Newcomer

Nooney7 · Mar 6, 2008

hello,

I have recently been introduced to the world of spreadbetting and before I start for real I have been researching etc to fully understand it.
Whilst doing this a situation occured to me where it seemed you could always profit. Say for instance there was some economic data to be published in the future and in these volatile market times it can be assumed that whether good or bad, the news is likely to have an immediate impact on, for instance the FTSE. Could you not go long and short on the FTSE so that whilst both positions were open you would be making a loss on the spread, but then when the news was released close the position that is in contradiction to the direction the market moves.

Im pretty new to this so there could be some obvious errors in my reasoning or in how the whole spread betting system works, but was just curious.

Thanks

shadowninja · Mar 6, 2008

Do a search. This method has been discussed many times. The main problem I think would be a sudden change in direction firing off both orders and then hitting both stops. At best you lose the spread.

Lee Shepherd · Mar 6, 2008

All I'll say is try it and see how you do..risk money if you wish or continue to do extensive research into this seemingly easy idea you've discovered.

Hedge bets are extremely complex and require correct timing to do.

Good Luck

Nooney7 · Mar 6, 2008

Thanks,
Ill give it a go and see what happens but it just seems almost too simple.

ns1000 · Mar 7, 2008

Nooney7 said:
Thanks,
Ill give it a go and see what happens but it just seems almost too simple.

You'd simply be giving away twice the spread. Don't distinguish between opening and closing trades - just buys and sells; when you're closing out the losing position in your system, what you're doing is identical to opening a trade. You're going from market neutral to exposed. Why not just open a new trade when your system tells you to close. It's the same thing and you're not paying spread.

the blades · Mar 7, 2008

Nooney7 said:
Could you not go long and short on the FTSE so that whilst both positions were open you would be making a loss on the spread, but then when the news was released close the position that is in contradiction to the direction the market moves.

why not wait for the market move, and then trade in that direction only - hence saving the spread and slippage?

Nooney7 said:
Ill give it a go and see what happens but it just seems almost too simple.

Don't, save your money and read a bit more. Think about it this way - if there were easy money in the market, more experienced people will be mopping it up before you.

Don't be discouraged. I'm a believer in the simple methods being the best. But I think you're barking up the wrong tree here.

UTB

gle101 · Mar 9, 2008

Of course there is no easy money is this business. Start out with the lowest stake possible and read up on "MONEY MANAGEMENT". Apply your own stop loss immediately according to money management plan set up.

stevespray · Mar 9, 2008

It's a long and drawn out story but these types of systems sell on ebay starting from about 50 pence.

The key in making money is based on the principle of 'slipping your broker'. This works to start with because, when you initial open your account, you account defaults to a standard set of flags on the firms software where your quotes and orders are actioned instantly. This generally means that you suffer low / no slippage on your stop orders and market orders. This is fine when you trade £1 per point and your actions might cost your broker between £10 - £50 if you get skilled at it. The problem comes when you ramp the stakes looking for bigger returns. Sooner or later the firm will detect you since you are making money! This means that your account gets a flag set against it which means 'dealer intervention'. Now, instead of your stops / market orders getting executed in a milli-second, it takes up to one minute. When you check your contract notes you'll find prices 40+ pips away from your stop loss. Instead of you taking 20 pips off them using your strategy they 'help themselves' to 50 pips from your account. Placing a stop loss with a retail broker / spreadbetting firm over data is like offering them a blank cheque.

Steve.

theroguetrader · Mar 9, 2008

Nooney7 said:
hello,

I have recently been introduced to the world of spreadbetting and before I start for real I have been researching etc to fully understand it.
Whilst doing this a situation occured to me where it seemed you could always profit. Say for instance there was some economic data to be published in the future and in these volatile market times it can be assumed that whether good or bad, the news is likely to have an immediate impact on, for instance the FTSE. Could you not go long and short on the FTSE so that whilst both positions were open you would be making a loss on the spread, but then when the news was released close the position that is in contradiction to the direction the market moves.

Im pretty new to this so there could be some obvious errors in my reasoning or in how the whole spread betting system works, but was just curious.

Thanks

Hey there,

When your starting off, reversals, hedges are all complicated things (even for experienced traders sometimes) -
Why not just take it SLOWLY and trade in ONE direction at a time.? - instead of worrying about the spread all the time - (which youll keep paying if the trade is wrong)

Why not just wait until whatever your trading " STARTS TO TREND " - and then jump on..? :idea:

Lee Shepherd · Mar 9, 2008

I used to have the very same thoughts(when I was losing) that this was happening. Many people would agree with you. I've been 'successfully' trading indices for 4 years and haven't suffered from these instances ever since seeking help and guidance. There is always something called a guaranteed stop loss if you are unsure of this and this will elliviate any slippage and protect against gaps.

I actually seeked help through a very good website, maybe they could help you stevespray aswell.

Check them out. [www.iamparanoidaboutbrokers.com]:cheesy:

Happy trading.

stevespray said:
It's a long and drawn out story but these types of systems sell on ebay starting from about 50 pence.

The key in making money is based on the principle of 'slipping your broker'. This works to start with because, when you initial open your account, you account defaults to a standard set of flags on the firms software where your quotes and orders are actioned instantly. This generally means that you suffer low / no slippage on your stop orders and market orders. This is fine when you trade £1 per point and your actions might cost your broker between £10 - £50 if you get skilled at it. The problem comes when you ramp the stakes looking for bigger returns. Sooner or later the firm will detect you since you are making money! This means that your account gets a flag set against it which means 'dealer intervention'. Now, instead of your stops / market orders getting executed in a milli-second, it takes up to one minute. When you check your contract notes you'll find prices 40+ pips away from your stop loss. Instead of you taking 20 pips off them using your strategy they 'help themselves' to 50 pips from your account. Placing a stop loss with a retail broker / spreadbetting firm over data is like offering them a blank cheque.

Steve.

stevespray · Mar 9, 2008

Lee Shepherd said:
I used to have the very same thoughts(when I was losing) that this was happening. Many people would agree with you. I've been 'successfully' trading indices for 4 years and haven't suffered from these instances ever since seeking help and guidance. There is always something called a guaranteed stop loss if you are unsure of this and this will elliviate any slippage and protect against gaps.

I actually seeked help through a very good website, maybe they could help you stevespray aswell.
Check them out. [www.iamparanoidaboutbrokers.com]:cheesy:

Happy trading.

No paranoia here – Just cold hard facts!

There used to be loads of retail brokers which offered so called “Guaranteed Stops” but they changed this when they saw that a few clever people were turning them into naked options plays around data time. After that they became “Guaranteed Stops In Normal Market Conditions” but now even that has panned out. If you have a retail broker or spread bet account then have a good close read of the small print in the Customer Agreement. Of course some firms offer Guaranteed Stops which you can pay for, normally an extra few points, but you will find that you cannot place these stops very close to the market (upwards of 75 points in some cases).

It is like I said in my previous post – a ‘blank cheque’. The broker simply has time, after a strong move on data, to work out where he is going to place his ‘gap’ to ensure that he doesn’t go the loser with all the tight stops which are on his system. Meanwhile ‘Limit Orders’ are filled at the requested levels ensuring further profits can be, if required, locked in against the underlying market.

Steve.

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