After the last event im still puzzled as to why things happend the way they did.
On such a short notice.
I am here to learn new things, understand and adapt, and also to help people learn how to pick and make profits with their trades.
My difficult question is:
If too many people win too much money on Trading212, does that mean that Trading212 loses money? Or get into trouble in some other way? Trading212 response to this is to lower the CFD stock leverage for everybody as fast as possible, in order for the company to stay stable?
Is this correct or am I wrong?
this has been addressed in the topics that were talking about the margin and leverages changes as well as the CFD account issues. you need only use the search feature and read through T212 staff’s posts.
Truly facinating information, so if I understand this correctly, Trading212 is trying to bring everyone over to Invest Account slowly, this way they can lower the “Exposure” for the company.
This is a assumption, I might be wrong… T212 does inhouse trading, all the trades people make here are never really in the stock market, but really inside the company, doing everything the opposite of the trader to make company profit, if the trader wins it is a problem, and to bring this problem down it is best to bring traders to Invest account. Less profit but also less risk. And Invest Account has Real Stocks, but CFD not, I think I understand now, thank you Dao
No, thats not how it works at all. T212 works just the same as every other spreadbet or cfd company. For cfds they make money on the spread, they hedge the clients positions so it makes no difference to them if the client wins or looses money.
Invest and isa are currently free, csnt see that 212 makes any money from invest at mo, apart from maybe kick backs from IB for traffic amd orders, but imagine in future 212 are planning to somehow monetise st least part of that platform, who knows how, probably advanced or better options for paying accounts. The invest amd isa at the moment is to attract people and hope they use cfds as well where 212 makes money on the spread. As everyother cfd broker does.
@Froop T212 gets a small return from the invest platform via securities lending, lending out shares held in invest accounts to allow traders elsewhere to short stocks and they collect the small payments to support the expenses of running the invest and ISA platforms, which are supported by the spreads and interest from CFD.
If positions were in fact all hedged how would they be so heavily over exposed right now which has led the CFD platform to come to a grinding halt with huge interest rates?
It’s became really expensive for them to hedge the trades in stocks that have been soaring, so they’ve have to limit these stocks. But I’m really not sure, I don’t get much of the CFD stuff, if you want a real response then tag David
Thank you for your answer, I never thought about it like that, hedging itself being more expensive for Trading212 company itself when many stocks go up, but this would explain alot and prepare us for this in the future. That is if many stocks go up, T212 might increase margin & also block everyone from buying until it comes down again, then we also know how long we have to wait until people can buy some of the 75 stocks again
I also could not find it in the beginning, and then i looked at Dao’s own messages in other posts and there you can see him explain it in bits & peices
the issues isn’t that the stocks themselves go up, but that everyone who knows they are going up wants to go long and there is little to nobody who will try to go short. and when many instruments all go in the same direction it’s not possible for T212 to net clients against each other as much and they have to balance the position on the other side. which means needing to reduce margin and leverage so clients use less of their money that they need to offset the risk of everyone who is long. the same could happen in reverse if everyone tries to short the market during a strong bear run.
@Supraman you posted in that thread plenty of times, I just couldn’t be bothered to type in lots of “…” searching processing stuck alone should get you the search result, “…again” being the correct topic.
