If you mean that seriously that gives then arbitrage opportunities between such spread betting CFDs and futures markets. Really it can be ? I highly doubt this. It would be too easy to print money with limit orders (automated in a way).
I'm sure there are enough algos doing this already. But think about it. If NQ is hovering at 15,000 and not moving, and yet Tom says he is buying, and then 1,000 all buy, but don't buy the NQ but instead their instrument, won't this cause that instrument price to go up? There are likely not enough sellers at that price for a much smaller instrument than the NQ. But now you have to wonder who is right? If you buy at the equivalent of 15,005, hence getting a much worse fill, if it goes to 15,050 you feel good since you're in, but if instead NQ breaks 15,000, you have now bought the very top and paid too much. So I don't see how you're going to print money just because of an imbalance.
Simple as that. If others jumped in, in your example, then sell NQ CFD at 15005 and buy the 15000 price quote from NQ futures. Quick and sure profit. It cannot be or would not believe until I could see it myself. It would be too easy to make quick bucks without any risk.
If they are both equal weight, then doesn't one just cancel the other? You make money on the NQ, but lose on the CFD assuming NQ goes up to 15050. Maybe I'm missing something.
You do not need the same size doing then the mass of 1000 traders are doing the move around the NQ CFD. Just take smaller size and trade the differences between NQ Future and NQ CFD. But I doubt this is profitable. So it cannot be what you described (as proof for arbitrage rule).
Thanks & good point. I might do. I think Tom will read this anyway or his assistants will surely do and alert him. I myself googled "Tom Hougaard reviews" and that´s how I ended up here, not having posted anything here for 13 years. I was just interested what you guys / independent experienced index traders here are thinking about him. I myself am an FX spot / FX Swaps / Interest rate futures guy (retired top end institutional in the City ) but never traded indices apart from some side-trades for fun. Which is why I am trying to study more in detail what good index traders do. I came here 15 years ago to watch the S&P journal thread. Then got hired again and was forced to stay away from boards by compliance. Many thanks for your detailed reply and insights. I have to be honest, I am intrigued by the fact that he can make 2 mio GBP per annum with an account of 100k. For a sole discretionary trader, it´s rare but not impossible. In FX I know several home trading guys who do it, but they are all systematic algo guys, with a minuscule latency advantage/edge and anonymous prime of prime access to the market so they can not be picked off (more on that later). Yes he is still a retail trader with pretty standard straightforward trading systems and logic and the combined volume of him and his followers may still be be small and meaningless in the overall market volume. In FX however, which is a de-centralized market (not a centralized exchange) the algos would pick up an almighty interest from retail traders (the best contra-indicators) at the same time and start trading against that (leveraged weak-hands) flow to trigger the scalpers-stops 30-50 pips away. It´s daily rinse and repeat there. I have been on the other side, so I know pretty well how it works. As long as there are no massive real-money flows coming into the market, the algo´s rule the waves for most of the time. What I want to say is, in FX, retail flow is very much WANTED by all these brokers, as its very easy to manipulate and trade off, that´s why there are so many brokers, it´s a gold mine for them this retail stuff. It´s also the reason why so many brokers make so much publicity in europe / asia / australia because the retail flow is so lucrative). I am trying to understand the dynamics in the index markets. So being "retail" in FX is looked down upon. How is it in index trading? Tom has mentioned he has learnt most of his skills / trading set-ups in the first versions of online trading boards such as Avid Trader (nowadays defunct), pretty much like Elitetrader today I would say, where some big heavyweight players were present with a wealth of knowledge to share. There used to be some big guys here too I seem to remember. So being "retail" outside FX for me does not necessarily mean useless. What I am saying is, there may be something valuable to be found in Tom´s trades, but I can not detect what it is lol. Fully agree on the posting live trades. I could not and would not want to do it. I´d rather trade alone with my cat and my dog. Like Bill Williams... I agree with your volatility point, and I believe Tom has also acknowledged that. I have no aim to discredit the guy. He is likeable, straightforward. I just wanted to see what the opinion is of other experienced traders who followed him what his true edge might be.
I can talk to you at length / in detail about that. But I will be brief here. For example, Tom himself has complained there are loads of scammers using his ID, his pictures (he even posted the scammers websites , marketing materials etc), selling his trading signals, even using similar telegram style messages. These scammers charge for exactly the same trading signals which Tom passes out for free. They even offer managed account services using his name, being him. These are presumably not brokers but proper scammers, although who would stop an offshore broker selling the same signals as being a private person? In FX (or any CFD market for that matter), if you sit as a system engineer or manager at a broker house and your back office systems / statistics pick up a consistently winning trader, this is an obvious potential gold mine. It is very easy for this broking house to just simply copy the trades (via a program to make no mistakes or just manually) for their own books, or in the name of a fictive client / spouse/ employee´s own account. Or worse, they (the broker) could just copy all trades of the profitable trader to an MT4 or MT5 platform (demo or real) and sell a copy-trading service. (MT4 and MT5 platforms are perfect to copy trades). There used to be several signal distributing platforms where some traders built up a following of 1000 traders, charging 50-100 usd per month to each follower... (they usually blow up, time and time again but often have picked up several months of nice income in the meantime). I have been told by insiders that this even happened with some FCA regulated brokers in London. For off-shore brokers, this is a piece of cake. Personally I do not trust any off-shore broker, and I would be very careful with smaller brokers anyhow. So, it is not just a case of legitimate A- booking / B- booking and C-booking. Before the algo´s , when I was a market maker, we knew exactly which client to cover + follow / leave open (warehouse) the trades / double up or take the loss and follow immediately... Some (large) clients would always create an immediate loss for me, but I would still want to see their flow, even at a loss, because I knew with statistical significance it would go his way massively, so I cover double his flow. Of course, nowadays algos do the same in a much more sophisticated way now. All this is legit. Where it becomes fraudulent is : what would stop a broker from open an automated copying system for themselves an/or selling signals others under a someone else´s name. Even if a broker is "pure agency", so STP passing of the trade on to the market, they have systems that show which clients are statistically "interesting" and have some employee open an account for them all to benefit from. All this can be an edge of course.
Edge comes in many ways. For individual discretionary traders, it is a combination of setups, position sizing, risk management and psychological makeup to follow through on the trades. The things Tom published may not even have any edge at all by themselves without his unique approach of trading. That’s probably why he doesn’t care about people stealing his methods. By the way, adding to winning trades will not increase your win rate, and in fact makes it lower. But it will increase the reward to risk ratio, which will increase your profitability based on the trader’s equation.
A development since 13 yrs ago are the rise of Dark Pools. If someone is trading size, they are gonna route their orders to those venues not a lit exchange. It would be interesting to hear your stories of “The Algo” having being on “the other side.” I am surprised though of your comment about your Compliance Dept making visits to an anon trading board off-limits.
Are you justmaking assumptions and speculating about any fraudulent behavior ? Because what you said is not allowed. My trades are my property. If someone or the broker would sell my trades as signals I could claim them later (even years after) for missing gains etc. This is all illegal what you said above. So do you have any proofs that this actually happened in reality ?