plus500 rollover scam on WTI OIL

PedroInacio

Recruit
Messages
5
I will start by saying that I didn't have any position during this event and I'm not sure if this is a scam or just dishonest contract writing.
So, on 17 April 22h the oil (WTI) is at $19 and quoted as well by plus500 at $19. Next hour its quoted by plus500 at $26.

Apparently, some folks at oilprice.com claim they have been ripped off big time over this stupid rollover.
Usually rollovers are $0.1 difference... I have never seen this happend.

Plus500 themselves claim that the rollover should not harm the traders account because they make up for the difference in your ballance sheet. The folks on oilprice.com claim they got burned hardhttps://community.oilprice.com/topic/13214-wti-wrong-price-on-plus500/?tab=comments#comment-104303

Can someone with experience tell me if this is just playing dirty but within the realm of legally? Or it's simple and pure theft?
 

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compu-forex

Sergeant
Messages
149
No it's not a scam. People that claimed they got burned don't know what they are talking about.

The contract in question is not a spot contract but a futures contract. The problem with futures contract is that whilst is is based on the spot price of the underlying instrument, it is not the instrument but a derivative. As result it drifts away from the price of the underlying asset. The next problem is that the futures contract expires every month and, the symbol is rolled over into a new futures contract whose pricing might not agree with the underlying asset. In order not to hurt traders, on the day of expiry, the contract pays, or charges, a once off swap fee which is the difference between the futures price and the underlying asset. The effect is that when the contract rolls over to the new price, you will be paid(as swap) any price difference. By the same token, you cannot profit from the rollover because you will pay in swap whatever the price difference is when the price reset is in your favour.

Here is a screenshot of a demo trade I made this week on wti at FP Markets(same product)
FPMarkerts oil rollover.JPG

You can see that a trade made on the 15th and closed on the 16th attracted no swap. A BUY trade made on the 16th and closed on the 17th was paid 5 950 euro per lot which equates to the price reset. Not the large "loss" that the trade is running at.

Not all contracts rollover. Some broker just set up a new contract with a new name and your positions are automatically closed upon expiry.

I don't know Plus500, but if people are complaining that this pricing is a scam, then they simply don't understand the products they are trading and should perhaps be looking for something else to do.
 

PedroInacio

Recruit
Messages
5
No it's not a scam. People that claimed they got burned don't know what they are talking about.

The contract in question is not a spot contract but a futures contract. The problem with futures contract is that whilst is is based on the spot price of the underlying instrument, it is not the instrument but a derivative. As result it drifts away from the price of the underlying asset. The next problem is that the futures contract expires every month and, the symbol is rolled over into a new futures contract whose pricing might not agree with the underlying asset. In order not to hurt traders, on the day of expiry, the contract pays, or charges, a once off swap fee which is the difference between the futures price and the underlying asset. The effect is that when the contract rolls over to the new price, you will be paid(as swap) any price difference. By the same token, you cannot profit from the rollover because you will pay in swap whatever the price difference is when the price reset is in your favour.

Here is a screenshot of a demo trade I made this week on wti at FP Markets(same product)
View attachment 52862

You can see that a trade made on the 15th and closed on the 16th attracted no swap. A BUY trade made on the 16th and closed on the 17th was paid 5 950 euro per lot which equates to the price reset. Not the large "loss" that the trade is running at.

Not all contracts rollover. Some broker just set up a new contract with a new name and your positions are automatically closed upon expiry.

I don't know Plus500, but if people are complaining that this pricing is a scam, then they simply don't understand the products they are trading and should perhaps be looking for something else to do.

Great explanation. However I don't think that the problem lies on understanding rollovers. They claim they have lost money, on plus500 we don't see a "swaps" tab in the closed positions. Plus500 email response to them left a question about why the futures contract was June and not May (Shouldn't matter if the swaps cover the difference).

I wish I had my demo position opened during this event to see what would have happened. What I wouldn't like to see is a closed position due to margin call.
 

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compu-forex

Sergeant
Messages
149
Great explanation. However I don't think that the problem lies on understanding rollovers. They claim they have lost money, on plus500 we don't see a "swaps" tab in the closed positions. Plus500 email response to them left a question about why the futures contract was June and not May (Shouldn't matter if the swaps cover the difference).

I wish I had my demo position opened during this event to see what would have happened. What I wouldn't like to see is a closed position due to margin call.
As you pointed out, it is irrelevant which contract it rolled over to as long as they paid the difference. The price action was the same at FP Markets - see the screengrab. Based on the link provided in the OP post, it looks like Plus500 don't pay swaps but rather apply an adjustment to the account.

FPM Pricing.JPG

In short, the pricing is correct. The OP can claim scam if the adjustment is not made. The position should not margin out because Oil typically ceases trading every night for an hour or two. Presumably the adjustment is made before they re-open the trading and the price action takes place.....at least that is what happened in my demo position detailed above. If this didn't happen like this and the position margined out before the adjustment is made, then Plus500 definitely needs to answer.
 

FxMaster

Lt. Colonel
Messages
9,534
I will start by saying that I didn't have any position during this event and I'm not sure if this is a scam or just dishonest contract writing.
So, on 17 April 22h the oil (WTI) is at $19 and quoted as well by plus500 at $19. Next hour its quoted by plus500 at $26.

Apparently, some folks at oilprice.com claim they have been ripped off big time over this stupid rollover.
Usually rollovers are $0.1 difference... I have never seen this happend.

Plus500 themselves claim that the rollover should not harm the traders account because they make up for the difference in your ballance sheet. The folks on oilprice.com claim they got burned hardhttps://community.oilprice.com/topic/13214-wti-wrong-price-on-plus500/?tab=comments#comment-104303

Can someone with experience tell me if this is just playing dirty but within the realm of legally? Or it's simple and pure theft?
What reply you have received from the company regarding this?
 

FxMaster

Lt. Colonel
Messages
9,534
Here is the ticket response.
First of all, invite the company by using the invite company option to your thread. And if you are unable to locate the option then this thread "Tutorial: How to Invite a company to your thread." will help you to find out.

Note: Invitation button will be enabled when your thread passes 96 hours.
Note 2: Make sure to follow the suggestions correctly, when you do it correctly you will get below message in your thread automatically.
Note 3: Make sure to share your account number (Only account number). Many time this help companies to find out you are genuine or not.

OP Screen shot.jpg
 

4evermaat

2nd Lieutenant
Messages
1,965
As you pointed out, it is irrelevant which contract it rolled over to as long as they paid the difference. The price action was the same at FP Markets - see the screengrab. Based on the link provided in the OP post, it looks like Plus500 don't pay swaps but rather apply an adjustment to the account.

View attachment 52884

In short, the pricing is correct. The OP can claim scam if the adjustment is not made. The position should not margin out because Oil typically ceases trading every night for an hour or two. Presumably the adjustment is made before they re-open the trading and the price action takes place.....at least that is what happened in my demo position detailed above. If this didn't happen like this and the position margined out before the adjustment is made, then Plus500 definitely needs to answer.

There is no rational reason for a CFD (which is speculative) to continue to use the front month of the underlying contract so close to expiration date. Because you are not taking [and have no intention of taking] physical delivery of the product. You would weigh the pricing much more heavily towards the next month the closer to expiration the front month approaches. This assumes the CFD provider is using a weighted average of 2+ front contracts, not just a single contract [front month].

Snag_dbcb5dfc.png
 
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