With the InterTrader Direct product absorbed back into the InterTrader brand in 2016 , we are pleased to see that the market-neutral offering has been maintained. For those of you that are unfamiliar with the service you should expect from them, we have put together a short summary for you – so you can get to know the broker better.
In short, InterTrader provide ‘no dealing desk’ spread betting and CFD trading, with 100% market-neutral execution with the aim of offering low-cost trading on a wide range of markets through their web-based and MT4 platforms.
Their service has been designed to provide fair, flexible and transparent trading for clients, making the financial markets accessible to all. Affordable trading through a service that traders can trust, where they can trade against the financial markets rather than their broker.
So what is Market-Neutral Execution?
Well, it means they won’t carry a market risk against your position – instead, they mirror trades in full in the underlying market. It’s worth noting that where spread betting or CFD providers are carrying a market risk, traders are effectively trading against them on how the market will perform. With market-neutral execution, this is not the case.
How does this work?
InterTrader provide an example of how it works in principle.
“A trader decides to buy our UK 100 index for £10 per point. they will trade at the live dealing quote on our No Dealing Desk platform (web-based or MT4), and we simultaneously offset our exposure on your position by going long £10 per point in the underlying market.
This way we have no financial interest in whether the trader’s position makes a profit or not. If they are up £200, we’re up £200 in the underlying market. If they are down £100, we’re down £100. Any money the trader makes or loses to us is offset by our trading in the market.
When the trader closes their position, we simultaneously close our trade in the underlying market. Any profit that’s made is covered by the profit we’ve made by offsetting our exposure. Similarly if the trader has made a loss, we’ve made an equal loss in the market.
There’s no conflict of interest
Generally, when a spread betting or CFD provider has an exposure on your trade (or only offsets part of their exposure) their own return depends on the performance of the market. Essentially, they’ll make a better profit if a trader loses.
InterTrader will make money through dealing charges which means it is in their best interests to provide the best possible trading service to encourage further trading. The key principle is: traders make money from winning positions and InterTrader make money from the dealing charge.
Find out more about how spread betting companies make money by downloading our free guide.
…and No Dealing Desk?
With no Dealing Desk, the InterTrader service provides a direct and transparent way to trade. Trading positions are automatically offset and passed straight through to the underlying market, with no dealer intervention and importantly, no requotes.
Any position that is opened, is automatically traded in full in their liquidity pool. InterTrader will not carry any exposure that could cause a conflict of interest. All of their orders are anonymous and traders can interact with the market by placing orders inside the market spread.
For forex CFDs on MT4, clients can trade at the market price and pay a small additional commission per trade. On the web-based platform, and for spread betting and non-forex CFDs on MT4, this charge is added to the market price to give an ‘all in’ spread.
…or dealer intervention
Execution of orders depends solely on market liquidity and not on the discretion of InterTrader’s dealing desk. This means that clients will never be requoted. A new position will either be opened at the price requested or rejected if there’s insufficient liquidity.
Be aware that stop-loss orders are subject to slippage in volatile market conditions. The flipside of this is that traders may benefit from positive slippage on stop and limit orders, known as ‘price improvement’.
InterTrader stress that their ‘no dealing desk’ does not mean an impersonal service. Traders can call the customer service team at any time with technical issues – or if they need to close a trade over the phone.
Trading the forex interbank market
Prices from the interbank market are aggregated in InterTrader’s liquidity pool, which provides the best available bid and offer prices for the forex pair concerned. Using both the MT4 and web-based platform, traders can view the best bid and offer price and place their own orders directly into the market.
InterTrader acts as the counterparty for traders positions, but will offset their full exposure automatically by placing the matching trade with liquidity providers.
TradeBack™
InterTrader will reward their clients’ loyalty by reducing the cost of their trading. A rebate of up to 10% of trading costs is available for trading over a certain amount. Rebate is based on the total spread fees paid on opening trades or, in the case of equities, on the total commissions paid over the course of the month, regardless of whether trades have won or lost.
The spread fee is the amount staked per point multiplied by the size of InterTrader’s spread on the market. For instance, the spread fee of opening a £5 per point trade on Wall Street Rolling Daily (spread = 1 point) is £5. Be aware that only trades made via the web-based platform are included in the TradeBack calculation.
Find out if InterTrader is the right broker for you. Read our full review here, or visit the InterTrader website to find out more.
About InterTrader
InterTrader Limited is part of the bwin.party family. bwin.party was formed from the merger of bwin Interactive Entertainment AG and PartyGaming Plc in March 2011. With over 2300 employees in offices in Europe, India and the US, bwin.party is listed on the London Stock Exchange (under the ticker: BPTY) and is a member of the FTSE 250 index.
A leader in digital entertainment, the group owns some of the world’s leading online gaming brands including bwin, partypoker, partycasino and Foxy Bingo. bwin.party was named Socially Responsible Operator of the Year at the 2011 eGaming Review Awards, while their sister company InterTrader.com took the honour of Spread Betting Operator of the Year.
