What are your guys thoughts on Plus500 for day trading? Does anyone use it or know of any better alternatives?
I have used their app in the past, decent availability of instruments, though less than IG, and I also prefer the user interface of IG app at least on android.
I would advise if CFD trading is something you have decided to do, check all the instruments you want to trade are available before signing up, as they charge inactivity fees.
It may also be of interest that Plus500 acts as principal-meaning that in many cases customer losses are their gain as they take the other side of trades, though this depends on whether they hedge exposure or not.
As far as I know IG aims to be market neutral and hedge all exposure.
Because CFD’s are only based on the underlying price of an instrument, the broker can just widen the spread they offer on their CFD as compared to the spread on the underlying, net off all the CFD buys and sells on their own book and hedge the left over position on the underlying market at a better price.
The acting as principal is not so much an ethical concern for me, though it can pose conflict of interest problems if a broker were to void winning trades.
There is also the counterparty risk of the broker miscalculating risk or losing huge money due to an unexpected event like when the swiss franc was unplugged from the euro.
As discussed on the IG thread, I think Plus500 as an investment will do really well, they are due to update April 7th and I’m optimistic. Longer customer lifetimes and lower churn after the leverage reductions, massive beneficiary of current volatility. I expect they are trading at 4-6x 2020 earnings, and 6-8x next years and future earnings. Just my opinion and could be wrong.