is the sky the limit ?

feenix

Junior member
34 1
Is there any kind of ceiling on the amount you can accumulate on your account with a spread betting company by consistent successful spread betting ?
 

timsk

Legendary member
7,598 2,374
Is there any kind of ceiling on the amount you can accumulate on your account with a spread betting company by consistent successful spread betting ?
Hi feenix,
Perhaps I've misunderstood what you're asking - but there are some obvious limits in that there is a maximum position size each firm will allow you to bet with. In terms of the funds in your account, given that most SB firms don't offer any (or very little) in the way of interest, no one is going to keep excessive amounts of capital in their accounts. Most traders will withdraw profits and only keep the bare minimum they require to meet the margin requirements for their trades plus a little extra as a safety margin.

Perhaps your question has more to do with how SB firms react to traders who are able to generate profits consistently? This is an old chestnut and opinion is pretty much divided between those who argue that they won't allow it (because they're on the other side of your trade - so they 'lose' if you 'win'), to those who say they welcome it (because they get the spreads and can offset their risk by hedging your trades or increasing their profits by copying them). The argument is a tad more complex than that - but that pretty much distils the essence of it.

Perhaps neither of these answers your question and you're driving at something completely different?
Tim.
 

lurkerlurker

Senior member
2,482 150
Is there any kind of ceiling on the amount you can accumulate on your account with a spread betting company by consistent successful spread betting ?

I doubt there are many here in a position to answer this question. There are many threads here where newbies do not get accurate, honest, informed answers to their questions.

Speaking from personal experience being designated as a "marked risk" client by more than one spread betting firm some years ago, the answer is yes. The thresholds which trigger the limitations will be different according to the profitability of the firms book and how the firm is run. However, my experience is dated as I've not used my spread betting accounts for years, so there is little use in quoting the amounts beyond which my account was 'flagged' or the firms I used.

If you are trading short term time frames successfully, e.g. 1-10 minutes hold times come a certain size your account will be switched from their regular book to their "marked risk" book:

1) they'll have a dealer hedge everything you do in the underlying
2) this will delay your execution until they manually confirm your request to trade, and if its no longer possible for them to get the hedge on, then you won't get your trade

2) is a major drawback if your timing is accurate and you enter very close to the tops and bottoms of moves - by the time the dealer checks your request to trade, he can't hedge it without locking in a loss for the firms book, so you get nothing done.

For markets with tight spreads e.g. mini dow and EUR/USD (1 point), SB is cheaper than the futures market where you have a commission to pay on top of the spread. However, these products are offered as loss leaders and firms generally don't want marked risk clients trading these products in any size, especially in the shorter timeframes. It impacts the profitability of offering that product. Using spreadbetting you cut out currency rate risk, paying exchange, clearing, and NFA fees, and there may be tax benefits. The trade off is that only some products will have low enough spreads to make it worthwhile (the loss leader products), and your max stake size will be limited.

If you are identified as 'marked risk' just move on to another firm. For the technically inclined, write a simple autospreader program to execute trades across multiple spread betting accounts from a single interface, and keep your per account deal size under the radar. I used both approaches successfully in the past.

This is all a short term solution. If you become very successful you will:

1) structure your tax affairs correctly so you pay little to no tax on gains, legally
2) trade sufficient volume to negotiate good rates on clearing and exchange fees
3) transact in sizes not feasible in spread betting

Ultimately it makes more sense to trade futures on the exchanges, where there is no limit except market liquidity and in some products maximum position size rules. Paul Rotter was making 50 million euros a year scalping German bonds in size ten years ago, so this gives an idea of what is possible for a high level independent trader.

Very few will achieve any success at all, but the stock and futures markets will not operate to prevent an independent trader from making himself securely rich on a large scale.

Knowing this, you can decide whether to invest the several years of intelligently directed hard work required to become successful. There will be no artificial barriers created, except of course the very significant barriers that traders often erect against themselves.
 
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mike.

Senior member
2,101 709
Perhaps your question has more to do with how SB firms react to traders who are able to generate profits consistently?


Tim.

Simon from capital spreads mentioned ages ago about a successful trader who took his SB account to over a million. Think he was a BT engineer ??

I seem to remember simon saying ( through gritted teeth ) " mmm yes, he was very good " :LOL:
 
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random12345

Established member
793 280
This is all a short term solution. If you become very successful you will:

1) structure your tax affairs correctly so you pay little to no tax on gains, legally

Sorry.... what? Explain this one? Are you an expat?
 
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hacks

Active member
237 4
I remember that post. It was 4k to 350k I think, yes BT engineer. No he didn't lose it all - he withdrew it to buy a house (Simon thinks).
 

tar

Legendary member
10,443 1,313
I remember that post. It was 4k to 350k I think, yes BT engineer. No he didn't lose it all - he withdrew it to buy a house (Simon thinks).

Most likely he was swing trading shares during the credit crunch ...
 

tar

Legendary member
10,443 1,313
How have you come to that conclusion?

I meant he wasn't daytrading , maybe swing trading indices or Gold ... etc during that period ...
 

DionysusToast

Legendary member
5,963 1,501
Didn't Simon also mention that the guy then blew up and lost it all?

Yup - Capital Spreads set him up a trading room in the presidential suite at the Ritz with an ultra modern 6 screen system and gave him a daily supply of hookers, champagne and coke to help him further build his account...

For some reason he went to pieces..
 
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Black Jack

Junior member
37 1
Is there any kind of ceiling on the amount you can accumulate on your account with a spread betting company by consistent successful spread betting ?

No you can keep as much on there as you like however I would say to avoid this due to the fact that if your positions move against you then you could end up losing money unnecessarily. I would maybe suggest leaving a certain amount in there but having provisions in place to move the money somewhere safe when it gets to a certain limit.
I am by no means an expert so don’t take my response as gospel, good luck though Spreadbetting is fun!
 
 
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