Spread Betting Bubble?

arabianights

arabianights

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Anyone else reckon that spread betting is in the roughly mid stages of forming a bubble?
 
I read an article a while ago that said there has been a considerable amount of new accounts opened since the first cracks of the credit crunch started to appear.Also in the last three years since I started looking at SB the amount of brokers has nigh on doubled quite a few recently leading to more cash offers to tempt you in.With this acceleration it does seem like a bubble forming although I still think there's more to come as the advertising of it seems to be gaining more momentum.
 
after it get bigger and bigger maybe it will burst , infact it can burst in one night ( new law )
 
Competition is increasing rapidly, very true. The ones that are strong financially and who will offer the best service for their clients will survive. During the good times, where you could perform badly, and at the same time make a lot of money, is over for the SB companies. It is very expensive to acquire new clients, in this today very highly competitive industry.
 
The more the better (as it were). Only a few years ago, SB companies were a licence to print money. They can't get away with sub-standard service now. Increased competition has given us narrower spreads, tempting account opening offers and more reliable, faster platforms.
 
It certainly is a bubble in the sense that more and more SB companies are appearing. Like the lottery and gambling companies, these should do well in a recession as people get desperate. Only the decent ones, of course, will survive. It will be like property developers. Most so called property developers (read "professionals in other industries who thought buy-to-let was a good investment idea... as safe as houses... in 2007 so took out 100% mortgages") have been filling their trousers with faeces for the last 2 years. I should feel sorry for them but it is their own greed that got them in this pickle.
 
I'm also thinking that the number of participants, as the depression grinds on, will be substantially reduced.
 
arabianights said:
I'm also thinking that the number of participants, as the depression grinds on, will be substantially reduced.
Click to expand...

Of course, but that's not what a bubble is, is it? It's causing a bubble but isn't the bubble as far as I understand things. (Feel free to call me a pedantic ****.)
 
here to stay ?

I think theres a huge number of people yet to be tapped. Wait until the bookies are tapping and drawing the online bingo crowd from W@nk Bingo or whatever the latest TV ad is....

Then it might of reached saturation point. Not seen many bookies on normal telly doing adverts like the bingo.... will that be coming ? On bloomberg telly they have a few. And retail FX is continuing to swell each year.

And each year there will be a new crop of global punters who may wish to embark on trading , so maybe its a sustainable supply for the best companies who offer tight spreads and good execution for many years to come..

So the bookies might have to consolidate as they reach saturation point at some point, and feed off the new yearly crop.

I can also see a time when bookies are paying punters to trade through them .
 
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More and more people with redundancy payments being exposed to an "easy" way to make money thinking "hey, how hard can it be?". Of course, the majority won't put in the time and effort to learn how to trade, will blow their accounts quickly and the guys at "EasyMoneySpreads" are the ones riding high on the recession.

Anyone up for starting our own SB company? :cheesy:
 
Tenapenny said:
More and more people with redundancy payments being exposed to an "easy" way to make money thinking "hey, how hard can it be?". Of course, the majority won't put in the time and effort to learn how to trade, will blow their accounts quickly and the guys at "EasyMoneySpreads" are the ones riding high on the recession.

Anyone up for starting our own SB company? :cheesy:
Click to expand...

That will always happen. The reason is not, always, to make easy money.
It's that they have been fired and don't know what to do and are very worried about being able tò keep up with the lifestyle that they are used to.

Not much good worrying about them, it will happen, anyway.
 
Yup, I think I might have been a bit hasty with this mid-way comment... it's probably an emerging bubble but still pretty worrying as to what the long term consequences will be - I don't think they're predictable but careful about the tax free status!

Darren to be extra pedantic let's call this bubble-like - same behaviourial processes at work.
 
This is a brilliant topic !
But will the bubble burst ?
Honestly I dont think so, the bubble may deflate a little.
As long as there is Financial Markets there will be SB.
As long as there is Sport ect
 
TomTom said:
This is a brilliant topic !
But will the bubble burst ?
Honestly I dont think so, the bubble may deflate a little.
As long as there is Financial Markets there will be SB.
As long as there is Sport ect
Click to expand...

dont be sure !
 
Tenapenny said:
More and more people with redundancy payments being exposed to an "easy" way to make money thinking "hey, how hard can it be?". Of course, the majority won't put in the time and effort to learn how to trade, will blow their accounts quickly and the guys at "EasyMoneySpreads" are the ones riding high on the recession.

Anyone up for starting our own SB company? :cheesy:
Click to expand...

The Spread Betting companies are aware of these newbies.

From th FT:
As redundancies have risen and bonuses have fallen, the number of city traders, former estate agents and car salesmen opening personal spread betting accounts to supplement their income has increased.

FT.com / Reports - Influx of professional traders and car salesmen to spread betting could increase liquidity for everyone
 
Interesting article, thanks.

I would say, however, that when former estate agents are providing significant liquidity to the market things will never end well :)
 
My view on SB companies is that they have a 'fairly' reasonable ride at the moment, not because of increases in clients / client turnover, but because the regulatory environment they operate in is not as tough as it is for their competition. Given the way everything in the UK goes I'm sure we will see some high profile cases of financial ruin and the usual knee-jerk reaction from the nanny state, leading to over-regulation which, in turn, will lead to less SB firms. At present it looks to me that some are no more than a brand which buys an off the shelf trading platform and away they go. Regulation will be the pin that bursts the bubble.
 
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