Death of SB

[NVP]

My grandad taught me as a bookmaker in the 1960's to always bleed people slowly ......you make more money

big over-leveraging in my opinion was always a bad business model for retail brokers as they could have probably taken another 50% easily off most traders by slowing down the loss rates ....instead of them blowing out fast and walking away from trading .....

however if everyone else is offering the big leverage deals you would have had to be a bold broker to not offer the same

N

 

[NVP]

Certainly a starting point would be to ascertain what constitutes a live account? It's basically any old account that has been 'active' in the last 12 months on a rolling basis.

I'm not sure what 'active' means. To me it is someone who is logging in regularly and has been executing trades. To others it might be anyone who has opened their trading app, regardless of whether they have traded or even have any funds on account. Maybe, each month, you could filter out all your unfunded, or dormant clients and ping them a push message to entice them to open their trading app and be an 'active' client?

On thing for sure is that in an industry where regulated brokers spent years gaming KYC and AML laws, I'm not exactly convinced they won't be just as keen to game other aspects.

gaming is the way forwards ....watch this space

 

[NVP]

IG helpfully point out that 79% of their clients lose money. Wonder what the figure will be after a few months of 'safe' SPB?

why would it be different .....same % idiots... just less leverage ?

 

[sminicooper]

But surely (1) isn't or wasn't the case? You can lose more that £1k on a 1K account. That's partly the problem the new rules are supposed to address.

Apologies – you're quite right! I should have explained myself more clearly – I was thinking along the lines of a sensible learner trader who'd read the Highway Code and was going out on his early lessons. While there is always a future for the uneducated who are willing to learn, there is little we can do about complete idiots and the greedy.

 

[Your User Name]

It's the idiot punters who've landed the rest of us(!) with the new rules, probably killing off spreadbetting as we know it.

 

[Splitlink]

But surely (1) isn't or wasn't the case? You can lose more that £1k on a 1K account. That's partly the problem the new rules are supposed to address.

Yes, it seems to me that ESMA has slipped up on that. The fact that a 50% loss is allowed on margin is a very dangerous situation for someone to get in to. I am sure that those who don't like the idea of taking a loss will get cleaned out very quickly.

 

[tomorton]

But surely (1) isn't or wasn't the case? You can lose more that £1k on a 1K account. That's partly the problem the new rules are supposed to address.

And eventually we will see someone going all in on an account on a crazy trade, knowing they cannot possibly lose more than the deposit money. If you're going to get wiped out anyway, why not go for the big win? Like the punters who buy 1000 lottery tickets at a time. Then the SB firms will go crying to the FCA......

 

[MORRIS2001]

Not sure I fully understand that. Most brokers have been capping total loss at zero balance for a few years now. Plus, the '**** or bust' punt has always been the most common trade as the majority of people who have spread bet accounts have it for the purpose of gambling.

Part of the issue that the industry in the UK created for itself was due to spending the last two decades telling everyone that it wasn't gambling and that it was investing. For a very significant proportion of spread bet traders it has always been about gambling and always will be.

It took me years to come to terms with the raw fact that most clients that you speak with are trading for the thrill of the punt. You can spend hours talking to well educated, smart and prudent clients who agree with everything that you say about trading in small size, limiting risk etc etc but they will promptly go all in on a punt because that is the 'fun' that they are looking for.

Ironically, back in the 70's IG only lobbied to get spread bets under the financial regulator as gambling debts weren't legally enforceable. A huge percentage of all activity has always been just people having fun punting

 

[tomorton]

All trading's gambling really. But let's not get into that again...........

 

[Your User Name]

I think the clever bit for IG was promoting SB as a way of punters making pots of money and not paying any tax, but of course that was seldom a factor in the real world.

 

[MORRIS2001]

To be fair to IG, I personally don't ever recall them saying you could make pots of money. You've never been permitted to say such a thing. However, the retail trader has always been enticed by unregulated third party vendors who have made such wild claims. Along with social media traders who lie about their trading results and performance.

 

[Splitlink]

I think the clever bit for IG was promoting SB as a way of punters making pots of money and not paying any tax, but of course that was seldom a factor in the real world.

I think that IG being one of the first was the clever bit. I remember them as far back as I can remember. I know that they were the first one for me. They had a minimum of 10 quid per point, then, and so I moved on to City Index.

 

[Your User Name]

IG feeling the pinch...

 

[NVP]

All trading's gambling really. But let's not get into that again...........

hahahahahahhaa......

agreed .........speaking as an ex bookmaker and professional gambler in my youth, ive never understood why so many people wrap Trading up as being "professional" and a cut above sports betting and horse racing

its just about winning.........gambling , Trading , Speculating , investing or whatever Cr*p you want to call it !

N

 

[NVP]

Not sure I fully understand that. Most brokers have been capping total loss at zero balance for a few years now. Plus, the '**** or bust' punt has always been the most common trade as the majority of people who have spread bet accounts have it for the purpose of gambling.

Part of the issue that the industry in the UK created for itself was due to spending the last two decades telling everyone that it wasn't gambling and that it was investing. For a very significant proportion of spread bet traders it has always been about gambling and always will be.

It took me years to come to terms with the raw fact that most clients that you speak with are trading for the thrill of the punt. You can spend hours talking to well educated, smart and prudent clients who agree with everything that you say about trading in small size, limiting risk etc etc but they will promptly go all in on a punt because that is the 'fun' that they are looking for.

Ironically, back in the 70's IG only lobbied to get spread bets under the financial regulator as gambling debts weren't legally enforceable. A huge percentage of all activity has always been just people having fun punting

yes some good points here .......successful trading is and should be boring ....grinding away the % wins over time .......but most wannabee traders still get a kick out of winning and a downer out of losing .........so in effect they are wired to fail over time ...hence the low sucess rate

what broker house is going to advertise showing a grey man sitting at a desk looking bored ......hahahahaha :smart:

N

 

[MORRIS2001]

Too true. If we look at the evolution of marketing in the gaming industry we can see that they are embracing the 'fun' aspect more and more as their pitch. The vast majority of spread betters who survive the initial first contact are no different but I can't see an industry which has spent decades trying to make trading platforms look like Bloomberg terminals accepting this aspect in a hurry.

The real shame is that the regulators did nothing to stop the excessive leverage offers that only ever existed to speed up the gains of the B book. They wilfully kept pas-sporting in more and more bookies offering outrageous levels of margin.

The real question is whether the FCA will recognise that what ESMA has achieved is to push the most vulnerable clients outside of the protection of the FCA and decline to enact the new margins but prefer to settle on something safer and more appropriate.

 

[Your User Name]

...what broker house is going to advertise showing a grey man sitting at a desk looking bored

Could also include bailiffs searching for goods to cover the debt.

 

[rawrschach]

CME has FX futures at $1.25 a pip, if ESMA is stopping you trading why not trade in the real market?

 

[donjovi]

I can't help feeling that ESMA have gone over the top. I was involved in the CHF trade a while back but as the max I will risk is 1%, it didn't kill me. Lessons on leverage were certainly learned that day, the Australian trader who went from +35000A$ to -240,000A$ must certainly have had a headache or 2 at close of trading. I think if leverage had been reduced to 100 and at the same time, limit retail traders to risking a maximum of 1% of their account per instrument, ie you can't make multiple trades on the FX pair, then it would have allowed traders to continue much as before but in a more controlled manner. As of now, if I want to risk 1% of my 10k account, the margin required is nearly 4k so I can only have 1 trade open at any time. This will kill retail trading.

 

[tomorton]

.......As of now, if I want to risk 1% of my 10k account, the margin required is nearly 4k.........

I am spreadbetting and the firm is subject to the ESMA margin restrictions. I am also risking 1% per trade. However, my margin requirements are only about a quarter of what you're quoting. Are you using SB or is there something else going on here?