WITH spreads pulled as tight as a drum and trading platforms becoming ever more sophisticated, it is clear that competition between contracts for difference (CFD) providers is heating up. A price war has been waged over the last year – much to the trader’s benefit. WorldSpreads even daringly began to offer zero point spreads on certain markets earlier this year. But with Saxo Bank’s retail client CFD trading platform launching tomorrow, it could be a fair guess to say that next year’s battle will be fought on technological advancement. Again, fantastic news for traders who can sit back and wait to enjoy the improvements. There is much to look forward to. Here are five predictions:
1. MORE LEVEL TWO DATA
LMAX has tipped us off on this trend. Its peer-to-peer exchange launched two weeks ago gives traders full access to the order book, providing real volumes numbers. LMAX’s chief executive Robin Osmond claims they have set the bar for industry transparency with this one.
2. PROFIT AND LOSS REPORTS
Saxo Bank’s unique selling point tomorrow will be offering detailed profit and loss accounts for stocks trading on its platform. This will include cash flow statements, research, balance sheets and most significantly future estimates on the likelihood of a company’s success.
Chances are that much like the interactive charting and technical analysis tools that took off across the provider platforms a few years ago, company data will be available across all platforms in a few years.
In the meantime, Saxo Bank platform users can smugly use the new material to silence accountant friends who claim that day-traders “just don’t pay attention to the fundamentals.”
3. THE ANDROID PHONE APPLICATION
Long-awaited by android users who kick themselves for not buying a BlackBerry or iPhone, which already have trading platform applications. Providers such as IG Markets have made it a priority with plans in the pipeline for launching one in 2011.
4. FEWER GUARaNTEED STOP LOSS ORDERS and limited risk accounts
Radically, it looks like mandatory guaranteed stop loss and limited risk accounts could be edging their way out, or could at least be offered with a greater degree of flexibility. The trend stems from LMAX, Saxo Bank and City Index decisions to give their clients optional stop loss accounts, leaving traders with more control of how to manage their risk (and reduce fees).
Josh Raymond of City Index explains that this gives clients greater access to markets: “When we had limited risk accounts, we could only really offer limited-risk account users access to around 30-40 per cent of our 13,000 markets. We wanted to allow traders of all different quantities access to the same range of markets.”
5. FASTER trade EXECUTION
Considering that CMC Markets’ recent platform relaunch promised fewer re-quotes and IG?Markets already claimsß to offer execution in the millisecond, faster trades could be achieved sooner than we expect.