A winner priced out of the market

This is a discussion on A winner priced out of the market within the Spread Betting & CFDs forums, part of the Commercial category; This weeks investors chronicle has a Buyer's Guide to spread-betting and CFD providers. This quote is worrying "One very active ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Jan 22, 2005, 6:20pm   #1
Joined Nov 2003
A winner priced out of the market

This weeks investors chronicle has a Buyer's Guide to spread-betting and CFD providers.
This quote is worrying

"One very active spread better is Chris Kobewka
As a better-than-average trader, he does not fit into the normal mould of a loser, and yet he still likes to bet small - between 1 and 10 a point. After placing a 2-a-point position with one leading company just after markets open every morning - and winning most of the time, at market opening times - he suddenly found that the spread-betting company no longer quoted Nikkei prices for the first five or 10 minutes of the trading session.

This account clearly presented a problem for the company concerned. Too small to hedge (as the Nikkei contract is bigger than 1 a point), the account was showing a consistent ability to win. The spread-betting company simply used its power to decide what prices to quote, and when, and then ceased to make a market during the time period concerned. Another firm stopped him trading via the internet after a large monthly gain. This highlights a fundamental problem with spread betting. Essentially, you are betting against the spread-betting company much of the time and, as demonstrated in this example, the behaviour of the company concerned suggests less than 100 per cent neutrality."
Camelot is offline   Reply With Quote
Old Jan 22, 2005, 6:30pm   #2
Joined Jul 2003
Well, if that doesn't spawn at least two interesting lines of discussion - I don't know what will.
TheBramble is offline   Reply With Quote
Old Jan 22, 2005, 7:17pm   #3
 
DaveJB's Avatar
Joined Dec 2002
Ummm.... don't understand the problem myself. Surely it's a question of picking the right thing to trade, or am I missing something?

If you don't have a lot of money to trade, then buying/selling shares is of limited use, because you own (or owe) the share and the daily, weekly and monthly fluctuations tend to only result in relatively small changes to your overall account value. Spreadbetting involves betting on the price move itself, so a 10c move on share X is as profitable as a 10c move on share Y - there's a lot of leverage in this, and a lot of risk to balance out, and eventually the spreads where the SB company take their piece of the action begin to annoy you... hence posts about SB company spread bias surface every now and again.

To trade small moves for noticeable profit surely something like direct access trading of shares is the way to go? You are back to shifting actual shares around, but as you now have a sizeable pot you can do it in big enough lots to make it worthwhile. SB gives the small punter the advantage of betting on the moves, but they are then locked into a relationship with a single company obliged to take the opposite stance in every chosen trade.

I think that the average SB company, rather than indulging in playing silly B's, might more usefully guide substantial players towards a more appropriate form of investment.

Dave

Edited, unsualalyyy, for spelkinge
DaveJB is offline   Reply With Quote
Old Jan 22, 2005, 8:05pm   #4
 
roguetrader's Avatar
Joined May 2003
I don't really understand spreadbetting, but surely if they are regulated then there must be some recourse. Sounds damn un-sporting at the very least.
__________________
It is fatal to enter any war without the will to win it.
roguetrader is offline   Reply With Quote
Old Jan 22, 2005, 8:20pm   #5
Joined Jul 2003
Quote:
Originally Posted by DaveJB
Ummm.... don't understand the problem myself. Surely it's a question of picking the right thing to trade, or am I missing something?
Dave, the point Camelot was making was that the SB companies took affirmative steps (one by not quoting a price at the market open the other by stopping Mr. Kobewka from trading via the internet) to stop a specific trader from operating as he was making money (from them). Basically, SB companies acting 'unfairly'.

I would imagine IC would have thoroughly researched their article before publishing and if so I wonder if they named (or could name) the respective SB companies?

That was the first line I thought just 'jumped out' of that first post.

The other of course, is the fact that our very own Chris Kobewka appears to have a winning system. (I presume IC researched all the claims made). Which is good news for Chris - not such good news for his detractors.

Definitely time to move to DA Chris.
TheBramble is offline   Reply With Quote
Old Jan 22, 2005, 8:24pm   #6
 
DaveJB's Avatar
Joined Dec 2002
Over simplifying perhaps - but there's a difference between what you are entitled to, what you get, and what it's worth fighting for. On paper your SB company says it'll take any valid bet, you then proceed to take 20,000 a month of them and mysteriously your orders seem to fail due technical problems, or the order takes an extra 30 secs to process and the price changes - oddly it never changes in your favour. Now, how do you PROVE they are messing you about? Answer - chuck a lot of money at an in depth technical analysis of computer records, expert witnesses or whatever that combine to persuade whoever is presiding that subterfuge was involved.... then hope the damages are worth the struggle.

OR quit and go elsewhere, which (I would suggest) is what your SB company were trying to persuade you to do all along. Now think about it - the problem is you are too good at winning, so why deal via a middle man at all? Go direct access, trade via the market itself, no fiddles involved. I'm not a whizz on that score, but as I understand it direct access traders have a choice of routes to make their trades, so not only are they avoiding the middleman they are then able to say 'I'll route this order via X' because X is a good route for one type of action, whilst they might route a different way for a trade with a different character....

SB is amateur hour stuff still, amateur traders pay commissions to people who do very little on occasion to earn it, amateur traders can proceed to gain ability and become master traders - master traders, amongst obvious things like actually picking longs that go up and shorts that go down (contrary to what amateurs do a lot of the time) also trade the correct instrument.

Don't get me wrong, I know huge amounts of stuff - but as I progress in trading I've still only got to a point well short of mastery, and I have not had (therefore) to step up from SB to direct access... as master traders do not appear to be chipping in here I'm telling you what I think my next step is likely to be so there will probably be errors in what I've typed. It does seem fairly evident to me, however, that if I consistently make decent profits my next step is to find a way to trade the moves, rather than the 'percentage change in share price', ie make a lot on MSFT moving $0.20, not a bit under 1% on my investment, and so far as I've checked into it direct access seems to be the route for large trades with minimal delay.

Dave
DaveJB is offline   Reply With Quote
Old Jan 22, 2005, 8:33pm   #7
 
DaveJB's Avatar
Joined Dec 2002
Hi Tony,
the last reply wasn't directly addressing your reply, more a case of why I'm perpelexed they guy is complaining the field isn't level when it's obvious where to go next.

This, in my view, is another way to sort amateur and pro out - amateurs whine when they are being cheated effectively, pros learn from it and step up a gear. Yes, the guy has a point, probably, and as we're all in favour of the punter rather than the SB company (who, on the face of it, are not doing what they ought) then they should be tarred and feathered. Now, the FSA and SEC doubtless have numerous cases before them that any sensible person would considfer blatant - they take maybe a decade or two to decide to administer a slap, big deal.

Sure, the guy should bitch about it, but meantime should also be pro enough to move on - it's not a battle he's likely to win, and meantime he's losing money. The only real answer worth going for is this -
Swap to DA or whatever, make a fortune, buy out the SB company, sack the **** lot of them.
Guess what, come the following Monday morning, new staff looks at the new CEO, and the first order of business isn't 'how to be fair' it's 'how to maximise profits'... and guess what sort of idea pops out of the thin air?
Dave
;-)
DaveJB is offline   Reply With Quote
Old Jan 22, 2005, 9:08pm   #8
The Staff are paid members that perform various roles such as editorial, advertising, support or technical work.
 
Trader333's Avatar
Joined Jan 2003
Chris Kobewka posts on this site quite actively. He has attracted quite a lot of negative comments from those who do not believe his trading ability. Personally, I have found him to be very straight when discussing trading techniques which I have done more than with many others on T2W.


Paul
Trader333 is offline   Reply With Quote
Old Jan 22, 2005, 9:12pm   #9
 
DaveJB's Avatar
Joined Dec 2002
Entirely possible, don't know the chap and to be truthful I try to avoid the automatic negative response to posters that claims of ability tend to produce... I gain useful info from all sorts, and who's to say that a failing trader won't give me the missing piece in my own puzzle? I have no idea in how he does, and I'll happily pass anything I see of his through my own filters so to speak - my only point here is that if he's doing as well as he says, then he is SB'ing where I do not think that's the appropriate instrument for him to be trading... a problem I am hoping to have at some point!

Dave
DaveJB is offline   Reply With Quote
Old Jan 22, 2005, 11:37pm   #10
Joined Mar 2003
Dave

I agree entirely with moving on, probably my most costly mistake was taking 3 years to move to direct access.

When talking to the jouralist, the purpose of the article was to point out and warn prospective spreadbetters to some of the negative and underhand aspects of spreadbetting firms which I thought was very brave of him considering these magazines receive considerable advertising revenue from these firms.

He was concerned about discussions on various boards about price spikes knocking out stops, where there was no corresponding move in the actual market.

There was no intent to whinge, these are just problems which one has to overcome in one way or another.

If you make numerous intraday as I do then DA is the way to go, the savings on the spread are considerable over a year.

I do believe SBing does have a place for swing or EOD traders with limited capital. If it wasn't for spreadbetting firms I would not have got started.

I have not seen the finished article but see nothing wrong with warning people about some of the pitfalls. When certain SB firms make 40p plus on every 1 turnover it must be difficult to win consitently, I don't know of any other business with such a high gross profit.
__________________
juanbyte
juanbyte is offline Training literature vendor (e.g courses / spreadbetting guides / eBooks)   Reply With Quote
Old Jan 23, 2005, 1:37am   #11
 
DaveJB's Avatar
Joined Dec 2002
Yeap,
sorry - it's a side effect of a continuing discussion like this that the language gets more 'digital' in nature (you're either good or evil, no shades of grey <g>) as you go back to remake an earlier point or expand on it.
I didn't see the article, and I've no idea what/who/why, equally I've moaned about stuff myself before now - and there is indeed a point about passing the warnings along which is altruistic in nature. I'm really taking issue with the idea that there's a morality involved, and some sort of right of appeal, when in practical terms there isn't - I'm not trying to criticise here, I'm trying to point out that when things like this happen the trader who wants to survive should work out the best next step to take.

I'm not trying to be critical of people here, but of the mindset that locks them into that sort of odd comfort zone where 'somebody' ought to be making the SB companies behave <g>

As for your move, well done - I hope to follow you in due course!
Dave
DaveJB is offline   Reply With Quote
Old Jan 23, 2005, 3:06am   #12
Joined Nov 2003
Dave,
can I summarize your position.:Anyone who is spreadbetting should not be crass enough to complain - or even mention an article that has a complaint in it?
roberk is offline   Reply With Quote
Old Jan 23, 2005, 7:35am   #13
 
Edster's Avatar
Joined Dec 2004
Firstly, I think that the SB company should be named and shamed.
Secondly, why doesn't he open an account in his friend's name and use that until this one then gets biased against then move onto the next friend.
Or maybe he should try and change his name?

Edster
Edster is offline   Reply With Quote
Old Jan 23, 2005, 6:25pm   #14
The Staff are paid members that perform various roles such as editorial, advertising, support or technical work.
 
Trader333's Avatar
Joined Jan 2003
Edster,

Quote:
Secondly, why doesn't he open an account in his friend's name and use that until this one then gets biased against then move onto the next friend.
Because, as stated, he is now using direct access which saves him a large amount in spread and he also avoids any of the tricks that may be pulled by using SB companies.


Paul
Trader333 is offline   Reply With Quote
Old Jan 23, 2005, 6:30pm   #15
 
DaveJB's Avatar
Joined Dec 2002
Nope, not my position - publishing the information that shenanigans follow a run of success is useful, I've no complaint with that. What I'm 'anti' here is probably best described as a "psychology of the trader" point...

Having identified a problem the options are to complain about it and appeal to some higher power to redress the wrong, or to go around the obstacle to continue winning by some other route. The second path is the correct one to take as a trader, and should be adopted as soon as possible without stopping off to indulge in profitless activity along the way. (By all means, in a quiet moment, pen a letter to the IC about it, which is presumably not dissimilar to what occurred here).

I'm not criticising the guy for getting the info into print at all. What concerns me is that other posters (not the originator of the IC article) are apparently more concerned with the justice aspect than with restoring effective trading. By all means tell the FSA etc about it, but that is not going to be an effective way to actually rstore the previous flow of profits. It will, however, certainly give you plenty to do instead of concentrating on the markets.

Far be it from me to suggest that closing the offending account, and moving to another company would result in the same problem in the near future with the next company, that's just my cynical side surfacing.

Edster's reply is an example of what I mean - sorry Edster, I'm not having a pop at you here, it's just a good illustration of the point.... SB is the wrong way to trade if you've got a sizeable pot, there is no good reason whatsoever to trade via a middleman whose role in life is to widen the actual spread on a share and to occasionally shift it up or down a little to 'bias' the return over a short period. The SB company is also imparting a small time delay on the deal as well, which frequently causes the deal to close a cent or two away from where it was when you clicked the trade button. So why on Earth would the guy want to mess about pretending to be someone else and sign back up? (Apart from problems moving money around in somebody else's name). The aim of trading is NOT to get even with people you believe have dealt you a crooked hand, it is to make profit. Trading is difficult enough for most without sidetracking into pointless exercises in revenge.

I do apologise in advance Edster, I can understand why you came up with that idea, it's just that it really illustrated the point so very well. I agree with the 'name and shame', in that this is information that would help you pick the SB company to trade with - although more appropriate and useful might be a table listing the size you can win with each before problems arise!
Dave
DaveJB is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Apple Shares - Over priced? laythh Stocks 8 Feb 6, 2007 1:13am
who is winner Dhoom T2W Feedback & Announcements 1 Aug 14, 2006 6:57pm
... and the winner is wasp Technical Analysis 2 Dec 26, 2005 9:16am
May Competition Winner Sharky T2W Feedback & Announcements 1 May 30, 2003 12:05am

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)