Spread betting, a viable option to make a living out of?

[cuotes]

Most people on this site should not be giving 'financial advice', it's bloody ridiculous.

Exactly, so make a favour to newbies and shut up, my dear!

SB firms will work against you. You know AVAFX? I won't copypaste the story here since it's written in spanish, but to summarize:

Not a long time ago, there was a guy who began to play some money with these guys. Fortunately very soon he began to win some money. No problem, everything worked like charm.

With the time, this boy began to earn more and more money. A nice sum of money actually.

Time to make a withdrawal. Time to buy a new car. Time to enjoy the fruit of his efforts. :clap:

But... surprise, surprise!!!!!

AVAFX regret to inform you that you have no available that money. Actually you have no gains. :whistling

How comes? It's impossible! What happened?

Your orders (several months of work) never reached the market. They where never executed, they told him.

But that's impossible. I've the confirmations of every order, and my account shows that profit.

So sorry, son. The operations never occurred. You have nothing. Good bye.


So... do you want to make a living with SB? Go ahead!!!

Paul71, I'm sure you are a great trader, much better than me, and more experienced, and a wonderful person too.

But for the sake of the rest of the community, unless you can give useful info, zip up your big mouth, darling.

 

[Paul71]

Put on a trade of 100 lots with spreadbetting outfit at buy ftse at 4901, market is moving higher ,spreadbettetting outfit goes to market to hedge ,price has moved matey , price has moved to 4909 but with spread 4912.

Trade directly to futures market buy at 4901 , filled at +/- 2

This is a common sense example of live trading with spreadbetting outfits.Traders are worse off .

If you make money pay the tax , cause the tax free is just an illusion.In above trader is worse off by 11 points ,deduct 2 points tax saving = 9 point loss on spreadbetttting outfit.Tax cheat is human nature, but tax savings on losses is good for cheaters.

My tax payment this year was no illusion, i will pay a small amount next year because of the overlap, then that's it, no more tax payment. The 'real' illusion is that you are making up figures to suit your argument.

Bottom line, spreadbetting is tax free. Stop making things up in your head.

 

[Paul71]

Oooh! very constructive and very useful

C'mon! I'm not upset

We can discuss pros and cons. I just pointed out a big con.

Don't get angry, ok?

First of all, lose that avatar, why a grown man has to have an 'angelic looking' girl as an avatar is beyond me.

Secondly, you have not pointed out anything. You said it was not viable to spread bet for a living, you are wrong.

 

[oildaytrader]

Bottom line, spreadbetting is tax free. Stop making things up in your head.

It's a shame gamblers can't accept the truth,its called the gambler's fallacy,make believe and believe what you want.

I have made a valid example.

http://en.wikipedia.org/wiki/Gambler's_fallacy
O D T

 

[Paul71]

It's a shame gamblers can't accept the truth,its called the gambler's fallacy,make believe and believe what you want.

I have made a valid example.

http://en.wikipedia.org/wiki/Gambler's_fallacy
O D T

You must be on about yourself, i know i gamble when i speculate, it's my avatar that gives it all away. Call yourself a vendor?

 

[Jack Hughes]

Jack, not helpful m8. You didnt explain how the SB company works against me, immediately, to some extent. As for the question regarding tax, you must realise i am not expecting definate answers, just interesting opinions.

Chezlaw, that is interesting. Ive now got two conflicting opinions to consider. Although i have no evidence, it was my belief that bookies purchased and sold from the market according to a clients bet size. Many of the other threads ended up like this, with different opinions clashing. I have rang up my SB company and they told me they make their money in the spread, but would not elaborate on whether they bought/sold from the market according to their clients bet.

Sorry, if it's not helpful, Alexetc.

The SB company works against you by delaying prices (which it has to when quoting a fixed spread corresponding to a 'real' underlying market with a variable spread); by sending bets through a dealer, especially if a client has been identified as a short-term trader who makes a profit; by requoting if a market immediately goes in your favour and accepting when it goes against; by adding 'designer slippage' on fills, again by delaying when they have no reason to, because your bet was with them, not the real market .
They make some profit on the spread, but popular markets will naturally self-hedge (balance of long and short positions open), and those that don't probably won't need to be hedged because they know that most punters let losers run and close winners early. If you try to place a large bet, this will be carefully vetted.

 

[oildaytrader]

Ooops, with all the rubbish he was talking i just naturally assumed he was a vendor.

Guess who needs a Vendor's tag , A SPREADBETTING COMPANY'S SALESMAN , arguing the benefits of spreadbetting.Its good for business , ain't it?

 

[cuotes]

Secondly, you have not pointed out anything. You said it was not viable to spread bet for a living, you are wrong.

OK. Let's calm down and talk about this again.

From my point of view and little experience:

Let's go step by step, and please don't hesitate to correct me if I'm wrong.

Most SB firms, in general terms,offers an OTC product. There are CFDs with DMA, but usually there is no SB with DMA.

Everybody agree?

That means, to my knowledge and experience, that there is no official price.

Agree?

Most of the times, maybe not always, but in general, you play against de SB firm.

Agree?

So, if there is no official price and my 'broker' needs my loosing to make a profit.....

how the heck can I rely on this scheme to make a living????

What I say, in this and other threads, and many people agree, is that SB is ok for betting. No for living.

The example with AVAFX is for real. Including a lawsuit against them.

I'm not against SB. I try to avoid newbies to be caught in the trap.

 

[Paul71]

Look, i'm not interested in what SB companies do with my money once i've put an order through, just as long as they pay up when the market moves in my favour. They can stuff the money under a magic mattress in the middle of thier offices for all i care.

 

[Alexbabwa]

If i understand you right oil (and i will be chuffed if i do), the 'tax' you describe is not money going to the government on profits you make, but extra pips the SB firms squeezes out of you? If that is the case its not tax at all, and there is bound to be a trade off for such a low cost of entry and no actual tax. If this is the case i am more than happy to put up with that. If it is not, and i have got it wrong just say so and il accept it. No point trying to explain it to me again because i doubt i will get it.

Donald my SB company offers free guarenteed stops and i have never had a case where it has run over. But then i rarely ever let price reach my stop as its a minimum of 53 pips.

Cuotes, your story is worrying. AVAFX is regulated by the FSA is it not? and surely they have measures in place to protect people from such obvious bull? I find the story hard to believe (not impossible), would you happen to know the account size of this victim? I would like to gauge when i will appear on my SB firms radar if at all.

 

[Alexbabwa]

This thread is getting a little hostile, there is really no need to be angry. I don't believe anyone is a 'vendor?'. Even if someone was a SB salesman, why on earth would they bother to try and sell it off work hours at the weekend on the forum. They don't get anything out of it, its not good for 'their' business at all, they are an employee. Quite a ridiculous accusation.

Jack i have never got a requote, but then i do often get 'trade rejected, price no longer available'. I guess its the same thing? I always get delays in price everytime without fail, but it doesn't bother me because eventually it catches up and i get my desired entry point (otherwise i don't trade).

So is everyone in agreement with cuotes that we play against the SB firm? or do they pay us winnings they got from the market? The hypothetical example below is how i currently view SB firms (as more brokers than bookies).

I bet £1 a point to sell and make 20 pips. I get £20. The SB firm went short on the market at whatever price and made a profit close to £20 which it pays me and they keep around £3 profit from the spread, give or take a few. Had i made a loss of £20 they would have taken my 20 to cover their loss they made on the market, with still £3 profit thereabouts they took from me on the spread.

Who agrees/disagrees with this example and WHY. No point posting your opinion if you don't have some rationale behind it.

 

[tomorton]

Exactly, so make a favour to newbies and shut up, my dear!

SB firms will work against you. You know AVAFX? I won't copypaste the story here since it's written in spanish, but to summarize:

Not a long time ago, there was a guy who began to play some money with these guys. Fortunately very soon he began to win some money. No problem, everything worked like charm.

With the time, this boy began to earn more and more money. A nice sum of money actually.

Time to make a withdrawal. Time to buy a new car. Time to enjoy the fruit of his efforts. :clap:

But... surprise, surprise!!!!!

AVAFX regret to inform you that you have no available that money. Actually you have no gains. :whistling

How comes? It's impossible! What happened?

Your orders (several months of work) never reached the market. They where never executed, they told him.

But that's impossible. I've the confirmations of every order, and my account shows that profit.

So sorry, son. The operations never occurred. You have nothing. Good bye.


So... do you want to make a living with SB? Go ahead!!!

Paul71, I'm sure you are a great trader, much better than me, and more experienced, and a wonderful person too.

But for the sake of the rest of the community, unless you can give useful info, zip up your big mouth, darling.

Sounds a horrendous experience and nothing can justify such actions, but there is a reason some financial companies register themselves in places like the British Virgin Islands, as AVAFX do, and it is certainly not to subject themselves to close regulatory supervision.

 

[tomorton]

Look, i'm not interested in what SB companies do with my money once i've put an order through, just as long as they pay up when the market moves in my favour. They can stuff the money under a magic mattress in the middle of thier offices for all i care.

Well said. We can to and fro about whether SB companies tilt the playing field, and whether DMA gives a better bottom line after tax, and this could go on for ever. But what is worrying is that nobody has come on here and replied to Alexbabwa and said, 'Yes you can make a living from SB and I am doing it'.

Any volunteers?

 

[Splitlink]

The index goes up from 5000 to 5010. A trader with IB makes 10 points less spread.

An SB pays out 10 points less spread.

Or no?

The difference is the spread and the trader must come to terms with that.

The message I am getting, here, is that the SB quotes a different price to that which is quoted by the official exchange price.

Believe me, I am very conscious of this belief and pay close attention to it. It does not happen in my case. If it did, I would be out of SB trading like a shot.

I do not believe that betting companies need to cheat. The, so called, trader will make his own mistakes without that necessity arising. Most traders are their own worst enemy. The SB company is on to a profitable living, even it is whiter than white.

When I lose money, I am capable of acknowledging that it is my fault. Only last week Footsie got to 0.2 points of my stop before recovering. It would have been so easy to trigger my stop but it did not happen.

 

[Paul71]

Well said. We can to and fro about whether SB companies tilt the playing field, and whether DMA gives a better bottom line after tax, and this could go on for ever. But what is worrying is that nobody has come on here and replied to Alexbabwa and said, 'Yes you can make a living from SB and I am doing it'.

Any volunteers?

I make most of my income through SBing, which i know isn't quite the same, but i could actually live on my SB income if i wanted to.

 

[chezlaw]

Put on a trade of 100 lots with spreadbetting outfit at buy ftse at 4901, market is moving higher ,spreadbettetting outfit goes to market to hedge ,price has moved matey , price has moved to 4909 but with spread 4912.

Trade directly to futures market buy at 4901 , filled at +/- 2

This is a common sense example of live trading with spreadbetting outfits.Traders are worse off .

If you make money pay the tax , cause the tax free is just an illusion.In above trader is worse off by 11 points ,deduct 2 points tax saving = 9 point loss on spreadbetttting outfit.Tax cheat is human nature, but tax savings on losses is good for cheaters.

I think you exaggerate the problem a lot. the vast majority of my bets go through with no delay so losing a few points on a small percentage of my bets isn't going to amount to that much. That's even assuming there is a bias which for safety I assume there is but actually have no evidence of.

 

[cuotes]

just as long as they pay up when the market moves in my favour

I agree with you, Paul
But the problem comes when they refuse to pay.

In the case of AVAFX, in the contract (that we sign and we should read carefully) they include the clause #11, which reserve the right to cancel your orders even a month later if you win.

Someone asked about the size of the account. No idea. But the profits were of 20.000 $

Just out of curiosity here is the link (in spanish, sorry): http://www.x-trader.net/phpBB2/viewtopic.php?t=7896&highlight=avafx


To avoid this experiences and separate the good guys from the bad ones:
http://www.forexpeacearmy.com/

 

[gamma]

I agree with you, Paul
But the problem comes when they refuse to pay.

In the case of AVAFX, in the contract (that we sign and we should read carefully) they include the clause #11, which reserve the right to cancel your orders even a month later if you win.

Someone asked about the size of the account. No idea. But the profits were of 20.000 $

Just out of curiosity here is the link (in spanish, sorry): http://www.x-trader.net/phpBB2/viewtopic.php?t=7896&highlight=avafx


To avoid this experiences and separate the good guys from the bad ones:
http://www.forexpeacearmy.com/

Who the hell is avax never heard of them.
I have been using ig , cmc, cantor and the much maliged capital spreads on this forum, for 10 odd years and never, have I had any problems getting money from them.
The spread bet companies do not have to do anything, to rid most people of their money, they do it themselves.
At the most, all you can accuse the SB'S of is not actually placing your bet in the market, but this is not really a problem, as if you do win, they will pay up from the other 90% who got it .

 

[Alexbabwa]

Thank you for your post tormorton. Your comment about some SB companies being based in islands to escape some regulation will help me avoid the dodgy companies. I'm going to read in to the FSA.

My research tells me that if SB is your main or only source of income you get done over by the inland revenue, great. So SB is not neccessarily tax free. Anyone of you currently unemployed or use SB as your main income?

 

[Jack Hughes]

Forget AVAX (whoever they are?), it's very unlikely that any FSA regulated outfit can get away with not paying out winnings if/when that happens. Gamma is right about SB companies not needing to use any tricks to part punters from their money, which is why it's so disappointing that they can't be more upfront about trade rejections and putting short-term traders on dealer referral, even though I understand why they do it.

Spread betting is a great way of learning about and accessing markets that would otherwise require sums of money that most people don't have. At the same time, it also has the side-effect of making proper DMA accounts more expensive. In the US, where SB is banned, brokers fight for business by offering low commissions and margins. Compare that with the UK.