If your CFD provider carries a market risk, you are effectively trading against them on how the market will perform. With market-neutral execution, you trade against the market, not against your provider.
How does this work?
Say you decide to buy our UK 100 index for £10 per point. You 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 your position makes a profit or not. If you’re up £200, we’re up £200 in the underlying market. If you’re down £100, we’re down £100. Any money you make or lose to us is offset by our trading in the market.
When you close your position we simultaneously close our trade in the underlying market. Any profit you’ve made is covered by the profit we’ve made by offsetting our exposure. Similarly if you’ve made a loss we’ve made an equal loss in the market.
Unlike the traditional market-maker model, the client and the broker are not on opposite sides. With market-neutral execution we’re on the same side.
No Dealing Desk
Your trading positions are automatically offset and passed straight through to the underlying market. Any position you open is automatically traded in full in our liquidity pool so Intertrader never carries an exposure that could cause a conflict of interest.
For forex CFDs on MT4 you trade at the market price and pay a small additional commission per trade. On the web-based platform, and for non-forex CFDs on MT4, this charge is added to the market price to give an ‘all in’ spread.
Execution of your orders depends solely on market liquidity and not on the discretion of a dealing desk. One consequence of this is that you will never be requoted – your new position will either be opened at the price you requested or rejected if there’s insufficient liquidity.
No conflict of interest
When a 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 you lose. So can you trust a provider whose financial interest is the opposite of your own?
We remain absolutely market-neutral on all your trading positions. We never trade against our clients, so our profit never depends on your loss. Intertrader acts as the counterparty to your position, but we offset our full exposure automatically by placing the matching trade with our liquidity providers.
The only money we make on your trade is via the dealing charge. It is therefore in our best interest to provide the best possible trading service to encourage your further trading. It’s a mutually beneficial relationship: you make money from winning positions and we make money from the dealing charge.
And because we’re offsetting our exposure, we won’t run up losses if all our clients make winning trades. You win, we win: it’s a completely fresh way to look at the broker-client relationship.