Longer Term Spread Betting

[clbfjc]

Hi,

I was interested to know if anyone uses there spreadbetting account to try and build a longer term portofolio. Obviously there is no capital gains etc. and is tax free. I realise that there is the issue of expiry dates on positions but, you can also set these to automatically role into the next contract month.

Would be interested to know if anyone use's there spreadbetting account in this mannor.

 

[Omoh101]

it would be interesting to see how this is done.

 

[montmorencyt2w]

There are certainly some here who run long-running positions, e.g. weeks. maybe sometimes months, if that is what you mean. (Only had limited success with that, speaking personally, although it is something I aspire to do better).


Are you really talking about Equities here?

It might be worth asking the question in the Equities thread.

But in principle, I see absolutely no reason why one could not do this, provided one wasn't bothered about the fact of not actually owning the stocks/shares involved, and there would seem to be a lot to be said for it in my view.

 

[tomorton]

I often hold SB positions for a couple of weeks, never intra-day these days (though I am tempted now and then to break this rule). SB intra-day is high risk - read all about the SB firms appearing to run stops, delay execution etc. Whether or not this is true behaviour, intra-day you are basically competing head to head with the SB professionals and they are mostly better than most of us. On a few days time-frame, its still tough, as the SB charts are more volatile than the EOD market price charts would suggest - the SB quotes respond to various pressures between 4:30pm and 8:00am. This hits all sorts of tight stops amd limit orders, to everyone's annoyance and cost. It also means that 1, 2 or 3-day candlestick patterns on the market price charts are not the same as the patterns on the SB tick charts: so which do you believe?

So long-term SB becomes a far less risky approach. No amount of the alleged book rigging by SB firms can wipe out a 500pt move of the FTSE100 over 2 weeks. You can use wider stops, avoiding triggering due to SB or market volatility. You can also get away from the screen allowing, more time for research, backtesting and practice. These should be much more profitable and beneift from much more time than finding entry points and trade management.

 

[clbfjc]

Hi,

I was looking at even longer timeframes 1 months to a years or maybe even a couple of years, I think there could be some millage in using IG in this manor. At the end of the day you get all the benefits of holding positions for a fraction of the cost. i.e 10 - 20% of the value. If your sensible you can keep the money earning interest in an account (not alot at the moment) while having exposure to shares. Can trade in foreign stock without currency risk, and can I belive if you are long you would even get a cash adjustment made to your account to reflect a dividend payment you would of received.

 

[Jack o'Clubs]

Bear in mind the implicit interest cost in doing this (which would more than wipe out the savings your money would make on deposit at the moment) - to see what I mean, check the spread between the spreadbet ask of a long-dated future (IG best for this) against the bid for the near-date contract. Adjust for any divis in the meantime and you'll see that there's quite a hefty financing charge. I've done this for periods at a time and it can be worth it if you're certain you will hit your CGT limit in a year, but in practice too many people focus on spreadbetting being 'tax-free' when in reality they'd never be paying tax in the first place. If you're certain you're going to be making well in excess of, say, £15,000 pa in gains, then it's worth considering as long as you don't overdo the gearing (bear in mind holding for longer periods means wider stop losses which means margin calls).

 

[montmorencyt2w]

You can also of course short the stocks or shares (subject to any restrictions which might be in force), which might not be so easy to do for the retail investor with the real thing. You could also hedge investments in the real thing by taking equivalent short positions with a SB firm.

 

[Jack o'Clubs]

You could also hedge investments in the real thing by taking equivalent short positions with a SB firm.

If I had the underlying, I'd rather short with a CFD as I can offset the tax if the hedge goes the wrong way and I gain on the stock and lose on the hedge.