Andy, Contracts-for-difference: First and foremost I want to thank you for being patient with me and taking the time to do this interview for our readers. How’s everything on your end?
ETX Capital Representative: Hello Andy, Things are going very well here thank you. Our clients have had a great year.
Andy, Contracts-for-difference: Could you give us a brief overview of ETX Capital? How big is ETX Capital? When did you launch?
ETX Capital: ETX Capital (formerly known as TradIndex) has existed since 2002 and has grown steadily since then to become one of the major players in the spread bet and CFD arena. ETX Capital was launched in 2004 and employs roughly 30 staff.
Andy, Contracts-for-difference: Could you walk us through your products?
ETX Capital: AT ETX we offer CFDs and spreads on single stocks throughout the UK, Europe and US markets and well as CFDs on Indices, Currencies, Commodities and Bonds.
Andy, Contracts-for-difference: Tell us why you decided to plunge into the contracts for difference business?
ETX Capital: CFDs are a natural fit to the existing ETX Capital business. Whilst there are a number of brokers in the CFD market we continue to gain market share due to the expertise of our execution and advisory services.
Andy, Contracts-for-difference: Under which jurisdiction and license does ETX Capital operate?
ETX Capital: ETX Capital is the trading name of Monecor (London) Ltd which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority, FCA registration number 124721.
Andy, Contracts-for-difference: Are the gains tax-free?
ETX Capital: Spread bet gains are tax free however CFDs are subject to normal tax rates. We’ve got to keep the chancellor happy after all!
Andy, Contracts-for-difference: Do you accept International clients? In which base currencies can clients trade?
ETX Capital: We do accept international clients but of course it depends on the country of domiciliation. I see vast growth in the future for international CFD markets with the UK being the CFD centre of Europe.
Clients can open accounts and deposit GBP, EUROs, and USD.
Andy, Contracts-for-difference: Please tell us about your commissions for the different products on offer.
ETX Capital: We offer execution and advisory CFD services. Our rates for execution only on single stocks are: UK & Europe – 0.2% and US – 3 cents. Our advisory rates are: UK & Europe – 0.4% and US – 5 cents.
Andy, Contracts-for-difference: What is the minimum deposit and minimum/maximum opening trade size (if there is any)?
ETX Capital: We have no minimum deposit or online trade size. Minimum trade size over the telephone is £5000 notional (or equivalent) and there is no maximum.
Andy, Contracts-for-difference: What margin is required for trading contracts for difference at ETX Capital?
ETX Capital: Single stock CFD margin rates start at 10%. Index CFDs start at 4%.
Andy, Contracts-for-difference: Do you offer credit facilities at ETX Capital? Can accounts be overdrawn?
ETX Capital: We do not offer any credit facility for our CFD product. Margin calls are made on client’s accounts that are overdrawn.
Andy, Contracts-for-difference: What instruments are available to trade at ETX Capital?
ETX Capital: Single stocks and Indices in the UK, continental Europe and the US, Currencies, Commodities and Bonds.
Andy, Contracts-for-difference: What types of orders are available at ETX Capital?
ETX Capital: Limits, Stops, Ratio and Contingent Orders, Good for the Day or Good till Cancelled.
Andy, Contracts-for-difference: Will you stop clients who are day-trading effectively? We have encountered traders who have worked hard to develop systems that were consistently profitable only to find that the platform broker/market maker (not ETX Capital) abruptly changed the rules thus killing their trading systems. Please comment.
ETX Capital: We like to encourage all types of investor whether they are short, medium or long term in their investment outlook. We work with our clients rather than against them so that their investment aims are achieved.
Andy, Contracts-for-difference: How do you classify clients – intermediate or private customers and why? – As we know classifying clients as intermediate indicates a certain degree of knowledge and experience on the clients’ part.
ETX Capital: CFD customers trading with ETX Capital are classified as Intermediate. As you correctly point out this indicates a certain amount of knowledge and experience.
Andy, Contracts-for-difference: Which is your target market? Retail investors or high net-worth and institutional business?
ETX Capital: We currently have a mix of all three of those types of investor so I wouldn’t say we have a target market per say. Our website targets most of our smaller retail customers. Our phone execution and advisory team service both hnw’s and institutions.
Andy, Contracts-for-difference: What do you think about education? Do you think people need it to be successful in trading CFDs?
ETX Capital: Knowledge is King. It’s important that all kinds of investor seek or are provided with product education and good market information. It is also important that investors have an understanding of the nature of gearing.
Andy, Contracts-for-difference: How do people trading these markets trade? Do they jump in and out 50 times a day or do they hold their trades for weeks?
ETX Capital: We have clients that trade on a daily, weekly and monthly basis although markets and investment opportunities tend to be shorter term nowadays. Most clients have price targets in their mind and tend to stick to that percentage return on their investment. A strategy I wouldn’t disagree with.
Andy, Contracts-for-difference: Are there traders who make a living through trading at ETX Capital? What is the trading style and methods that these traders use for winning consistently?
ETX Capital: Yes, we service a number of professional traders who may not have started out as full time investors but have found out they were so good at it its now their full time job. Trading styles tend to be different – from momentum to technical to valuation investors. They each have their own style although the most successful traders tend to be less emotive about their investments.
Andy, Contracts-for-difference: What do you think are the most important characteristics of the professional cfd trader?
ETX Capital: A complete product and market knowledge.
Andy, Contracts-for-difference: The last few years has seen an explosion in cfd trading. Do you think it could spell the end of traditional share trading? And is the stock market feeling the pinch?
ETX Capital: I don’t think we will see an end to traditional share trading although the London Stock Exchange are definitely feeling the pinch.
Andy, Contracts-for-difference: Are spread betting/cfds as a trading instrument most suitable for intraday traders (daily) or longer term speculators (weekly/monthly)?
ETX Capital: CFDs are suited to all types of investor as they provide so much flexibility. Some clients like to take advantage of the stamp tax saving, some like to short stocks and others prefer an element of gearing.
Andy, Contracts-for-difference: There are many sayings in the markets; do you have a favorite one?
ETX Capital: One I think makes sense is “Never invest in anything you don’t understand” and on a less serious note “If you can see a bandwagon, you’ve missed it!”
Andy, Contracts-for-difference: Any books and resources you would recommend to fellow traders? Any other comment you want to make?
ETX Capital: I read Barbarians at the Gate and Liars Poker when I was 16. They really whetted my appetite and first got me interested in trading. I recently read ‘Trend Following’ by Michael Covel and found it very useful.