ShortsandLongs Interview: Andy MacKenzie

Andy MacKenzie PR Manager of ShortsandLongs agreed to answer some of my questions regarding ShortsandLongs's innovative spread betting platform.

FSB: It is my understanding that ShortsandLongs is part of Spreadex which is already an established spread betting operator that has been in the market since 1999. Why are you launching a new financial spread betting brand and what are the key differences between ShortsandLongs.com and Spreadex?

Andrew: Spreadex was established in 1999 and is now getting ready for its tenth year of trading. The Spreadex business model is based on credit and leverage and a strong service focus with account managers and a bespoke phone service for, primarily, high staking individuals who want to take big positions in the market.

Obviously economic conditions have changed somewhat over the last 10 years and ShortsandLongs.com was launched to provide smaller staking punters with a safe environment to access the markets via completely free guaranteed stops on every trade - something we believe is not available anywhere else in the industry at the moment - and via some of the tightest spreads on offer from any spread betting firm.

With all that has been going on in the global markets of late, we also decided to change the traditional concept of spread betting by ensuring that ShortsandLongs.com clients can never lose more than their account balance no matter how much prices may move against them.

FSB: OK, to start with why ShortsandLongs? Why not name it anything else?

Andrew: We tested a number of potential names, but ShortsandLongs was the title that got the best feedback from our market research. The feeling was it summed up the basic elements of spread betting - ie going short or going long - and stood out from the crowd.

FSB: Tell us about your flash-based trading platform. Is it developed in-house?

Andrew: Yes, our flash-based trading platform is developed completely in-house based on the technology we use for our Spreadex product. We have made great strides in our IT department in recent years with particular focus having been made on increasing our number of developers, allowing us to make constant improvements and advances in our platform.

We are proud of the performance of our current ShortsandLongs platform, which has been designed to be one of the most intuitive and straightforward-to-use systems available for traders. That said, our customers can still expect to see further additions in the coming months in terms of speed of pricing, opening orders and an intelligent system for managing rolling trades.

Click on the 'i' icon to reveal details such as min/max stake and minimum stop distance for your market.

FSB: Which markets do you cover? How far out do the contracts go?

Andrew: At the moment we have concentrated on covering a small number of key markets namely a range of indices including the Dow, FTSE, DAX, CAC, S&P, NASDAQ, Nikkei, SMI and Eurostocks 50, all UK350 shares, commodities including Brent Crude, Light Crude, Gold and Silver, seven main currencies and a selection of bonds. We have a range of future contracts available on our indices, commodities and currencies.

FSB: Tell us about the size of the spreads and margins for some popular markets - UK Shares, US Shares, FTSE 100, Wall Street, EUR/USD and GBP/USD.

Andrew: As mentioned previously, our spreads are some of the most competitive in the industry. For example our UK 100 is one tick for the daily and three ticks on futures, the Wall Street is three on the daily and five for futures. Our shares are 0.15% of the market value and as for our currencies, the EUR/USD and GBP/USD are traded per 0.0001 point movement with a five tick spread. Our Gold price is also extremely popular with our customers with a spread of just 0.6.

As is the case with most spread betting firms, the above stated spreads do increase out of hours. However, when you compare our prices to the rest of the industry, you will see they are among the tightest around.

FSB: What is the minimum required to open an account? What is the minimum stake (bet size)? Do clients need to actually fund the account for it to be opened or can they first create the account to get a peek at the platform and later decide whether to fund it?

Andrew: We tried to avoid minimum deposit and bet levels as much as possible for our customers in order to allow them to set their own trade levels. Having said that you have to draw the line somewhere, so we set our minimum bet level across all markets to £1.

In terms of opening an account, there is no requirement for a minimum deposit amount and no, you don't have to fund the account before you can see the platform. In fact, you can see the live prices and get a good feel for the platform without evening being a member.

We also group together the hottest longs and shorts of the day (the stocks which have risen or fallen by the most on that particular day) and the most traded markets among ShortsandLongs members for each day.

FSB: It appears that your Membership Application page specifically excludes anyone without a UK address. This is in contrast to your flagship Spreadex site where one can open an overseas account. Is there any reason you don't accept applications from outside of the UK?

Andrew: At the moment our payment system, combined with requirements on verification checks for new members, prevents us from accepting applications from overseas. However, we have had great interest from overseas applicants and it is high on our list of issues to address in 2009.

FSB: Shorts and Longs comes with mandatory free guaranteed stops on spread trades. Does this mean that clients can never lose more than the amount they have put up for a trade even in the event of substantial gapping?

You can either set the risk level by amount or market sell level.
Click on the image to see it in more detail.

Guaranteed Stop Levels can be altered after having entered a trade.
Click on the image to see it in more detail.

Andrew: Yes, that's right. Customers can never lose more than they have put up for a trade - ie they can't lose more than the risk level specified for each trade via their guaranteed stop. This should not be confused with the fact that clients can obviously still lose more than their original stake size, as is the norm with financial spread betting.

This is where we believe ShortsandLongs differs to our competitors in that our customers can never lose more than their specified stop limit even if the market gaps through overnight or due to sudden price movements. And they can never lose more than their account balance, so they always know exactly what they are risking in their trading.

Protecting our clients from exposing themselves to potential big losses from the wildly fluctuating markets was one of the key features we wanted to include in ShortsandLongs.com.

FSB: Are there limits on how far the guaranteed stop losses can be placed from the entry price? Can the guaranteed stop loss levels be adjusted after one has entered a position?

Andrew: Yes, there are minimum stop levels for opening trades, for example on the Wall Street Daily it is 20 points and on the UK 100 Daily it is 10 points, GBP/USD is 0.003 and shares 3%. Again the minimum distances change out of hours.

Not only do the stops protect customers in terms of limiting loss if the markets move against them, the stops can be adjusted to lock in guaranteed profits in open positions too. For example if the markets move with a customer's bet, the individual can move the stop to above or below the original bid or offer price meaning that even if the markets then fell back again, they would still be closed out for a specified level of profit.

Individual positions can be chosen to roll or not. Rolling positions are highlighted in orange.

FSB: It appears that the amount at risk for guaranteed stops can be set by either of two criteria; either by setting a maximum amount to risk, or a level which when reached will close the trade. Tell us more. Is this level the 'underlying market quote' or the spread betting provider's quote and if it is the latter do you consider the bid or offer as the stop level?

Andrew: Yes, customers can choose to set their stops either by a specified monetary amount (for example the individual may only want to risk £200 on a FTSE trade) or by a certain level (eg the customer may want to be stopped out if the FTSE drops to a specified level eg 4200).

Customers will be making their trade on our prices, which are based on the underlying market but obviously include our spread. If a client was to 'buy' or go long they would be buying on our offer price but would be closed out if the bid price hit their stop level. If they sold, or went short, it would be the other way around.

So, to set an example, if we had a spread of 4327-4328 on the UK 100 Daily and a client wanted to 'buy' or go long, the offer would be 4328 and the bid 4327. If the client set a stop at 4300 the bet would be closed out if our price hit 4300-4301.

FSB: Won't ShortsandLongs as a provider lose on gapping and slippage by offering free guaranteed stops? We know that nothing in life is free and that you can't prevent the markets from gapping so where's the catch?

Andrew: Yes, it's true that we can lose out by covering customers' positions which gap through. However, it is one of the risks we are prepared to take in order to offer our clients a far superior service and is a 'privilege' we believe traders should be entitled to.

As a company, ShortsandLongs has a much stronger position than individual traders - particularly with 10 years worth of trading from Spreadex behind it - so it is only fair to pass on some of our strength to our customers where we can.

Obviously, any business has to make money to survive and our business model is based around attracting a large customer base and taking a very small amount per trade through our spread - albeit that the spread is very tight!

>> Page 2 - ShortsandLongs Interview Continues Here: Questions about the Product Workings

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