Intraday spread trading

[Splitlink]

I saw price differences of up to 3 points on the FTSE and DOW daily cash bets.

Can you make lot of money on that? Since I do not arbitrage, there may be something that I am missing. I am not saying that it cannot be done, but I suggest that only the big boys can make it worthwhile and they have software that does it automatically.

Split

 

[henry766]

i don't believe anyone arbs intraday using spread bets , in fact its hard to trade intraday with spread bets , if people trade intraday i suspect they trade the futures or take positions lasting at least an hour , either that or arn't profitable.

 

[Splitlink]

i don't believe anyone arbs intraday using spread bets , in fact its hard to trade intraday with spread bets , if people trade intraday i suspect they trade the futures or take positions lasting at least an hour , either that or arn't profitable.

I don't, either. It's too sophisticated a procedure to be used on spread bets. I think that it is a serious mistake to get too complicated with spreadbetting. I have to trade on what I think is going to go up or down overnight minimum, probably longer, because I take too long to make a decision for intraday work and I want to be able to leave the computer for other things. Horses for courses!

Arbing has to be very short term, minutes or even seconds. Anyone who has watched SBs spike prices up or down to close out stops will know what I mean. There is no way that they will give a trader a chance to open a trade- they just want to close a group of stops out and arbing works fast like that.

 

[Roberto]

Arbing has to be very short term, minutes or even seconds. Anyone who has watched SBs spike prices up or down to close out stops will know what I mean.

Absolutely ... it would have to be seconds, in fact; and even then there's no guarantee of getting the right price. I think it would also tie up a huge amount of capital to _try_ to grab the occasional 2 or 3 point profit (with absolutely no certainty of outcome) when there's a real discrepancy. And they'd close you down pretty quickly, surely? They'd suspect immediately, on your first trade, no?

 

[LION63]

Does anyone here monitor the out of hour quotes made/given by the spread betting companies ie. FTSE and certain UK shares? How do they arrive at the prices they quote? Do they accept trades at those quotes?

 

[Splitlink]

Does anyone here monitor the out of hour quotes made/given by the spread betting companies ie. FTSE and certain UK shares? How do they arrive at the prices they quote? Do they accept trades at those quotes?

That's outside my knowledge but I don't believe FS trades any shares after hours. Index futures, yes.

I know that you cannot get a trade before the market opens in the morning.

Split

 

[Roberto]

Index futures, yes.

Agreed ... Capital Spreads, for example (my own preferred SB company) quotes spreads on individual FTSE, Dow, Dax and CAC shares only when their respective markets are open for business, give or take a few minutes at the beginning and end of the trading day. Index futures, yes, but that's a different ball-game. Incidentally "cash" prices of indices in spread-betting terms are derived from the futures value anyway.

 

[LION63]

Deal4Free quote the FTSE from Monday 7am through to Friday 9pm without closing. They also quote all UK shares that have ADRs until 9pm. The CAC is quoted until 7pm each day and the DAX 9pm (The DOW is quoted from 1am Monday through to Friday 10pm).

All these instruments are trade able at these times and the only difference is that the FTSE spread increases from 2 to 4 points and the share spreads widen as well; the others all remain the same.

I cannot believe that they are the only company that do this. Secondly, I thought that the FTSE futures close around the 5pm mark and that would mean that the quotes are no longer based on the futures.

 

[Splitlink]

Secondly, I thought that the FTSE futures close around the 5pm mark and that would mean that the quotes are no longer based on the futures.

I think that that's right, although not completely sure. On FS you have to phone in after hours and on the shares trade buttons they put a Zzzzzz, which I guess means "Gone to bed" . I think that they figure their future FTSE index prices from what the Dow is doing after hours. That is, quite often, not what happens the next day. The Dow can change so drastically from morning to afternoon that I would hesitate to open a FTSE future trade on that basis.

CI (and that was several years ago, before online) had screen and market orders. "Market" meant that your stop would not work after hours. "Screen" meant that you would be stopped on their quote if it triggered after hours.

 

[henry766]

one can understand spread bet companies being reluctant to take bets ( large ones especially) on very thin mkts like after hours , as it happens i do trade intraday using betonmkts with fx and is expensive but i believe cheaper than paying a spread intraday , longer term maybe a different matter!! good trading everyone!!

 

[LION63]

Deal4Free accept trades/bets on all the instruments that they quote out of hours and they also fill stops and limits at those prices.

I have tended to feel that their method of pricing the FTSE out of hours is slightly risky or odd as it seems to be based on :-
Current DOW level divided by the level of the DOW at 4.30pm multiplied by the closing level of the FTSE.

It tends to provide a few opportunities to make relatively easy money every now and then.

 

[henry766]

i'm not so sure lion , often when you try to trade out of hours the quote window comes back saying mkt is closed , either that or spread is very wide ,not certain of this , just seems that way when i trade with them .with small exception maybe of say s&p which has liquid out of mkt future at times , but in my experience stocks forget it . ( fx is of course a 24 hr mkt anyway)

 

[LION63]

As I said earlier henry766, the out of hours spreads tend to be wider and they only quote UK shares that have ADR listings, sometimes the quote window will come back stating market closed but that is when the company does not have ADR listings. I am not trying to imply that there are numerous opportunities to make money out of this but they arise at least 3 to 5 times a week and some can be quite rewarding even for trades of a small size.

For example, I do not believe that because the DOW has risen by 100 points the FTSE should open 45 points up or if the DOW falls 100 points the FTSE should open 45 points lower. The other thing that tends to happen quite frequently is that the DOW rises and they raise their FTSE quote and then the DOW falls and it is back to where it started or even lower.

I just thought it might be useful information to those that spread bet as it is another source of making a few points on a regular basis.

 

[henry766]

how many shares have "adr " listings , sorry if i missed your point, i have traded the correlation between long gilt t bond s&p ft100 and the £ $ , sounds complicated but it isn't , just need to wait for one to be way out of line . well in theory .

 

[LION63]

I agree with you henry766, these things sound complicated but they are not.

The list of shares with ADR listings is quite lengthy and I do not know the best place to check the list, however here are a few and if you want to know about others please ask.

ARM Holdings, BT, BSkyB, Prudential, HSBC, Vodafone, Unilever, WPP, Barclays, LLoydsTSB, Pearson, WPP, Shire Pharmaceuticals, GlaxoSmithkline, AstraZeneca, BP, Shell, Cable & Wireless, ICI and Reed Elseveir etc.

 

[henry766]

thanks lion , only reason i ask is that i do trade ftse350, and unlike u.s. mkts seems to take a long time for spreads to tighten on them!!!

 

[Edster]

...although I doubt that there is any telephone trading these days, is there?

Spreadex, for one, only have telephone trading. I use these at the moment but am considering moving over to Capital Spreads.

Edster

 

[prisoner66]

Lion63........Just saw your bit about out of hours spreads. I monitor these quite often and agree that they do represent opportunities on occasion. The markets are tradable any time up until midnight when your position will be closed at the actual market closing price and rolled over (if you let it), any trades after Midnight will be based on the previous market actual close. The only exception to this is a Friday when all trades ceases at 9.15pm and reopen about 2am Monday morning.

If you look at the out of hours charts there are often opportunities based on influence from other markets open at the time (the SB quotes being based on the 24hr futures!), just depends on what time you want to get up.

Needless to say there are occasions that I set my alarm for the early hours. Placing orders in advance is ok....but I always like to check to see what is really happening.