cash invested and it also seems they have positions opened for days or even weeks. Besides the liquidity problem there is another problem if CFD account hold onto the underlying assets for too long. T212 need to borrow the share from somewhere to create the contract so if people buy and don’t sell from time to time then T212 needs to go out and rent more stock.
This is not how CFDs are supposed to work and has created some issues for T212 (probably other retail brokers as well)
Everybody’s long TSLA and EV stocks. T212 doesn’t want to be the one stupid party shorting TSLA or EVs synthetically, so they go to the primary market and go long to hedge their short synthetic bets by buying shares. The stocks keep going up, TSLA up almost ~40% in the last 2 weeks, EV in general 5-60% up. Which means T212 lost a shit tonne of money, whereas the hedging is keeping the looses lower from CFDs.
T212 doesn’t want to go down in history as one of the TSLA shorters, so they artificially inflated (‘adjusted’) the long swap fees by a ridiculous amount and reduced the max quantity you can go long and increased the margin requirement. Some would call it outright stealing.
Imagine you are in a loosing football game, and you can just change the rules and get extra time and force the opponent team to play with less than half of their players.
Just to make sure you win or don’t loose bad. Pathetic I would say.
To me sounds like disaster recovery gone wrong, a MM or CFD provider should at least provide a level and fair playing ground when their winning odds are almost always 8/10.
That link doesn’t work. Is it invalid or has the content been removed?
So genrally speaking people in Invest platform are somewhat safer
It is regular members only section. (Aka L3 members)
@saifali not everyone can see that topic
I think your assesment is a little harsh. Downtime and such wasn’t great and people got compensated, although strictly speaking T212 make it very clear that they cannot be held liable for downtime. Not a great look going down in the first place, but they went above and beyond in correcting it in my opinion.
Now as to the margin issue. Well, your analogy to football doesn’t really hold up, because that is assuming the oppsing team did not agree to the other team being allowed to implement which rules they like. In this case every customer agreed that T212 can change the execution and margin amounts at any time. In this case I believe they have given over 24 hours notice for the margin reduction. Again, it’s not a good look, all I’m saying is people are judging them very harshly for things everyone agreed to.
I think it all has to do with the learning curve on onboarding so many new clients. Problems and procedures that were put in place slowly become inadequate with the increase in number of users. I would also bet it’s hard to identify what will be the next problem, it’s like trying to read the market. I do stick to the invest side of things so none of this has really affected me. All I can say is give it some time while the company continues it’s massive growth phase. There will be a time where number of users and concurrent use will be a much easier metric for them to guage.