SB on Stock Indices

This is a discussion on SB on Stock Indices within the First Steps forums, part of the Reception category; FWIW - I think in order to trade -You need to "learn". Read up material and also go to a ...

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Old Aug 13, 2004, 9:25pm   #29
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Joined Dec 2002
FWIW - I think in order to trade -You need to "learn". Read up material and also go to a Seminar about what you want to trade and the instruments that can be used -Working trades on tips is just a way to get on the "rubbish tip" best advice is dont rely on tips -go and get knowledge.Same analogy as Buying a car -You need to know the make,engine size(can you handle it etc) what fuel it takes etc and do you have the "licence to get on the road" otherwise you will become a cropper.
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Old Aug 13, 2004, 9:50pm   #30
Joined Jan 2004
To be fair Zarif, carpe's initial post asked for a strategy for trading indices, not for tips. I still think the "consolidation-breaks" strategy is highly suitable because it is (a) simplicity in the extreme, and (b) very reliable (with caveats - see previous posts). The only investment it requires is some experience observing the behaviour when breaks occur in order to be able to identify the tradeable contenders, and little else. Anyway, I think I've said enough on the matter. Anyone interested in learning more about it can always PM me.

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Old Aug 24, 2004, 10:19pm   #31
Joined Apr 2004
I'm interested in starting trading the indices, and was considering spread betting on the FTSE. However I see that the average spread of a FTSE100 Dec contract is 13 points whilst the Dow contract is 16 points, which as a %age is a smaller spread, and therefore more preferable to trade than the FTSE100. Does that make sense?!
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Old Aug 24, 2004, 10:32pm   #32
Joined Feb 2002
Yes it does but take care kensitp. There's more to it than the spread, though keeping overheads under strict control is businesslike.

The Dow is often said to be far more volatile than the FTSE, so more difficult to make sensible entries / exits.

Don't forget the SB firms don't just have spread to make their costs back, they also have the bias, being the amount the spread is ahead or behind the underlying index, depending on which way they think its going to go. You will see spreads totally separated from the current index value, the index value standing totally outside the bid or offer spread. So having a tight spread is comforting, but no real help if the bias starts 20 points off the index.

And the Dow is not traded at times to suit everyone - its risky to be in a market you can't monitor.

London and New York are different markets with different influences on their behaviour and different constituents. they move in different directions more often than thought, at least often enough to make for painful drawdown.

Why not paper trade for as long as you can stand it, until your success rate is good and consistent, then try small stakes until your money management is established.

Be lucky!
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Old Aug 24, 2004, 10:48pm   #33
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Joined Dec 2002

The disadvantage of any given spread is generaly less the larger the index, because of the likely larger daily moves the larger index makes.

But where have you found these spreads? They're horrendous and unless you plan to trade very long time periods then you will never survive with them. Look in the 'Broker Reviews' elsewhere on this site for spread betters with spreads of 3 or 4 points. Futures brokers will bring this down to 1 point or so, but you'll need to gain plenty of experience and knowledge first.
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Old Aug 25, 2004, 2:45am   #34
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Joined Feb 2004
I just thought I would offer an opinion.
I see a lot of criticism of SB on the different boards about how expensive the spreads are etc.,
Let me float my own philosophy.
Trading is a business
All businesses involve risk of loss.
Assume betting £1 per point on the Dow.
Spread=10 points. This £10 is your outlay.
The dow moves in your direction and you chicken out and close for a 50 point profit on a day with a 90 point move in your direction.
Don't cry into your beer.
How many businesses will give you a 500% return on outlay in one day or even one week?
As for the risk of loss? Every business loses at some time, on some deal.
You are not FORCED to look at the screen as your losses move through the £300 barrier as I did on one day I would rather forget.

"A fine excuse to pick a man's pocket every 25th. of December"
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Old Aug 25, 2004, 7:25am   #35
Joined Apr 2004

Thanks for the replies guys, this is a fantastic site! The spreads I quoted were guaranteed stop losses with IG Index. The guaranteed stop loss does add a premium of about 3 points I think.
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