A question on spread and Freetrade quotes

Hi,

When I placed my trade on Freetrade I got a quote of 92.85 gpx at 08:43 BST.

At the same time the price of NG.L was 92.36. My own source gave a bid/ask of 926.20/926.40 ( but sadly I don’t know the delay so this might not be correct, but am told it’s live. Yahoo is a live stream )

I’ve noticed that FreeTrade quotes seem to be a bit off. Is there a reason why? I am trying to time my orders.

***** Source Yahoo Finance, 1 min latency.

Are you talking about the price displayed or the trade price?
You might be able to look up your transaction on the exchange

I think you’re just seeing the effect of delayed pricing information that is inherent in the system unless you’re paying for real-time pricing.

First, you have to realise that the price Freetrade shows you before you execute a trade isn’t a ‘quote’. Actually I’m not certain what it is! Some people have said it’s the mid-point between the latest available bid and ask prices (delayed at least 15 minutes, of course), but I don’t think I’ve actually seen Freetrade state that for certain. I suspect it’s more likely to be the price of the last completed trade, again delayed. (If anyone reading this can authoritatively say what the price actually is, I would be grateful to know!)

Then, you have to understand bid/ask prices – it’s good that you were looking at those, many people don’t realise that they should! But you’re comparing the bid/ask from one source, which is delayed by an uncertain amount, with the price that Freetrade shows you, which is also delayed by an uncertain but probably different amount. So it’s not surprising that they don’t match up exactly.

The price of NG shares was moving quickly this morning, down by almost 1% and then up by 0.6% within an hour and a half. You saw a bid-ask spread of 926.20/926.40; half an hour later I looked and saw a spread of 929.60/929.90. So if you executed a trade during that time, I’d expect it to go through at a price somewhere in that neighbourhood, but not necessarily exactly at any of those prices.

Frankly, if you’re trying to catch fairly small and rapid price swings in real time, and do it precisely, Freetrade is not the right tool for that job. You really need to pay the price for a real-time trading system. (You could consider upgrading to Plus so that you can use limit orders if you want to have tighter control than Freetrade’s ‘instant orders’, but limit orders don’t help you chase a fast-moving price; what they are good for, though, is setting your desired price so that you can wait for the moving share price to come to you.)

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Hi,

Thanks for offering some explanation.

Yes, the price of NG was moving, and I wanted to take advantage of it. I did in the end and profited from it. I know that FT is not meant for trading :wink:

We really need to know exactly what FT offer. If it’s not a quote, then what on is it? If it’s delayed, then FT can manipulate the spread internally, thus making money.

E.g I try to buy and they sell the stock to me for for 100gbx , but because then they buy at 99 gpx. They pocket 1 gbx. Do they do something like this? How do they make money if each trade is free excluding stamp duty. (Excluding money made on ISA, SIPP, and Plus accounts.)

What you are describing is illegal in the UK. It’s really tiring to read about new people claiming freetrade is ripping them off when they didn’t even read the execution policy etc. :sleepy:

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I didn’t say they were ripping people off.

I didn’t know it was illegal.

No accusation was intended.

The execution policy is here:

and it states:
"Deals in UK-listed instruments are passed through our dedicated routing system. Here, quotes are automatically obtained from various sources and your deal is conducted with the venue or counterparty providing the best price available at that time.

Due to the inherent nature of a moving market and any delays in displaying information through our mobile application, it is likely that the actual execution price will differ from that shown on screen before the order is made."

So, back to my question. How is the price calculated? I don’t really understand how this works. I’m off to search the Internet :slight_smile:

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That implies they are ripping you off :+1:

Nope. If they did, and they didn’t, I would not feel ripped off if it was transparent.

OK, but most people on the planet would consider them pocketing the difference as being ripped off :+1:

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What other methods can use they make money on UK trades? I do want FT to be profitable for them and their clients.

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Freetrade Review - can you trade stocks for free? - Money To The Masses

or

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Thank-you. Good stuff.

Summary: Revenue is mostly taken from subscriptions, and FX fees.

Current revenue streams:

  • Freetrade ISA, £3/month
  • Freetrade Plus, £9.99/month
  • Freetrade SIPP, £9.99/month
  • Fee of 0.45% of the Base FX rate on each US order placed
  • Small amount of interest earned from banks on customers’ cash
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