Four General Tips for Spread Betting

[ukhero]

1. Do your home work. There is no quick get me rich scheme from SB. Yes, you may see a spike or a hole in a share price or index which may grant you a small or even large gain, but in general, the long term, luck is a fickle women, she stays with the fool for only as long as he has money. And a fool with money is soon parted.

2. Stick with what you know. Familiarity of a index / share / market ect; this is the key for long term gain. And yes, it may appear boring from time to time, but profit rather then loss is your ultimate aim, so be dedicated.

3. Accept losses and learn by them. Be the child who forever asks 'why!' Adapt your strategy and decisions to the changing environment. Don't be a dinosaur for the world forever changes, so adept your bets accordingly.


And Finally.

4. Having taken the above into consideration with all your copious amounts home work done, the decision made, the bet clicked, don't bottle out early. Too often I hear of SB's cancelling a call early because the market has gone the wrong way only to watch it change for the better later in the day. So, have conviction in your judgement.


Good luck

 

[marben]

Hi UK,

I'd agree with that and add the following:

5. Before you enter a trade decide what your stop loss level is going to be for that trade. Note point 4: don't set the stop TOO tight.

6. Decide on your maximum acceptable cash loss for the trade. Determine your stake by calculating maximum loss / distance of stop loss from entry price.

7. ALWAYS place a stop loss when you place a trade and NEVER "loosen" the stop (i.e. increase the maximum potential loss)

Good trading!

Mark

 

[charliechan]

8. never open an account with a spread betting or bucket shop. they are thieves and will rob you blind asap.

 

[marben]

8. never open an account with a spread betting or bucket shop. they are thieves and will rob you blind asap.

If that's the case, how come I've consistently made profits spreadbetting stocks in the FTSE100 over the last 10 months?

It helps if you know what you're doing, as per point 1. above

 

[Anonymous]

There are two tips missing after all tips before and after this: Tip 1 is at the beginning of all tips which I shall reserve for those who really want to know.

The last tip of all tips, Tip 2 is: after making losses, especially a string of losses a trader should follow the following ritual: recite the ritual of Monty Python

available here: www.searchlyrics.org/monty_python/always_look_on_the_bright_side_of_life.html

It works better with a midi tune.

 

[ukhero]

Nice to see people reading my comments. A thank you to all.

Yes we all have our own tips, feel free to add them. Perhaps we'll reach 100 by the end of the week.

Good luck to any FTSE SB's tomorrow.

Yours

UK

 

[charliechan]

If that's the case, how come I've consistently made profits spreadbetting stocks in the FTSE100 over the last 10 months?

It helps if you know what you're doing, as per point 1. above

well, you're either paper trading, or gambling with 1p per point or something is my bet.

there are too many threads on this board and elitetrader about folks who have had their money stolen from mis quotes (fx 'brokers favourite prize canary), forced to call in orders once successful, more mis quotes, etc etc.

i belive junebyte or someone like that who used to post here did have some success before they took him out and he discovered (the hard way) that it was better to play on a level playing field, than 'trade' against the guy who holds your margin and knows your position.

it has also been proven that despite their claims, spread betting companies can only profit from their clients loss (they disguise it in a spread, but its the same thing and has been proven before - its in their self interest for clients to lose). large successful clients therefore are a big dent in their pnl.

why put your nuts in a vice and trust the other side of your trade with the handle???

anyway, i have no wish to go into a pointless argument about spread betting/thieving vs exchange trading.

peoples beliefs are too ingrained.

i suggest those who are interested in knowing the facts simply do some work and research.

all the best

 

[the blades]

it has also been proven that despite their claims, spread betting companies can only profit from their clients loss (they disguise it in a spread, but its the same thing and has been proven before - its in their self interest for clients to lose). large successful clients therefore are a big dent in their pnl.


all the best

Hello Charlie,

Any chance of a link to this proof?

You are right about beliefs being too set for a good debate. 6 Months ago I'd be tempted to take you to task, now I couldn't be bothered

UTB


PS I spreadbet profitably with a sizeable trading pot, FWIW (which isn't much).

 

[marben]

well, you're either paper trading, or gambling with 1p per point or something is my bet....
...

Charlie,

I think you're jumping to conclusions. FYI I have been trading for a living using spreadbetting for 9 months now. My typical trade in FTSE100 stocks is £100/1p movement. I have a Proquote L2 feed, so I KNOW whether or not I'm getting fair quotes. Other than the odd point being shaved here or there I have not observed a problem with d4f's prices.

Recently did an analysis of CFD costs vs SB costs. Over the last 6 weeks my SB costs (from the spreads and financing) were just over £4,000. I have been quoted CFD commissions of 20bps and on this basis commissions alone would have totalled over £6,500. The spreadbets are also tax-free, so I don't have to worry about tax admin.

If you're day-trading/scalping SB is not a suitable vehicle but as a swing trader it seems to work fine for me. It also may well not be suitable for index or forex trading - not my bag. I can only report on my own experience.

anyway, i have no wish to go into a pointless argument about spread betting/thieving vs exchange trading.

peoples beliefs are too ingrained.

i suggest those who are interested in knowing the facts simply do some work and research.

all the best

Couldn't agree more!

All my best,

Mark

 

[marben]

BTW, why would d4f need to nick from me when they can make upwards of £3,000 a month legitimately (without taking any risk)?

 

[OpenMind]

Marben
One of the biggest problems I encountered when trying my hands at spread betting was stop running. How do you handle that?

The second biggest problem was the decision on where to place the stop: based on the market price or based on the spread better's price?

Many thanks.

 

[marben]

Marben
One of the biggest problems I encountered when trying my hands at spread betting was stop running. How do you handle that?

The second biggest problem was the decision on where to place the stop: based on the market price or based on the spread better's price?

Many thanks.

Not quite sure what you mean by "stop running".

Completely agree that deciding on the stop position is tricky. [mind you, so is what to trade, which direction to trade in, when to enter and when to exit :cheesy:]. Depends on the methods you use for trading. Personally, I look at recent peaks/troughs and Bollinger bands and go for the "worst case". When I started trading I found that I was often stopped out too soon on trades that subsequently turned out to be "right".

Best thing to do is to study your trades and decide whether your stops are generally too tight, too loose or about right and adjust your methods accordingly. This takes time and patience. That's why it's vital not to risk too much of your trading capital on any one trade. I stick to the rule of not more than 2% of capital at risk in each trade.

BTW to be honest many of the tips have little to do with spreadbetting specifically. They are equally applicable to CFD or futures trading.

Good trading,

Mark

 

[OpenMind]

I thought everyone who has been in the market (particularly spread betting) knows about stop running.

Stop running in spread betting is when the spread betting market maker initiates a sudden movement of the price of an instrument, away from the underying market price in order to trigger stop orders accumulated at a certain area.

The same happens in stock markets as well. In the case of stock market, market makers trigger violent price movements even when there is no supporting volume.

Admittedly, these are not reasons to give up spread betting. I lost because I did not follow a plan. I am reasonably sure if one follows a good method, one can make money in spread betting.

 

[Satori]

it has also been proven that despite their claims, spread betting companies can only profit from their clients loss (they disguise it in a spread, but its the same thing and has been proven before - its in their self interest for clients to lose). large successful clients therefore are a big dent in their pnl.

Theoretically SB companies make money from frequency of trading, whether the trader wins or loses. They charge a spread and that's their profit, with bets laid off to give them a neutral position.

However, the reality may be a bit different.

 

[twiggytwo]

Marben
One of the biggest problems I encountered when trying my hands at spread betting was stop running. How do you handle that?

The second biggest problem was the decision on where to place the stop: based on the market price or based on the spread better's price?

Many thanks.

How many on this site know that the Spread Betting Companys use Bloomberg Combined Data for the Comms and not Day only or E. O. D. data for the price they use to stop you out ?
regards

 

[Splitlink]

When I lost money in spreadbetting I used to blame the spreadbetter. Now, I don't, although my suspicions keep me on the alert. My belief is that if one gets his trade direction right he'll make a profit. Sometimes, the process is as slow as hell but if the price does not move I cannot see how the the SB can be blamed.

I have heard that stops are useless because, in a panic fall, the price drops right through. On July 7 Finspreads stopped me out right on my price, even though the low for the day ended twenty pence below that. That has happened to me again, in July, when I was short on Schroders. Whose fault was that? However, Finspread did not let me lose more than my stop stipulated. With Finspreads I have never had misquotes, or any other strange things happening to me. I accept the fact that other traders may have had bad experiences but, in several years of using them, I have never had to use the phone to query anything.

I admit that the spreads widen when there is uncertainty in the market. Day traders must have a hard time
but I am not one.

Split

 

[Anonymous]

If the stop is placed far away enough it is unlikely to be touched unless the entry point is obviously wrong.

If a contract is volatile and risk capital is insufficient to take on the volatility try using an alternative contract like options.

 

[Splitlink]

Socratic wisdom is wide, indeed. A pity that he is not alive today.

Split

 

[houdani]

How many on this site know that the Spread Betting Companys use Bloomberg Combined Data for the Comms and not Day only or E. O. D. data for the price they use to stop you out ?
regards

trust me i know all about it, i was stopped out once with ig index on a forex trade,despite seeing that my stop level was three points away from 'stop level'. i telephoned asking what was going on and they assured me that despite their website stating one level,they use bloomberg data feeds which work to fractions of a second.sure enough after asking for proof they e-mailed me an attachment of that area of the days tick chart and it turned out there was a brief micro-second spike which stopped me out, but which was so quick and insignificant it didnt make end of day data.being stopped out i can take,being robbed by speed-of-light technology completely narked me.

 

[jimmy1jag]

I had similar experiences with Finspreads and got fed up with it and left them. Far happier with where I am now, but which again is only a temporary home until I get IB sussed.