Spread Betting for a living

[PurplePerson]

I may be thick, but AFAICS whatever price you choose it will activate when their price hits it?

Axthree - no. If market price on a stock is rising and I want out at say 199p offer(market price), and market price reaches no higher than say 197-198, I wouldn't expect to be stopped, even if the 'house' quote has been moved to say 198.5-199.5 (for whatever reason).

Life is tricky enough just watching the market, without having to also double-guess what spin or skew the broker might have in mind.

Purple..

 

[Zenda]

Stops on the Dow

yes, the deployment/use of stops is indeed a headache at times. Much depends on the instrument(s) traded, your favoured time frame & trade objectives. One I found quite useful (& occasionally still use) on the cable is a simple trail of the 100wma off the 60min....it's just one strat employed to catch half decent trends off (potential) tops/bottoms of moves. You miss a chunk of the reverse, but it does pick up (keep you positioned) solid pips on bursts thru the century numbers.....it's usually far enough away to be safe in normal trading conditions, but can tip you out on the big news spikes. As with all things, flexibility of strats for differing occasions will even things out & help keep the a/c healthy!

The biggest loser in trading indexes are due to stops being positioned too close for the instrument traded - here is the DOW look at the trading ranges each day - most novice traders cannot position their stops outside the normal trading range - hence consistantly stopped out - :|

How do upload picture other than attachment now?

 

[stevet]

CityTrader

to add to what ivorm said - are you saying that you can place your stop relative to the underlying ?

although underlying would normally relate to the appropriate cash index, i have to assume that you mean the real futures price relative to whatever SB "contract " you are trading? for sure they cant offer it to you on the cash index price

obviously there is at least some advantage for you if they will do that as there is at least time and sales on the real futures to verify pricing - but if they did allow it - why then dont't they then offer you the facility to enter and exit at the real "underlying" price

and just to make sure - you are doing normal spreadbetting with the spreadbetting companies and not using the facility that they offer professional traders - which is a whole different story of course

 

[CityTrader]

stevet - absolutely. I will always leave a stop basis ( say) the Sept FTSE future ( if I have a position in the SB'ing firm quarterly index contract) and then leave it to them, once the stop is triggered to fill me at whatever price they claim they were quoting at the time - to be honest, I think you get a better fill that way anyway.

I assume the reason they dont offer the facility is that their quoted price will widen above the underlying if they are seeing a lot of buyers, or are short and are bidding up to try and cover their position ( by attracting sellers)

 

[stevet]

City Trader

ok - so they dont fill you at the price you set the stop at ( the real futures price)- but they fill you at the price they say their price ( the appropriate SB price) was at the time the stop was hit

so you have no real way of knowing that the price you end up stopped out at (SB price) is the correct price as such - but you accept that as a penalty i guess of using SBs to trade at - but at least you know the real price was hit?

and of course - even if your real price was hit - with exchange futures - dependent on size - you could or would end up with a worse fill price anyway

so they could effectivly offer a stop close for trading positions based on real markets and then just pay out on their SB price at the time the exit was hit

in your last paragraph - are you saying that although the SB bid and ask would normally be equidistant from the mid futures price ( with perhaps a preference to the last price) - that sometimes they will give an SB ask below the real bid or a SB bid above the real ask?

 

[axthree]

Thanks PP & CT for your responses. My brain is a bit boggled at the moment, so I'll read and attempt to understand properly tomorrow.

 

[alliance]

Axthree:

I also use the temporary bias to my advantage when entering a trade. A technique I learned from other T2W posters but was a bit slow to copy.

Could u expand on this pls?

TIA

 

[jck]

jesus wept. thank you guys for making my life so happy. here i am having lost a few hundred once and thinking there must be an easier way and your saying the sb firms will make sure i dont win. i found the problem was not in my thinking before hand but that my brain did not care if i lost or won.

 

[CityTrader]

Stevet

this is true, BUT at least you know the stop is triggered. Also, they will never move too far away from the true price- otherwise punters will arb between them and another firm ( trust me, i used to try and do it all the time- once even nicked 50points at £50/point) over an Easter bank holiday when wall st had made a major move the previous trading session)

Another (psychological) point to bear in mind, is that human nature being what it is, if you were to call up and ask for a price , the SB'ing firms justification for "reading" you is that they dont know whether you are a buyer or a seller, if however a stop is being "taken out" all things being equal, you'll possibly get a better price as they know which way you are ( obviously) and they are not going blatantly risk getting caught screwing you on the price. Now before you all start shouting and moaning what a load of ********, trust me on that last point!

I don't think they would ever have an ask price below the real futures bid price ( no need to) but I'm sure if they were seeing a lot of seller,s and wanted to reduce their position themselves, that they would bias the price so much so, that ( say )the futures were 4310-4311) they may well quote 4304-4311

Hope this make sense...

City Trader

ok - so they dont fill you at the price you set the stop at ( the real futures price)- but they fill you at the price they say their price ( the appropriate SB price) was at the time the stop was hit

so you have no real way of knowing that the price you end up stopped out at (SB price) is the correct price as such - but you accept that as a penalty i guess of using SBs to trade at - but at least you know the real price was hit?

and of course - even if your real price was hit - with exchange futures - dependent on size - you could or would end up with a worse fill price anyway

so they could effectivly offer a stop close for trading positions based on real markets and then just pay out on their SB price at the time the exit was hit

in your last paragraph - are you saying that although the SB bid and ask would normally be equidistant from the mid futures price ( with perhaps a preference to the last price) - that sometimes they will give an SB ask below the real bid or a SB bid above the real ask?

 

[stevet]

so in your last paragraph - they arn't really offering a better buy price - but they are presumably going to put off sellers opening new positons, so the spreadbetting company hopes they end up equalising their book

i do get all you say - and of course have looked at arb opportunities - but it seems that its not easy to get any large size on with spreadbettors, you cant access their systems automatically to monitor and/or place trades, their systems seem unreliable anyway and unless there was a trading edge specific to using a spreadbetting company - it just seems easier and more efficient to use futures

one of these spreadbetting companies is going to blow out for sure one day - and i would not like to have just had my 100 size, 100 point trade just come in at the same time!

 

[Creech]

Interesting posts from everyone here. Learning alot from all this.

CT - can you actually place stops on the actual market price rather than than the SB price then? What SB do you use?

 

[CityTrader]

Creech,
you can place stops BASIS the underlying price, but they will fill you at whatever price they are quoting at the time.

 

[Splitlink]

[QUOTE
I assume the reason they don't offer the facility is that their quoted price will widen above the underlying if they are seeing a lot of buyers, or are short and are bidding up to try and cover their position ( by attracting sellers)[/QUOTE]

You technocrats!! You are leaving me way behind!

The facility that they don't offer. Do you mean the stop to open a trade?

I can see why they don't offer that, although it has only just dawned on me.

In my previous post I mentioned the danger of stops being triggered on SB spikes. These happen in a milisecond and they flash back up so that manual traders don't stand a chance of getting in an opener. However, if they had the opening stop facility a trader could use that spike to open, couldn't he, to the disadvantage of SB?

Hope we are talking about the same thing!

Regards Split

 

[stevet]

Splitlink

the reason they might not offer a "stop open " is that spikes are just trails of last prices - they do not mean that the last price is still tradeable as there might not be any contracts available at this price - at least that is how it is in the real futures market - and the spreadbettors need to be able to hedge in the real market - so by extension they would be nuts to offer a "stop open" on their own SB price ( since i assume on a spike that you cant place a bet at this price, the just need to make a delay till the price settles and then quote) - but they could offer a price based on the real contract hitting your "stop open" price - but giving you the current next spreadbetting price

 

[Creech]

Thanks CT!

 

[axthree]

Alliance,
If you look at SB's prices compared to the live price, the SB price seems to slide up or down either side of the true price. If you can deal when the two are as near as possible together in the direction you are trading its like getting an extra couple of points provided they don't slip again when you want to exit.
Oh dear, I'm not making this very clear.
It's a bit like having a one inch long rod inside a 1.25 inch long tube.

 

[alliance]

Alliance,
If you look at SB's prices compared to the live price, the SB price seems to slide up or down either side of the true price. If you can deal when the two are as near as possible together in the direction you are trading its like getting an extra couple of points provided they don't slip again when you want to exit.
Oh dear, I'm not making this very clear.
It's a bit like having a one inch long rod inside a 1.25 inch long tube.

Tnx Axthree, I think I am with u there

 

[The General]

Alliance,
If you look at SB's prices compared to the live price, the SB price seems to slide up or down either side of the true price. If you can deal when the two are as near as possible together in the direction you are trading its like getting an extra couple of points provided they don't slip again when you want to exit.
Oh dear, I'm not making this very clear.
It's a bit like having a one inch long rod inside a 1.25 inch long tube.

Axthree,

The only problem with your statement is the fact that by definition, if the dealing price(for your direction) is very near to the actual, the market will be moving fairly quickly, so you would be (for example) buying at a good price relative to the underlying in a sharpish downward market.

 

[stevet]

it is very important that anyone hoping to make money trading a) gets a good understanding of data delivery and b) how to trade - you sure dont want to be making trading decisions off the relationship between market pricing and spreadbetting pricing

spreadbetting introduces a whole extra layer to the complexities of trading successfully - a professional trader both understands how to trade and also about data supply - and because of this - might have a chance to profit by spreadbetting

for non-professionals to profit from spreadbetting seems a real long shot - so at least use the experience to try to learn the technical complexities of data supply and how to protect your capital

but forget about the quirks of spreadbetting itself - since you will probably only make money spreadbetting once you have already made money in the real markets - and can then handle the added difficulties of making money via spreadbetting

 

[axthree]

Stevet,
Your para1. Agree. decisions made and if conditions met THEN see if extra can be winkled out.

Your para 2. I'm profiting quite nicely thank you.

Your para 3. Seems a long shot? I take it you started in the opposite direction from some of us.

Your para 4. Never made money in real markets before I started spread betting.

I do agree that there are added difficulties in spread betting and that it is a blunt instrument.
Normally I only take a position each day or so but today took several, just to prove to myself that it could be done. The spreads are a killer.
You are absoulutely right about money management. I have benefitted greatly from advice on this subject from members here, without which I would be reduced to using the teabags twice.
I would add that I am no professional and just use my profits to pay for a rather expensive hobby.