Has Spreadbetting Become A Con ?

[ANGELO]

I admit that I havent used my IG INDEX spreadbetting account in ages due to trading with CFDS , but I noticed a change that has made trading with spreadbetting firms ( mainly IG AND CANTOR ) really unprofitable .Firstly you cant close a bet at any time you like , Im sure this was not so in the past , so as an EOD TRADER this has become a disadvantage . Secondly, and this is the one that really stings , YOUR ORIGINAL OPENING POSITION IS MOVED each and every day!!!!!! This was not so before.

I will give you an example.....

you enter a stock position at 50 pts @ £1 a pt long , with a non g stop and rollover instruction.
As calculated, the day trade is up 10 pts, netting you £10 and the day finishes there at 60pts .
Over night your chosen stock becomes a celebratey and everyone wants a piece of the action, so the morning stock price is now 70 pts, up 10 pts .

simple enough right? well this is the con part.....

instead of gaining 10 pts , your position now opens at 70 pts meaning not only have you lost that 10pts gain, but any drop in price means that its loss from your original gain.

that day the market opens at 70 pts but news breaks in and the stock is downgraded, so the stock now falls 5 pts .

in the old days you would be left with a gain of 15 pts.
now you are left with a gain of only 5 pts . ( 5 pts loss minus from 10 pts gain from the first day).(imagine if that stock had droped a total of 10 pts instead , you would be left with 0 pts gain , even though you clearly made 10 pts gain in the begining and your closeing figure of 60 pts has not been breached!!!)

sounds like a big con to me !!!!!!! ALAN RICH (NAZ) warned me about spreadbetting firms along time ago before this incident and now I can see what he means!spreadbetting companies are just bookies dressed in smart suits, and remember , bookies hate losing!!

if any one knows of a spreadbetting firm which does not practice like this please let me know.

thanks for your time guys

 

[FetteredChinos]

cmc deal4free, capitalspreads, tradindex etc..

they all offer rolling positions properly.. though i would be surprised that IG discount the overnight action each day.

have you written to them to check this wasnt an error?

 

[ANGELO]

cmc deal4free, capitalspreads, tradindex etc..

they all offer rolling positions properly.. though i would be surprised that IG discount the overnight action each day.

have you written to them to check this wasnt an error?

THANKS FOR THE REPLY and the advice!
I spoke to them on the phone and they confirmed that this was there practice!

 

[the blades]

Hello ANGELO,

Before I place any deal, I calculate what the SB price should be (and it's always correct). I hold the stock for weeks / months and calculate the SB ptice before dealing (and it's always correct).

If what you say was happening, the prices should be drifting away from the cash price - shouldn't they.

This isn't my experience with CMC , IG or Fins, for UK 350 stocks. As FC says, I expect you've suffered an error.


Cheers,
UTB

 

[ANGELO]

Hello ANGELO,

Before I place any deal, I calculate what the SB price should be (and it's always correct). I hold the stock for weeks / months and calculate the SB ptice before dealing (and it's always correct).

If what you say was happening, the prices should be drifting away from the scah price - shouldn't they.

This sin't my experience with CMC , IG or Fins, for UK 350 stocks. As FC sayss, I expect you've suffered an error.


Cheers,
UTB

thanks fo the reply , ill check again just in case!!!!

 

[ANGELO]

i checked again with IG and i think they have different rules for daily bets with roll over and futures ( monthly expiration) bets .

 

[pdaigb]

If your position reopened at 70 I bet the previous day's position was settled by them at or close to 70. You won't have lost out on the price move - no spread betting company would do this. If you have lost out then it's an error and they'll correct it.

 

[Jack o'Clubs]

Angelo,

See page 32 and Note n) on page 36 of IG's dealing handbook here:

http://www.igindex.co.uk/content/dg_index.html

for how they treat roll-over bets. As pdaigb and others note, if they've done anything other than adjust for interest or dividends then it's a mistake on the account. Are you sure the stock didn't go cum-div on the day you noticed a gap?

 

[Visaria]

This obviously does not sound right. Are you then saying that if you were short the stock instead, instead of making a 15 point loss, you would have only lost 5 points??? Could be useful if an overnight earnings report comes out better than expected :cheesy:

 

[Trader333]

....... and remember , bookies hate losing!!

In my view this is an understatement and should read:

...... and remember , over the long term bookies dont lose!!

Paul

 

[twiggytwo]

Roll Overs

I admit that I havent used my IG INDEX spreadbetting account in ages due to trading with CFDS , but I noticed a change that has made trading with spreadbetting firms ( mainly IG AND CANTOR ) really unprofitable .Firstly you cant close a bet at any time you like , Im sure this was not so in the past , so as an EOD TRADER this has become a disadvantage . Secondly, and this is the one that really stings , YOUR ORIGINAL OPENING POSITION IS MOVED each and every day!!!!!! This was not so before.

I will give you an example.....

you enter a stock position at 50 pts @ £1 a pt long , with a non g stop and rollover instruction.
As calculated, the day trade is up 10 pts, netting you £10 and the day finishes there at 60pts .
Over night your chosen stock becomes a celebratey and everyone wants a piece of the action, so the morning stock price is now 70 pts, up 10 pts .

simple enough right? well this is the con part.....

instead of gaining 10 pts , your position now opens at 70 pts meaning not only have you lost that 10pts gain, but any drop in price means that its loss from your original gain.

that day the market opens at 70 pts but news breaks in and the stock is downgraded, so the stock now falls 5 pts .

in the old days you would be left with a gain of 15 pts.
now you are left with a gain of only 5 pts . ( 5 pts loss minus from 10 pts gain from the first day).(imagine if that stock had droped a total of 10 pts instead , you would be left with 0 pts gain , even though you clearly made 10 pts gain in the begining and your closeing figure of 60 pts has not been breached!!!)

sounds like a big con to me !!!!!!! ALAN RICH (NAZ) warned me about spreadbetting firms along time ago before this incident and now I can see what he means!spreadbetting companies are just bookies dressed in smart suits, and remember , bookies hate losing!!

if any one knows of a spreadbetting firm which does not practice like this please let me know.

thanks for your time guys

Hi ANGELO, I never ever, ever, place a roll over position, long or short when Spreadbetting
for position trades use a MARCH / JUNE / SEPTEMBER / DECEMBER 3 month Futures bet only !
Roll Overs are not for the traders benefit, so keep clear if Spreadbetting
best regards

 

[coolTrader]

That is why they are called spread"BETTING" you are playing against the house.

 

[the blades]

"In my view this is an understatement and should read "and remember , over the long term bookies dont lose!! ""



Provided they keep their prices in line with the market, then the odds are the same either way.

The loser could easily be the person on the other side of the trade / bet. The Broker / Bookie can win either way.

On second thoughts, let's not go here.....


UTB

 

[Splitlink]

As a regular rollover spreadbetter, I have taken on board the assumption that if Globex messes around with the share price over night and the price gaps one way or the other, then I stand to lose or make a packet the following day. I can't, really, see what other action the company can take under those conditions other than follow the market's price.

The only alternative is to close the trade as close to the market close as possible but, for sure, it will be impossible to get a good price the following day.

What is more relevant to spreadbetting companies being a bunch of crooks is what happened to me several months ago with AUN. I was faced with a spread of 55 points at the opening when the price gapped up. There was no way that I could close my overnight trade at a profit.
This has not happened to me since then so I wonder whether it was a mistake and I should have complained.

Split

 

[ANGELO]

I think twiggy got the jist of what the problem was , basicaly there are different rules for dailys and different rules for futures .COULD BE WRONG , but dailys always have a better and closer price and futures have a distant price , meaning futures are to our disadvantage so the rules are more relaxed . thats where trader333 wisdom comes into play , right now I only feel comfortable using spreadbetting for commodities because cfds dont trade them , apart from that its cfds for me !

overall I think its completely my fault this event happened , as it was suggested , I should have read the handbook or perhaps asked more questions , and the trade in question was the recent rise in the ftse mid 250

thanks to everyone for their input

 

[CityTrader]

:
I will give you an example.....

you enter a stock position at 50 pts @ £1 a pt long , with a non g stop and rollover instruction.
As calculated, the day trade is up 10 pts, netting you £10 and the day finishes there at 60pts .
Over night your chosen stock becomes a celebratey and everyone wants a piece of the action, so the morning stock price is now 70 pts, up 10 pts .

simple enough right? well this is the con part.....

instead of gaining 10 pts , your position now opens at 70 pts meaning not only have you lost that 10pts gain, but any drop in price means that its loss from your original gain.

that day the market opens at 70 pts but news breaks in and the stock is downgraded, so the stock now falls 5 pts .

in the old days you would be left with a gain of 15 pts.
now you are left with a gain of only 5 pts . ( 5 pts loss minus from 10 pts gain from the first day).(imagine if that stock had droped a total of 10 pts instead , you would be left with 0 pts gain , even though you clearly made 10 pts gain in the begining and your closeing figure of 60 pts has not been breached!!!)

sounds like a big con to me !!!!!!! ALAN RICH (NAZ) warned me about spreadbetting firms along time ago before this incident and now I can see what he means!spreadbetting companies are just bookies dressed in smart suits, and remember , bookies hate losing!!

if any one knows of a spreadbetting firm which does not practice like this please let me know.

thanks for your time guys

I think you lack of understanding is the problem. If you don't like the daily bets, trade quarterly. I have spread bet for over 20 years ( first spreadbet was on Gold through Ladbroke Index in.. 1984?) , and through ups and downs, I'll never make a daily trade, And surely the simple name of the bet should explain to you, that it ends at the end of each day. If you choose to reinstate it the next day, then of course it's at that days opening level. Simple. I assume if you had shorted the above example and only lost 5 points instead of 15 points you would not be whingeing now??

For anyone to call Spreadbetting a con is simplistic and for you to be warned off is akin to a bad workman blaming his tools. If you are a decent trader, and you make money from spread betting, then the bookies will always lay off your bet ( in the underlying market) It's only the mug punters's bets that they love to take on.

CT

 

[ANGELO]

I think you lack of understanding is the problem. If you don't like the daily bets, trade quarterly. I have spread bet for over 20 years ( first spreadbet was on Gold through Ladbroke Index in.. 1984?) , and through ups and downs, I'll never make a daily trade, And surely the simple name of the bet should explain to you, that it ends at the end of each day. If you choose to reinstate it the next day, then of course it's at that days opening level. Simple. I assume if you had shorted the above example and only lost 5 points instead of 15 points you would not be whingeing now??

For anyone to call Spreadbetting a con is simplistic and for you to be warned off is akin to a bad workman blaming his tools. If you are a decent trader, and you make money from spread betting, then the bookies will always lay off your bet ( in the underlying market) It's only the mug punters's bets that they love to take on.

CT

I didnt know that asking for the opinion of my fellow traders (as well as constructive and positive advice ) was considered" whinging" , I have admitted my mistake but I suppose I must still be considered a "mug" .
sorry I asked .!!!!

 

[CityTrader]

I didnt know that asking for the opinion of my fellow traders (as well as constructive and positive advice ) was considered" whinging" , I have admitted my mistake but I suppose I must still be considered a "mug" .
sorry I asked .!!!!

You didn't answer my question, If you'd "lost" less than you beleive you should have due to the daily bet, would you still consider spreadbetting a " con" ? I'd guess not.....

 

[Baruch]

Info about Finspreads:

http://www.graemenash.co.uk/2006/02/update-finspreads.html

 

[ANGELO]

You didn't answer my question, If you'd "lost" less than you beleive you should have due to the daily bet, would you still consider spreadbetting a " con" ? I'd guess not.....

the answer to this is simple, at the begining of the thread I believed it was , but now I believe it is just leveraged product , but Im the one without the lever.......
until I can change my reality with a different strategy then this is where it will remain , but since you live in RADLETT and I live 20 mins away I would love to meet up with you ,so you can expand my reality , I always keep an open mind , thats why I asked for constructive advice .

its been great talking with you citytrader!