Unusually large spreads

I’m not going to sit here and lecture anyone on knowing when to cut their losses. They have every opportunity to close the position before all those fee’s add up and often choose not to. Were they going to sit and watch it hit zero all the while blaming T212 for not forcing them to close out earlier?

Hypotheticals don’t serve any purpose here.

Do I need to tell people to look up how hedging works or can I count on people to be responsible for their own financial decisions? the difference in spread is a one off collection for T212, it doesn’t earn them a penny more for you losing or gaining on that position.

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Hence why I said to ignore my risk management strategy. I’m still comfortable with this trade, which is my own decision. I’m still very profitable overall.

The point is, this is still a losing trade and T212 are making money off it. Increasing the spread would put me in a worse off position, holding the losing trade longer, and earning T212 more money.

Simple.

The point in my hypothetical was pointing out the difference between winning and losing trades. Had my trade been a winner, I would have paid a couple of dollars interest, not the 100+ I’ve paid on the losing trade. I’m just explaining how T212 does in fact make money off losing trades.

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Could you explain the reason they’re increasing spreads?

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Its a control for their exposure risk.

They could have reduced the leverage available rather than increase the spread as an exposure mitigation measure. They chose to increase the spread. The reason I imagine they did this is to push people into losing trades and increase the money they earn from them. Contrary to what @Dao is saying, losing trades do indeed make T212 money and cost investors.

See my example above from my own trade.

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Sometimes I think a select few members of this community are undercover staff :shushing_face: t212 is looking after themselves and putting us in the shit. Simple

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I’m starting to think T212 has little to no idea about the extent of the impact that their fiddling with the spreads has been, and continues to be - which is incredibly alarming.

Let me just put this into perspective to get it off my chest one last time.

  • The Nasdaq data I can see is reporting a pre-market price fluctuation of ~$0.10c or -0.98% from $10.15 to $10.05.

  • T212 processed this as a magnified drop of $1.14 or -11.6% drop from $9.83 to $8.69 (at this point the spread between the Ask and Bid was 30%)

This is not taking into account the initial spread from the actual share price.

The impact on my account was greater, equivalent to about 15% of my margin, if not more, and when combined with other positions, momentarily pushed me into a margin call and closed positions for a loss before rebounding.

This all happened on a handful of shares being traded. on an instrument that has millions of shares traded each day.

This is not even the worst example demonstrated here, but it is dependent on your volume and size of positions, of course.

Put simple, their spreads are an absolute catastrophe.

T212’s explanation of their spread manipulation is dubious at best - protecting themselves at the expense of their users.

Given the extreme market conditions right now, it’s becoming increasingly difficult to efficiently hedge exposure to popular instruments.
This, unfortunately, requires us to take measures in order not to exceed exposure limits. We have decided not to increase margin requirements (decrease leverage, which would mean a potential stop-out) but rather increase the spread.

I laid a complaint with T212 regarding their spread manipulation but also a request to see the terminal data for this price movement as I am unable to validate this on external platforms, and frankly, I have no reason to trust T212’s platform right now.

Three replies from T212 in the email thread, each time from a different customer care member, each saying a similar thing, educating me on the type of spread they use - Stefan instructing me the definition of a floating spread, or ‘active’ as Stanislav referred to it.

Stefan tells me:

You can be certain that our prices are live and updated within milliseconds, due to the fact that we use big banks, financial institutions, and other large brokers as providers in order to increase reliability.

But this is not true is it? You don’t have to go far in this forum at all to find evidence of technical issues with their data that results in compensation

Mihail informed me:

The decision to amend the trading conditions was not taken lightly

Really? Not taken lightly?

Usually when a company takes such a hard decision with huge (financial) ramifications of their clients and users, they take a careful and calculated approach and make the best effort to inform their users.

Where are the communications from T212 of the amended trading conditions?

  • Spread manipulation
  • Massive swap rate increases
  • Instrument and hedge suspension
  • Processing and server issues

The silence is deafening.

In my fourth email I pointed out that they still hadn’t addressed my query regarding the price data on their terminal and past technical glitches, and that I wasn’t asking about spreads, that was the end of any responses by them.

The staff have been active elsewhere though across the board, but haven’t stuck their heads in here after 120+ replies over 24 hours on clearly a hot topic of a pressing issue.

One thing you may be certain about - we’re all working tirelessly to ensure that our clients are receiving nothing less than outstanding service. Digital businesses, like ours, however, cannot commit that an external factor or a technical difficulty won’t somehow affect the expected flow of operations. - Tony.V

Well @Tony.V , I’m not quite sure we agree with the definition of outstanding service you are using.

Regardless of how T212 make their money through CFDs, they make their money through CFDs.

If this was your business model, would you not try to provide a customer and user experience that kept these wheels well oiled? Because from what I can see, there is irreversible damage being done to the T212 brand, and users must be leaving CFDs in droves, while the paper trail left behind on social and other websites will turn away future users.

Surely they have a robust understanding of how complex CFDs are and their clients risk management is without throwing an invisible spanner in the works.

With all that said, @Dao, I appreciate your contributions here. Could you please clarify to me the correct complaints procedure so I know I am following protocol?

Thanks.

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If you are trading with decently large notionals then try IG.

If not then to be honest I’d ditch CFD and open a tastyworks account - start doing options.

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What I read from there is that the apparent problems on the connection between Trading 212 and Interactive Brokers that resulted in complaints from many people using Invest accounts is also hampering their ability to hedge CFD positions. If they too have 30 minutes of more delay when trying to hedge increasing spreads might be a way to limit that risk.

Hopefully once the connection problem is fully sorted all spreads may return to normal.

Trading 212 fees

Trading 212’s big unique selling point is its zero-commission trading. There are no charges for share dealing or to hold stocks in an ISA wrapper. Trading 212 makes money through the spreads between the buy and sell price on their assets. There is also a 0.5% currency conversion charge and you will have to pay stamp duty for share and ETF purchases. The platform’s chief executive Ivan Ashminov has previously indicated that additional ‘premium’ services will be added to the platform, which users will need to pay to access.

Fair enough, this could well be the case.

But then I’d question how fair it is to not make customers aware that you as a platform are struggling to hedge the underlying risk of users’ open positions. If user X has an open position and is just about in profit, so decides to keep it open overnight then 212 find out they can’t hedge the risk correctly and so widen the spreads, potentially pushing user X’s trade into a loss - how is that fair when no warning / other options explored?

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I got 5 margin call notifications today via email. All due to spread influx’s that where crazy! I got stopped out of a few positions and had to close a few as widened spread x1800 shares = crazy figures. Price went up spread came down making a profit minuscule. Price went down spread went up making difference absolute huge and throwing you straight into the deep end and stopping out other trades that where sitting comfortably :see_no_evil: for weeks, patiently appreciating in value. Love the platform but it’s heading into the “get what you can from your customers” territory and I must say, I’m not a fan

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T212’s financial reports (<- link) explain that they make money from increasing the spread. Which is not a secret - they’ve said it here in the forum that they do it.

So when the spreads suddenly increase by 700% the obvious conclusion is T212 is trying to make more money. Or shake people out of trades by blasting their stop losses to smithereens.

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Well when we are forced to close a position or a position is closed due to margin call as spreads so wide, we close out at a loss. That loss is t212s gain. Explain how they don’t make money with this?

I’ll take a look at IG, thanks. I did hear the fees are fairly large though on them.

Never heard of tastyworks, will check them out.

Paging @Dao. (20 characters)

TastyWorks is a US options broker, but you can trade from UK/EU and I know people do.

Not a free platform though and also there are fees to be aware of when transferring funds - best way is to use transferwise or similar. There are guides online for using TastyWorks from outside the US. Huge benefit of options, other than the TastyWorks software actually being really good, is that they are exchange traded - no broker messing around with spreads, limiting exposure etc.

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I had this experience also. I was shorting a position so when the price was going down, I should have been delighted. Though as the price went down, the spread widened. So actually for a long time, as the price declined and declined, instead of going into the green more and more, I went into the red more and more. Eventually it dropped enough to allow me to exit the trade with $1 profit. Just enough to get out of it and barely break even.

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I ended up with just over £1,160 negative result and that was after closing 11 green trades

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Christ. Your head would be wrecked.

The worst part for me is I was looking for that position I just mentioned and it was green, then suddenly the spread just widened and it was hugely red. Madness.

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Yeah it’s a forking nightmare indeed