I'm finished, warning on spreadbetting

[Lee Shepherd]

Guys,

Lets drop the sympathy and get real. The chances of trading successfully with £150 is next to zero. It maybe that this guy was trying to panic close when going grossly against him instead of simply putting in stops. Scalping with Spreadbet companies is difficult, more so when they are huge sizes of maybe £50 per point or more depending on what market. This guy would have only enough resources to have £1 per point, hardly worth them putting him on dealer intervention.

Remember, spreadbet bookies allow you to bet against the other guys, when their books become unsteady, ie, not 50-50 then they take the rest to market to hedge their bets. They will NOT take £1 to market as their is no equivalent lot size and would cost them more than simply paying out the newbie. When on dealer intervention you can find that fill times become slower as they take some or all of the order direct to market or simply get a traders opinion whether to or not. If you feel this unfair or intolerable then it would be time to move to DMA.

I say again, they would not have him on dealer intervention for his £1pp or total of £150.
Scalping is not liked generally by SB companies as they cannot hedge their bets in time before you've closed out again.

Lets look at what £150 will get you (apart from in trouble):

One £1pp contract would cost near this amount in margin so before you know it, a few points against you on one single trade means a margin call and risk of the trade being closed out against your will.

Lee Shepherd

 

[Splitlink]

Lee,

I don't disagree with your opinion that £150 is a difficult level with which to start. but I started with £200 a decade ago. Of course, £200 was worth more in those days. Still, it was very difficult and I scalped or took every small profit I could, before it went into a loss so that I could build my account.

Now, I'm more leisurely because I have a fatter account but ,still, I'm older and young people have to start somewhere! Maybe I was lucky, but I like to think that I knew what I was doing. That is very important. So many traders with limited means do not not, really, know what they are doing and are just hoping to get a grip on the ladder. They will not last long that way.

The margin question. The spreads are much tighter than they used to be. Now the FT, Dax and Dow are down to two points. The SP is 0.6 points. Dow margin is £250 per £1 ? I don't trade that index, but FT is £100 per £1. So, if you trade with £1000, you are still going to have proportionate margin calls if you overtrade the limit and get it wrong.

Still, I would advise anyone to start with a low amount at first. How many people starting with £20,000 have lost the lot? Many more than we will ever know, because most of them are too ashamed to confess it!

Split

 

[francisfinley]

The margin question. The spreads are much tighter than they used to be. Now the FT, Dax and Dow are down to two points. The SP is 0.6 points. Dow margin is £250 per £1 ? I don't trade that index, but FT is £100 per £1.

Split

Hi Split, can you list the SB companies that offer a 2 point spread on the DOW and the margin of 250 per £1?

Thanks in advance

 

[Splitlink]

Hi Split, can you list the SB companies that offer a 2 point spread on the DOW and the margin of 250 per £1?

Thanks in advance

I trade Fins. They have a margin of 200 x quantity. I see that the spread is 4 points, now, Sunday afternoon. I could be wrong about that but I'll check it again when the market is open tomorrow and let you know what the spread is, then.

Split

 

[Lee Shepherd]

Lee,

I don't disagree with your opinion that £150 is a difficult level with which to start. but I started with £200 a decade ago. Of course, £200 was worth more in those days. Still, it was very difficult and I scalped or took every small profit I could, before it went into a loss so that I could build my account.

Now, I'm more leisurely because I have a fatter account but ,still, I'm older and young people have to start somewhere! Maybe I was lucky, but I like to think that I knew what I was doing. That is very important. So many traders with limited means do not not, really, know what they are doing and are just hoping to get a grip on the ladder. They will not last long that way.

The margin question. The spreads are much tighter than they used to be. Now the FT, Dax and Dow are down to two points. The SP is 0.6 points. Dow margin is £250 per £1 ? I don't trade that index, but FT is £100 per £1. So, if you trade with £1000, you are still going to have proportionate margin calls if you overtrade the limit and get it wrong.

Still, I would advise anyone to start with a low amount at first. How many people starting with £20,000 have lost the lot? Many more than we will ever know, because most of them are too ashamed to confess it!

Split

Hi Split,

mmm, a difficult one. This is one of those times where clashes of opinions come into play. Their is of course lucky people that can make it with such small amounts but of course these are very few and like you say, we rarely hear from the losing ones due to shame or simply not bothering to tell anyone, if they do, it's usually a rant on how they where robbed by some spreadbet company.

This is one of the reasons why I personally would prefer newbs just to go DMA, dont shoot me with that one as I use SB myself but I hear so many complaints. The thing is, I personally feel if they went DMA they would encounter similar issues with what they do. It's not the SB's screwing them over, it's how they play, SB and the punter, read the rules and either obide by them and understand them or go DMA. We both know the difference but I feel that most newbs jump in immediately with what they would call significant money when all it is is a drop in the ocean of a SB pocket.

Again, open to scrutiny hear a little but I would suggest, (and this comes from my experience but doesn't make it the right way) paper trade or demo with a sizable amount and blow that a couple of times. As long as the research is done as to why you blew the cash, real or not, would soon make that person realise how to correct it next time without getting emotionally involved in the issue of just losing hard earned cash, the examination of the trading process should remain the same but without the dread or/and problems of losing real money.
The problem happens so many times when newbs jump in with a small amount and make loads from it straight away, they are just lucky but yet getting away with it and starting to set in bad habits that become harder to correct than if they weren't there in the first place. One example of this is moving a stop loss, we all know why they are there and yet in no books ever printed does it say to do this, no trader anywhere in the world ever advises it and even newbs know not to do it, yet so often they do.

Some times I actually wonder if I can ever help any new traders with words as it would seem that most dont tend to listen, they follow but that's different.

 

[Splitlink]

Yes, I know how you feel. You can lead a horse to water but you can't make him drink.

The dangerous part of the trade is not getting out while you are ahead. Even if it is only just above breakeven. It's best to cut it and wait for another chance. How many times does a profit turn into a loss? But many traders make the disastrous blunder of "giving it a few more points, then I'm out!"

One of the problems with small capital is that the trader could be inclined to cut corners so as to move ahead faster, so he overtrades and commits all kinds of sins that a professional will not do.

Good trading.

Split

 

[Splitlink]

Hi Split, can you list the SB companies that offer a 2 point spread on the DOW and the margin of 250 per £1?

Thanks in advance

Sorry, my mistake, Fins has a 4 point spread on Dow.

Split