arabianights
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Generally they'll cover an excess net exposure (whatever that might be... depends on the spread company - let's say the equivilant of £50pp on ftse) by hedging it in the underlying market - otherwise they'll leave you to get on with it and presume you'll lose and if not you'll effectively be trading with other clients.
That's what I heard from a drunk spread betting chap in the pub, I'd tell you who it was but then Mr. Denham might not be too pleased to hear about it...
That's what I heard from a drunk spread betting chap in the pub, I'd tell you who it was but then Mr. Denham might not be too pleased to hear about it...
arabianights
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(by net I mean amongst their clients)
hi thanks for your answer
doesnt that mean that they need a lot of liquid cash? it can get to staggering numbers and from what I understood these companies arent that big.
do forex companies cover the same way?
so you mean that they cover their excess spread by buying/selling the underlying index in the real market?
doesnt that mean that they need a lot of liquid cash? it can get to staggering numbers and from what I understood these companies arent that big.
do forex companies cover the same way?
arabianights
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They have enough cash, don't worry.
Honestly, think a simple example: Let's say someone puts £500 a point on FTSE.
That's only 50 lots. Might sound a lot but ****ing easy to get filled on the underlying future in normal circumstances.... Even now if stupid could get it done in 3 ticks 90% of the time no problem... And yeah forex companies cover the same way if they have brains.
Basically spread betting is a license to print money around such hedges...
I wonder if the SB firm will distort the price they quote in order to trigger new customers orders to offset some of the risk on their books - a hypothetical example; most of the SB clients will be trading off 5min timeframes or somesuch, and follow a plethora of technical indicators (the SB firms know this). If the SB firm distort their price to trigger an MACD crossover or something, perhaps that will engourage new short / long trades on their books as required...???
...Might not be that absurd; they certainly will distort price to make traders puke if things are getting hairy on their books (aka stop hunting), and they'll change the spread to prevent new trades coming in @ market, I wonder if they bother with triggering technical conditions too??
...Might not be that absurd; they certainly will distort price to make traders puke if things are getting hairy on their books (aka stop hunting), and they'll change the spread to prevent new trades coming in @ market, I wonder if they bother with triggering technical conditions too??
I'm sure they do that. I'm not a professional bookie but that is the first thing that springs to my mind.
arabianights
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Point is certain fellows in the real market will try to trigger this sort of indicator anyway so no need for the spread betting companies to get involved
so what is the actuall difference between spread betting and buying futures/forwards?
you can go to the real market and buy a future on the underlying index instead of going to the SB company.:|
Point is certain fellows in the real market will try to trigger this sort of indicator anyway so no need for the spread betting companies to get involved
you can go to the real market and buy a future on the underlying index instead of going to the SB company.:|
arabianights
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tax and lower stakes, basically.
why do you say lower stakes?
is it because in the spread betting I can decide on which leverage I want to bet?
I have another question, do you know why spreadbetting is not considered gambling and why fixed odds is considered gambling?
thanks
is it because in the spread betting I can decide on which leverage I want to bet?
I have another question, do you know why spreadbetting is not considered gambling and why fixed odds is considered gambling?
thanks
but it is under the regulation of the FSA not the gambling authority
fsa is the 'financial gambling' authority.
so from what I understand forex is also considered gambling because it is also regulated by the FSA.
if this is true then american citizens cant invest in forex?
and if this is true what is the difference between the uk gambling authority and the FSA?
I mean they regulate different stuff
oiltanker
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usa and uk are different so one cannot compare systems.
all financial trading is gambling. no one knows what the market will do. all there is are probabilities.
retail is a form of gambling . you buy stock and HOPE you sell it. Its not called gambling but having been a retailer for many years, except in the form, there is no difference between trading on the high st and trading the markets. Which is why people fail as retailers as they do on the markets.
so authorities have different names because they specialise in different things. some activities will fall under different authorities .
all financial trading is gambling. no one knows what the market will do. all there is are probabilities.
retail is a form of gambling . you buy stock and HOPE you sell it. Its not called gambling but having been a retailer for many years, except in the form, there is no difference between trading on the high st and trading the markets. Which is why people fail as retailers as they do on the markets.
so authorities have different names because they specialise in different things. some activities will fall under different authorities .
ok thats quite a definition.
maybe it would be more correct to say that speculative buying of stocks is gambling but I would also not agree with that because the house doesnt hold the odds.
by law, I think that spread betting is not defined as gambling but fixed odds betting is defined as gambling. my question is why?
maybe it would be more correct to say that speculative buying of stocks is gambling but I would also not agree with that because the house doesnt hold the odds.
by law, I think that spread betting is not defined as gambling but fixed odds betting is defined as gambling. my question is why?
In the UK, a licensed bookmaker can take bets on whatever he wants. Anyone offering a leveraged financial product needs to be regulated by the FSA. Fixed odds and binary bets aren't geared, so are not subject to FSA supervision.
Just because something is regulated by the FSA does not stop HM Revenue and Customs treating it as gambling. You're confusing taxation and regulatory regimes.
Outside the UK, spread betting is generally considered a financial product and therefore not gambling. In the UK, as long as it is offered by a bookmaker, it is classed as gambling for taxation even though it's subject to FSA oversight as a geared financial product.
Just because something is regulated by the FSA does not stop HM Revenue and Customs treating it as gambling. You're confusing taxation and regulatory regimes.
Outside the UK, spread betting is generally considered a financial product and therefore not gambling. In the UK, as long as it is offered by a bookmaker, it is classed as gambling for taxation even though it's subject to FSA oversight as a geared financial product.
hi sorry for the misunderstanding what do you mean by "arent geared"?
