Behind enemy lines, staying the right side of the Spread Betting companies

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Black Swan

So if you're doing well with one of the most reputable firms, for example IG Index, and you reckon you could (with a touch more focus and dedication together with compounding at the right times) make a profit of between £500-£1000 a day (150-200 pips) how do you ensure you stay the right side and fly under the radar and not asked to take your bat and ball and fook off...?

Accepting the fact that no SB company wants to pay you out circa 250K pa with a smile is there a 'suggested' strategy that's a win/win (as much as poss) for both sides of the deal?

For example and I fully realise this is highly simplistic, do the SBs find day traders working on one hour timescales OK, but detest scalpers operating on five minutes...?

Do the SBs find it OK if you're trading on the main Indices and major fx spots as they can hedge easily...?

Any thoughts/discussion much appreciated
 
They would have to hedge all your trades in the underlying, otherwise you are just taking money off them.

I dont think they like to do that, but when you force them to hedge (by winning short term) you might find you get delayed fills and order rejections..

Best choice might be to use an SB firm that is setup to hedge ever trade by design, like futuresbetting.com (but they dont do spot fx i think).

Or just DMA directly yourself, with CGT at 18% these days (hope it doesnt go up in the next Budget), its not much. If you spread bet hourly, at the end of the year the extra spread you pay on every trade will probably eat 18% of your profits anyway.
 
Good points by DD.

I've never understood why the tax-free angle on SBing has such a hold on the population of mostly unprofitable traders.

I could understand it the other way round. You find you’re making profits above your non-taxable limit and then look for more tax efficient alternatives. But to saddle yourself with the additional burden of SB antics while also trying to get your trading game up to par seems a pointlessly difficult and ultimately unsuccessful strategy for all but the few.

It’s not as if DMA was out of reach for low-capital traders, it isn’t, and especially is this ease of access and availability facilitated in the spot FX markets.
 
TheBramble said:
Good points by DD.

I've never understood why the tax-free angle on SBing has such a hold on the population of mostly unprofitable traders.

I could understand it the other way round. You find you’re making profits above your non-taxable limit and then look for more tax efficient alternatives. But to saddle yourself with the additional burden of SB antics while also trying to get your trading game up to par seems a pointlessly difficult and ultimately unsuccessful strategy for all but the few.

It’s not as if DMA was out of reach for low-capital traders, it isn’t, and especially is this ease of access and availability facilitated in the spot FX markets.
Click to expand...

Tony - can you elaborate on your last paragraph please?
 
TheBramble said:
Good points by DD.

I've never understood why the tax-free angle on SBing has such a hold on the population of mostly unprofitable traders.

I could understand it the other way round. You find you’re making profits above your non-taxable limit and then look for more tax efficient alternatives. But to saddle yourself with the additional burden of SB antics while also trying to get your trading game up to par seems a pointlessly difficult and ultimately unsuccessful strategy for all but the few.

It’s not as if DMA was out of reach for low-capital traders, it isn’t, and especially is this ease of access and availability facilitated in the spot FX markets.
Click to expand...

I would much prefer to go the DMA route but I swing trade LSE equities with an average trade length of perhaps 3-5 days. SB offers the significant advantage of me not having to pay 0.5% stamp duty on each transaction. This would cost me 20-30% of my account each year just in tax.

A related question though, which I probably ought to know the answer to already, is that if the SB companies hedge my equity trades do they also incur the 0.5% tax?
 
donaldduke said:
They would have to hedge all your trades in the underlying, otherwise you are just taking money off them.

I dont think they like to do that, but when you force them to hedge (by winning short term) you might find you get delayed fills and order rejections..

Best choice might be to use an SB firm that is setup to hedge ever trade by design, like futuresbetting.com (but they dont do spot fx i think).

Or just DMA directly yourself, with CGT at 18% these days (hope it doesnt go up in the next Budget), its not much. If you spread bet hourly, at the end of the year the extra spread you pay on every trade will probably eat 18% of your profits anyway.
Click to expand...

The only genuine difficulty I've experienced is orders/fills being delayed, only by a few seconds which hasn't altered the order that much; one or two pips. I'm looking for answers in relation how to trade with for example IG and not becoming an issue, as an account/customer. If they have perhaps 10,000 regular customers and a v. small percentage are day trading the major indices and or fx spots, making themselves a regular £500-£1000 a day, is it that a big issue? :confused:
 
Last edited by a moderator:
I'd guess it depends on your style.

If you're hitting them for £20pp once in a while and taking 100 pips then that will probably be ok becasue they can probably offset that but if you're trying to stuff them in £250pp and looking for 5 pips then they'll mostly end up unhedged and just wearing that loss all the time so they'll switch you off.

When i was market making we'd leave some clients on in big size becasue they didn't take the p##s and just did their trades (which sometimes suited our book) but others we'd put in miminal size becuase they'd just try and catch you as the price moved and be basically trying to steal a small turn in big size al the time.
 
the maximum thing , maybe they will put u on " dealer confirmation ", and this shouldnt be a problem if u trade on hourly charts .

Simon from CS said if u make 1000 quids weekly they will not notice u , unless u trade 40 times daily they will put u on DC , i think IG has bigger risk tolerance than CS . Anyway your concern should be how to trade profitably and how to make 1k daily .
The bottom line : if u trade big and u make 1 k on a daily basis go to DA , thats it .

PS : we disccused this topic manytimes b4 ...
 
foredog said:
I'd guess it depends on your style.

If you're hitting them for £20pp once in a while and taking 100 pips then that will probably be ok becasue they can probably offset that but if you're trying to stuff them in £250pp and looking for 5 pips then they'll mostly end up unhedged and just wearing that loss all the time so they'll switch you off.

When i was market making we'd leave some clients on in big size becasue they didn't take the p##s and just did their trades (which sometimes suited our book) but others we'd put in miminal size becuase they'd just try and catch you as the price moved and be basically trying to steal a small turn in big size al the time.
Click to expand...

Thanks foredog, this is more the kinda feedback I was after. :)
 
Black Swan said:
The only genuine difficulty I've experienced is orders/fills being delayed, only by a few seconds which hasn't altered the order that much; one or two pips. I'm looking for answers in relation how to trade with for example IG and not becoming an issue, as an account/customer. If they have perhaps 10,000 regular customers and a v. small percentage are day trading the major indices and or fx spots, making themselves a regular £500-£1000 a day, is it that a big issue? :confused:
Click to expand...

Reading your thread reminded me of this article I read last year just I was getting into trading:

IG’s value plummets by 27% after spread bets on bank shares cause £12m of bad debts in one month - Times Online

Slightly off topic but it might shed some light on what they perceive as risk?

KJ
 
tar said:
http://www.trade2win.com/boards/general-trading-chat/56104-banned-winning-too-much.html
Click to expand...

thnaks for the link that thread doesn't answer this thread topic/title. I'm looking for ways/trading methods to quietly and efieciently day trade with, for example IG, whilst making a very decent living from them, keeping nose clean, flying under the radar....

TBH I read that thread in full a while back, may have even contributed to it, but dismissed it given my overall opinion was that those who had accounts closed were exploiting weaknesses in systems/platforms, they weren't nec. profitable traders puting in a 'decent' shift...
 
Black Swan said:
thnaks for the link that thread doesn't answer this thread topic/title. I'm looking for ways/trading methods to quietly and efieciently day trade with, for example IG, whilst making a very decent living from them, keeping nose clean, flying under the radar....

TBH I read that thread in full a while back, may have even contributed to it, but dismissed it given my overall opinion was that those who had accounts closed were exploiting weaknesses in systems/platforms, they weren't nec. profitable traders puting in a 'decent' shift...
Click to expand...

Look at the end of the day, if you do big size, however you trade, you are not going to get under the radar. I personally know several dealers at some of the largest firms and they watch their clients carefully - especially the bigger winners and losers. Some even go to the lengths of building detailed profiles on some of their clients including trying to work out their strategies. This is not paranoia - I have had this first hand.

Bottom line: Swing or position trade. You will never get shut down for doing this.

It's only those who scalp or look to exploit pricing errors or sharp and fast changes, that will come a cropper.

Time and time again on these boards it's those that do one of the above that are the ones complaining about S/B companies.

I have never seen anyone that actually holds a trade for a minimum of two hours or more, be kicked out for winning and would be very interested to hear of someone that has - I don't believe it would ever happen.
 
Woo hoo! Still not banned!

I concur with T_D..... Only those taking the **** will get banned, think about it, its just not good business...

If you ran an SB firm and I do 5-10 trades per week with you and I'm consistently raping the market, would you...

A) Shut me down

B) Follow me, hedge me, profile me and most importantly, at £500 per pip, want the 7pips spread profits of every trade?!
 
donaldduke said:
They would have to hedge all your trades in the underlying, otherwise you are just taking money off them.

I dont think they like to do that, but when you force them to hedge (by winning short term) you might find you get delayed fills and order rejections..

Best choice might be to use an SB firm that is setup to hedge ever trade by design, like futuresbetting.com (but they dont do spot fx i think).

Or just DMA directly yourself, with CGT at 18% these days (hope it doesnt go up in the next Budget), its not much. If you spread bet hourly, at the end of the year the extra spread you pay on every trade will probably eat 18% of your profits anyway.
Click to expand...
from what i hear, Futurebetting will be offering spot fx in near future,in addition with there futures products.
 
Black Swan said:
So if you're doing well with one of the most reputable firms, for example IG Index, and you reckon you could (with a touch more focus and dedication together with compounding at the right times) make a profit of between £500-£1000 a day (150-200 pips) how do you ensure you stay the right side and fly under the radar and not asked to take your bat and ball and fook off...?

Accepting the fact that no SB company wants to pay you out circa 250K pa with a smile is there a 'suggested' strategy that's a win/win (as much as poss) for both sides of the deal?

For example and I fully realise this is highly simplistic, do the SBs find day traders working on one hour timescales OK, but detest scalpers operating on five minutes...?

Do the SBs find it OK if you're trading on the main Indices and major fx spots as they can hedge easily...?

Any thoughts/discussion much appreciated
Click to expand...

It seems to help if you always enter or exit with an order (in my experience).

Perhaps this way it's guaranteed that you're not taking advantage of lagged prices.

Nice problem to have, though, 250K tax free a year :)
 
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