Spread Betting for a living

[stevet]

axtree

para1.
was really saying that if someone makes trading decisions based on also trying to fit their decision to when the spreadbetting price seems to best - they are going to find it real difficult to make money

para2
pleased to hear you are profiting - but if trading was your full time occupation and you are not employed - you have to be making at least 6 figures per annum in order to overcome lack of paid holidays, sick leave, the fact you have your own capital at risk etc

there is no such thing as part time trading - since professional traders may sit for a whole day just waiting for their setups to come together so they can get a trade on - so even someone sitting down for a few mins a day to trade and doing just one trade - is doing the same thing as a professional -but just having an easier life than most professionals!

para3
started with fundamental trading many years ago

para4
ok

i didnt mention money management - as people who trade for a living would be more concerned about gettting enough size on - than the so called priciples of money management

 

[axthree]

Stevet,
Sorry, I don't know where my money management bit came from.
I realy shouldn't post when my brain is boggled.
For info, I'm self employed and gradually building a bigger pot as well as funding my anti-social hobby.
When you refer to "The so called principles of money management" I take it that you would consider a policy of a rigid percentage of capital at risk on any one trade is not likely to deliver very much very quickly?
The reason I ask is that I have on occasion staked more than many would consider prudent to achieve a self set target.
Sorry if I come over as a bit po-faced but it's the risk/reward bit of what we all do that intrigues me.
If, and it's a big if, I continue to get it right I will probably want to graduate to the real markets but at present they seem rather complex to me.
It's interesting to me that when using my virtual account which I operate alongside the real ones I take risks which I wouldn't consider with real money but actually perform better.
Maybe I'm too timid to ever really make a go of it. I'm certainly not clever.
On a lighter note I still remember sitting here, like a rabbit in the headlights, watching myself lose at the rate of £100 per minute and not believing what I was seeing.

 

[stevet]

axthree

"a rigid percentage of capital at risk on any one trade" is not a strategy to make money in markets - its a strategy for learners to try to protect capital - but another way to protect capital is to load up on winning trades

"a self set target." is another strategy used by learners to aspire to making money - but removes the dynamic relationship with the markets that you need in order to trade successfully - somedays are just narrow range days where your profit opportunity is much reduced or where the balance of wins and losses is going to produce a breakeven day - and on these days - if you have set yourself a "self target" - you are going to ignore the messages being sent to you by the market - similarilly some days there are massive profit opportunities - and a "self target" is likely to take you out of an easy money making market too soon

it seems a common belief that spreadbetting can be used to learn to trade - wheras using spreadbetting as a method to trade adds another layer of difficulty to profit making - hence the point of my first forum message - that only a succesful trader with years of experience might be successufl spreadbetting - certainly not a learner to trading

if "real markets" seem complex - remember that spreadbetting is another level of complexity on top of "real markets" and whilst the spreadbetting company might make it appear to be easier to use their services - just remember that all the employees of the spreadbetting company are way happier to pick up their pay cheque - than make their fortune trading - and they dont actually earn that much

virtual accounts will produce a virtual trader - and that aint gonna pay the bills! but learning all there is to know about the markets and having a real methodology to trade will allow you make money with real money

your virtual trades should be the same as your real money trades if you have a real methodology as opposed to gambling - all that is happening is that you are gambling harder with your virtual account - and therefore making more - but there will be one big loss or run of losses that would take your virtual account back to the real one or lower - so you are not making more from the virtual one - you are just playing the volatility wave

the brave can lose their balls before they learn to fight and the clever will always find ways to put off the fight - but its winning the fight that makes the bucks - so stick with "timid" and "not clever"

losing is the best way to learn to trade and the bigger the loss - the more it should help as it will make you really concentrate on what went wrong and learn - little losses you can sweep under the cappet and ignore dont teach you anything - except to learn to keep doing the wrong thing and little losses add up to a big loss anyway over time

 

[axthree]

Thanks for your post, stevet. I think I will stay timid.
I have a few years before they plant me so will stay with the "slowly but surely" approach.

 

[Creech]

axthree

it seems a common belief that spreadbetting can be used to learn to trade - wheras using spreadbetting as a method to trade adds another layer of difficulty to profit making - hence the point of my first forum message - that only a succesful trader with years of experience might be successufl spreadbetting - certainly not a learner to trading

if "real markets" seem complex - remember that spreadbetting is another level of complexity on top of "real markets" and whilst the spreadbetting company might make it appear to be easier to use their services - just remember that all the employees of the spreadbetting company are way happier to pick up their pay cheque - than make their fortune trading - and they dont actually earn that much

Interesting stevet but what would you recommend then for someone wishing to start in trading? i.e. what platform and provider would you recommend? By the way im thinking to trade mainly in FX, and indicies on a smaller scale.

I liked the below...something im gonna remember!

the brave can lose their balls before they learn to fight and the clever will always find ways to put off the fight

 

[stevet]

FX is very very hard to make money at - it has lately got a lot or PR - but make no mistake - you will lose more and lose more quickly without learning anything than you wil with indicies

and the only real way you can learn is to get a job with a trading firm where you can use their money to spend a year learning

failing that - decide that as a professional trader you can make 4 figures a day easy, and much much more if you are at the top of your game - dedice how much you are prepared to invest to learn on your own by taking trades in the futures market in order to lose - and then analyse what went wrong

 

[Creech]

Thanks for the reply but you make it sound impossible for a a beginner! Its pretty much impossible to get a trainee/grad job as a trader. That would be ideal as i would learn a great deal with no risk.

I thought i had it worked out but now im a bit confused Maybe the answer is to just go it alone and seek out your own method(s)?

 

[minx]

Thanks for the reply but you make it sound impossible for a a beginner! Its pretty much impossible to get a trainee/grad job as a trader. That would be ideal as i would learn a great deal with no risk.

I thought i had it worked out but now im a bit confused Maybe the answer is to just go it alone and seek out your own method(s)?

Goto www.oanda.com and set up an FX Game account, play away to your hearts content and see if you can make money. If you can then go live with real cash, if you cant then you've just saved a few grand. Never jump in unless you know what you're supposed to be doing.....

 

[Creech]

The thing is ive been doing my research, reading, etc but im just confused as to whether or not use SB or direct access for trading? With regards to this im really quite confused. If so what direct access platform would you or anyone recommend?

Your right seeting up a dummy account is a good idea and that is what ill probably do as well.

 

[Trader333]

www.Interactivebrokers.co.uk is who I would recommend.


Paul

 

[minx]

but im just confused as to whether or not use SB or direct access for trading? With regards to this im really quite confused.

What time frame? If daily/multi-hourly then SB is fine, if scalping then you need direct access.
Look at the various spreads and work out how much damage each will do to your strategy, then factor in Gordon Brown and his ever increasing call on peoples wallets and decide...... slightly off topic I know

 

[Zenda]

which Free Software

The thing is ive been doing my research, reading, etc but im just confused as to whether or not use SB or direct access for trading? With regards to this im really quite confused. If so what direct access platform would you or anyone recommend?

Your right seeting up a dummy account is a good idea and that is what ill probably do as well.

CMS Forex Visual Trader Demo (no time limit) - Download it from
http://www.learntrading.co.uk/customer/pages.php?pageid=20

Free CD available- an intro to FX is available but Please mention Trade2win in your request - send me private message. Should you decide to unlock the full course then Trade2Win will be reimbursed helping fund this site. (you can purchase full course from T2W shop)

 

[Creech]

Thanks for all your advice!

I am intending on scalping/swing trading so im going to look into IB now and check it out their commissions etc.

 

[Creech]

IB looks good and their spreads r pretty low t too i.e. DOW.

However with reagrds to FX, am i reading IB right as it says the min FX order size is $25,000?

Also, when trading is your money in GBP or USD? Ive read on some other posts that your money is converted into USD then you have to exchange it back into GBP as well as pay commission?

 

[capitalspreads]

to learn .....just open a demo account with one of the SB or direct access companies and trade FX as if the money was real. If you make money DAY TRADING (not with a one - off trade) over a reasonable period then open a real account and start to risk your own money. Just dont risk more than you can afford ! Take advice from where you can get it and NEVER, EVER think you are right. The MARKET is right no matter what you think otherwise.

simon

and yes, before you ask ... I have an axe to grind as an SB company representative

pip pip

 

[DITD]

New poster here so apologies if I am posting this question on the wrong thread.

A friend of mine has opened a buy bet for £1000 per point with Finspreads on a fairly volatile share. From your experiences would this be hedged or would they take the risk on themselves? If hedged how does this usually work?

Thank you,

DITD.

 

[Zenda]

Introduce me to your friend please!

 

[DITD]

He bought at a price of £1.28 and now the price is 57p. A huge loss at the moment but he is still in it (but can afford it)

That is the reason for my question post 116. If he is stopped out or simply closes the position for a loss would the £70,000 loss go straight into Finspreads pocket?

 

[Trader333]

Your friend is a gambler, for his position to now become profitable requires a greater than 100% increase in price. He should immediately close the trade unless he is a billionaire and this is all play to him.

It is difficult to know if Fins hedged this position or not but I would hazard a guess that they will have partially hedged it.


Paul

 

[jpwone]

HI DITD

Hedging first. To hedge a bet the spreadbet company can take the same trade in the market ie. if you are long (an up bet) they will buy the actual shares and if you are short (a down bet) they can go short in the shares. This means that they have the same position as you and their profit is the spread they have applied over and above the true market spread. If your friend is long at £1.28 and they bought in the market at £1.27 then they have locked in a profit of £1000 and will get another £1000 when the bet is closed ie. your friend will sell at their price of 57p but the market price is 58p. The problem with this is that to hedge a £1000 bet the spreadbet company needs to buy/sell 100 000 shares in the market. This will probably fall outside NMS (normal market size) and they will have stagger the order into the market. This being the case they will probably want notice of open/closure of the bet and will endeavour to get the best prices but any costs will be reflected in the price that your friend eventually gets. They have other options to hedge the bet (options being one) but for simplicity I have shown the method which is easiest to understand.

Thats how they could hedge this bet but the £70,000 question is have they hedged it? Only they will know the answer to this. Beare in mind that if they hedge all the bet it is possible that they will move the market ie. they become a buyer of 100,000 shares and this amount of buying drives the price up. Either way, hedged or not, it affects your friends position in no material way.

Your friend should be more concerned about the amount of money being lost rather than worrying who it is being lost to.

It took me a long time and a fair bit of money to realise that just because a price has fallen significantly that does not mean it cannot fall further or that it is cheap. If you were standing at a fairground and a man was hitting a stake into the ground and the stake was 500 cm long and he had already knocked in 372 cm would you want to bet a £1000 a cm that he could not knock it in any further? A lot of people who thought Marconi could not get any lower lost money.

The opposite is also true. Just because something has gone up does not mean it cannot go further. If the same man was flying a kite and had got it up to 50 m would you want to bet he could not get it any higher? A few people who are currently short in oil are finding out right now.

If your friend is serious about trading (which he/she should be if he/she is trading at a grand a point) then he/she should understand risk management, money management and how to use a stoploss. Just because you can afford to lose an amount of money on a trade does not mean you have to.

Hope this helps.

JPWone