97% Spread Betters lose their money!

[DESKPRO]

97% Spread Betters loose their money!

Article in todays Sunday Times say that 97% od Spread Betters loose their money... "its gambling not trading", how many here are actually daytrading using SB and hace made money over a period of time? Alternative it mentions is CFD's. How easy is it to trade these? Can this be done online have they got stops, limit orders vary stakes etc.

[http://www.timesonline.co.uk/article/0,,2097-1028048,00.html

 

[Marc100]

DESKPRO

I have an account with IGMarkets which I am very pleased with.

You have the option to trade online or by phone. The online interface is very robust and easy to use.

Also, IG have just incorporated a level 2 frontend if you prefer. You get a six week trial period which should be enough time for you to decide if it suits your style of trading or not.

You will need to deposit minimum £10000 to open an account. The article you provided stipulates you need to maintain an account balance of at least £10000 to trade CFD's. When I first traded with IG I went below this amount for several months without calls for me to top up my account, maybe different with other providers?

You can set stops and limit orders as easily as you would with any online broker.

Rgds.

 

[Rainmaker]

not surprised that a very high proportion of spreadbetters lose money. trading is a zero sum game. a very small proportion of traders win a grat deal of money, the sb firms take their cut, then there are costs to pay. lots of people have to lose money to fund this.

i've read somewhere that the trading arms of the investment banks are no better. if you take out cost of capital, etc and look at their proprietary trading p&l over 30 years, their combined profit is zero.

 

[Zenda]

Lets Put it in Full -

The Sunday Times - Money



March 07, 2004

Spread betting - odds on you’ll lose
Some traders have become millionaires, but one expert says 97% of spread betters lose money. By David Budworth



[Mods note: the article in full has been removed as it breaks copyright]

 

[JonnyT]

Trading Stocks is not a zero Sum game.

Trading futures and derivatives is.

JonnyT

 

[chump]

http://www.enthios.com/new_page_10.htm


Cheers

 

[adrianallen99]

Thanks chump, that was an enjoyable article

 

[Zenda]

Yep I agree nothing changed since 1993 !!

 

[DaveGos]

Chump

Having read the article I don't think he makes a good enough case for zero-sum. True for every winner there has to be a loser but some of the winners arn't playing such as the brokers and MM. Which is why if I win as much as I lose in trading as an individual trader my pot diminishes.

He seems to miss out a whole classification of traders who go out of there way not to be informed, I'm one of them when I make a trade the last thing I want is detailed research clouding my decision all I want to do is trade what I see now. I'm also surprised that he devoted little to what I feel is the most important reason why some people can consistently profit from a "zero sum" game and thats money and trade management. If I'm honest the only reason that I am profitable is that I stick to my stop loss and target rules because I know that even if I have no trading edge, even if I have a negative edge these two targets will make my trades net positive. In fact the only time I've really lost money or cut profits is when I have ignored one or both of these targets.
I wonder if the articles author has ever traded or just an academic.

 

[chump]

I think the article covers issues in such a way it that should start to make you think about YOU and where YOU fit into the market.

I have had this discussion before,but I will put it here for what it is worth.

The edge that defines you has a winner is NOT in the market it is in YOU the player.

The market is constant in the way it gives you an opportunity to win. The probability that defines whether YOU win is how well you understand the market and yourself.

I could spend hours expanding on this..LOL. In essence it this. If you don't know what your advantages are and where best to exploit them in the market you will lose in the longrun.

This author says it better as follows :

"To trade profitably in the longrun,you must know your edge,you must know when it exists,and you must focus your trading to exploit it when you can".

I think this is the single most thought provoking statement he makes,and potentially the most beneficial if you wnat to spend time analysing it".

Cheers
Steve

 

[DaveGos]

I agree it is You and not the market that is important, I'm just not convinced that you need to find some sort of label which defines a relationship with the market as no matter what you do, unless you are a very large player, you cannot influence in any way what the market does or what any of the players do.
For myself I keep it simple, stick to my trading rules and don't worry what the market is or isn't going to do.

 

[chump]

Dave,
You missed the point.

It appears many people lose because they do not understand their own strengths and weaknesses .

It appears many more lose because even though they may understand their strengths they have not identified where within the market they can capitalise on them. To do the latter it is helpful if they also consider who other players are and what those players are trying to achieve.

This has nothing to do with predicting markets and everything to do with analysing market activity and planning your startegy accordingly.

Cheers

 

[donaldduke]

97% Spread Betters lose their money!

This is what attracts a lot of people to trading, if it were so
easy the rewards wouldnt be so great.

Everyone knows that the majority of people lose but everyone
thinks they will be part of the minority that wins..

Afterall if 3000 people out of the total 100,000 make money there
must be something those 3000 people are doing that can be
emulated...

Most people who have been succesfull in other areas of their lives
probably think they can be part of the 3% that are successfull..

 

[Cigar]

97%... its a very nice headline for someone advertising his book.. I also suspect theres a little bit of the investor/trader 'thing'.

Isn't there a regularly issued figure that states 80% lose in their 1st year, then 40% the next year, then 25% in their 3rd year. Maybe the SB losses reflect the fact that SB'ers are generally people new to the market, the first step. If a newbie survives the first 12 months, he stands a better chance of surviving his 2nd year etc.

You could also state that 80% of new business ventures go bust within 18 months. Or that long term holdings (isa's, pensions etc) have performed very poorly over the last few years, and they aren't held in spread bet accounts.

Success doesn't come easy .. for anyone

 

[donaldduke]

Its not in the SB Industry interests as a whole to report
that that 90%+ of customers are losers.
Not good for attracting naive new punters.

Perhaps some of the SB insiders on T2W like 'capitalspreads'
would like to comment on what percentage of customers were profitable in the last month or in the last quarter of last year...

Im sure they have these figures, a few SQL queries is all you
need to run to get these results..

I remember broadway trading a few years back used to show
on their website how many of there traders were profitable..

 

[DESKPRO]

No one has really answered my question on how many using this board spreadbet and overall have found it to be profitable over a period of time (eg few months or even years)

 

[donaldduke]

Deskpro,

If you want an answer to your question, then you might
want to create a thread with a poll along the lines of:

1.I am profitable using SB
2.I am profitable using CFDs
3.I am profitable using Direct access
...
...
10.Im not yet profitable


The general answer to you question is ofcourse some people
on this board make consistent money using SB.. How many? we will never know for sure..

 

[Buk]

to the tune of the 'Bananarama' thingymajig........."it aint what ya play, it's the way that ya play it....and that's what gets results"... :cheesy:

one of em was quite fit....just can't recall her name now...ummmm errrrr

 

[Beach Runner]

I remember reading somewhere that in futures a rough guide is that 80% of traders lose; 12% break even, and 8% win. I'm sure many will have seen these figures as I've read them more than once. I've always assumed that the percentages for spread betting would be similar, and possibly worse? I do think that the spread betting companies are treated <i>very</i> kindly by the media. It's usually rare to read anything slightly negative. Perhaps all that advertising revenue helps?

This website, by contrast, greatly helps to address the imbalance. I read a very good definition on here a few days ago, I think written by Frugi, of the SB bias. But possibly failure is likely to be the natural result of anything we attempt? Success the exception? In an excellent book (my opinion, guys): 'The Power Laws of Business' (anyone else read this?) by Richard Koch, the author states:

<i>If we realize that failure is normal, we come to view all business as an experiment, where success at the first attempt is not to be expected. Paradoxically, this is very good news."</i>

 

[zigglewigler]

The problem is not the instrument with which you trade, it's the trader, his/her understanding of the market they're trading and their understanding of the instrument's behaviour in that market. Forget the 'bet' in spread betting, all trading can be considered gambling. Gambling in terms of pure chance is not what we do, we're looking to bring the odds of success our way by technical analysis. The Time's article referred to investors, not speculators, I would largely agree that spread betting is not for them. The buy and hold mentality is a hard one to shake.

David Buik of Cantor Index, a spread-betting firm, said: “Before the stock market bubble burst in 2000 some spread betters were reckless

Well I nearly bust a gut reading that quote! Weren't all stock investors the truest morons at that time? 'Reckless' would be flattery if applied to those that bought into the 99-2k market simply because 'this time it's different'.

Perhaps investors will feel safisfied with slow steady growth at best, whilst speculators require more spectacular results, and are therefore more often dissapointed.

The character type poll on this site indicates that the iNTj and iNTp types make up the bulk of traders, those two groups constitute 3% of the general population. That must be the few that the article's 97% refers to!

Have a little more faith in yourself and pay less attention to those that make money talking about the markets.