Newbie questions

[justyn]

Hi everyone,

I am new to the forum and relatively new to share dealing.

I opened a Finspreads account with £100 about a week ago so I could try spread betting and currently have £40 left.

I haven't exactly made my fortune but I am learning how things work and trying to learn from my mistakes.

I have a few questions, please excuse my ignorance:

1. I have been betting on the DJIA daily cash as I found it is more volatile than the FTSE so there is more opportunity to make a profit of several points in a day. I noticed that some people here trade future indices. Is there more scope for me to make profit by betting on the DJIA futures or would I be as well sticking to the daily cash?

2. Does anyone here make a living from Daily Trading using Spread Betting?

3. Does anyone think it is possible to make a profit from Daily Trading the DJIA using Spread Betting?

4. I would like to make a profit of 40 points per day, is this possible or am I being unrealistic?

I noticed in some posts I have read on here that some people have said that SB is not the best tool for day trading. However, I am attracted by the fact that you don't have to pay an form of tax (so there is no hassle from that point of view) and also that I can simply "get going" by paying £100 and start trading online.

Any comments or advice (good or bad) would be warmly received. I am trying to learn as much as possible from other people's experiences.

Regards,

Justyn.

 

[FTSE Beater]

Hi Justyn

Welcome to T2W

1. I have been betting on the DJIA daily cash as I found it is more volatile than the FTSE so there is more opportunity to make a profit of several points in a day. I noticed that some people here trade future indices. Is there more scope for me to make profit by betting on the DJIA futures or would I be as well sticking to the daily cash?

Be careful with trading, potential profits are directly related to potential losses, and at this stage of your trading career it is vital to keep your losses low.
If you have lost 60% of your account, then it seems to me that your bet sizes are too large. With finspreads, you can trade from 1p a point (for the first 8 weeks at least ), so use it. Trade 1p a point and play for points, not £'s - that comes later

2. Does anyone here make a living from Daily Trading using Spread Betting?

Quite a few do

3. Does anyone think it is possible to make a profit from Daily Trading the DJIA using Spread Betting?

It is and has been done, but there are easier methods. Unfortunately it is a catch 22 situation as you need to have a lot of capital to take advantage of the alternatives

4. I would like to make a profit of 40 points per day, is this possible or am I being unrealistic?

40 points from the DJIA is obtainable, but don't expect to get 40 points a day straight away. I would aim for 50 points a week for a start.

I noticed in some posts I have read on here that some people have said that SB is not the best tool for day trading. However, I am attracted by the fact that you don't have to pay an form of tax (so there is no hassle from that point of view) and also that I can simply "get going" by paying £100 and start trading online.

SB is tax free, but no matter what form of trading you do, the first £7200 is tax-free (capital gains tax).

Hope this helps

 

[justyn]

Hi FTSE Beater,

thanks for taking the time to reply and for your warm welcome.

If some people here are making a living from Daily Trading the DJIA using Spead Betting, and 40 points per day is realistically attainable, then at least I know that what I would like to do is not impossible.

I think I will trade for smaller stakes as you suggested. I have been trying to get familiar with how everything works as I am brand new to all this but it is surprising how quickly your money erodes away when you are not careful.

Kind regards,

Justyn.

 

[PAINTACE]

Have you read all the Dow Intraday threads by Chartman?

If not, start reading and enjoy

pa

 

[justyn]

Have you read all the Dow Intraday threads by Chartman?

If not, start reading and enjoy

pa

Hi Paintface,

no I haven't read them, where do I find them? I am sure they will contain some useful information for me to digest.

Kind regards,

Justyn.

 

[andrewmooton]

justyn, seek and ye will find.

 

[Racer]

Daytrading the daily dow...

Analyse the way they move the prices compared to the real Dow price(via Excel) and you will find they move the prices to each side of the Dow very fast, so you can lose quite a lot of points by mis-timing or not waiting for them to pull the price back in line again. You have to be verrrrry good to beat the spreadbetters at the daily

 

[justyn]

Hi Racer,

thanks for your reply.

I don't understand what you mean exactly?

Let's say I am Spreadbetting the Dow and according to the SB facility I am using the sell price is 10200 or buy 10206 and the "real" live Dow figure is in the middle ie 10203

Are you saying that they adjust the figures I see so that as soon as I buy at 10206, assuming the real Dow figure is still 10203, they move the buy down to 10203 and the sell down to 10197 so that to sell at a profit I have to see the sell value move from 10197 to at least 10207 which is a gain of 10 points?

If this is the case then its very unfair as to make a profit of 10 points you need to see the Dow move 20 points.

It also means that if the Dow goes the other (wrong) way and you want to get out and take a small loss, you are faced with the fact that it has gone 3 points in the wrong direction but you are losing 12 points on the deal as they have moved the goalposts?

Sorry if I have misunderstood what you mean but I am confused!

Justyn.

 

[Racer]

See attached file for the way they move the prices!

 

[Racer]

Dow rises 19 points,

you get in at 22...sell at the high 30 equals 8 points

Dow falls 12
short at the high 30 buy back at 22 equals 8

so for a 31 point move on the dow you get 16... if you are very lucky and time it 'exactly'!! And what about when you get it wrong... it moves even faster in the wrong direction... you need to 'win' more than 70% to break even at that rate?

 

[justyn]

Hi Racer,

my thoughts exactly after looking at that spreadsheet.

What are the other options to spread betting? If I wanted to bet £1 per point on the DJIA through some kind of stockbroker would I have to buy at the full price ie £10200? I don't have £10k to invest in order to gamble or £1 per point unfortunately.

Plus I would probably get stung on the exchange rate to dollars right?

I have an old Bear Stearns account in the states, I have just logged into it to have a look around but it looks like you can't trade online, just look at your recent activity etc.

I'm scratching my head wondering what to do next LOL!

Justyn.

 

[dc2000]

Hi Justyn
You can as Racer says get lucky with spreadbetters and jump on at the right price and immediatley see a profit this is rare but can be done
IMO the one way a spreadbetter scores over DA is for holding positions overnight this is at a lower cost than direct access by doing your trading this way and looking for the larger move the effect of the spread become less important

 

[hampy]

Do a search on T2W for interactive brokers (IB). Used by many UK traders as you can keep your a/c in sterling. Minimum stake for 1 contract on Dow future (YM) or S+P500 future (ES) very roughly equates to £3 per point, but spread much less than any UK spreadbetter.
Also look at their website: www.interactivebrokers.co.uk
Good luck,
hampy

 

[justyn]

Thanks everyone for your advice.

I am a novice so for the time being I am going to trade on paper or for 1p with finspreads and try to improve my technique. That way I am not going to lose a fortune but can learn a lot.

Once I get more comfortable with trading (and more successful hopefully) I will take it from there.

Justyn.

 

[Racer]

justyn, I trade the Dow, but... I never daytrade it.
I go for bigger swing trades. Start off with small position initially and if I think I have it right add to the position

 

[bracke]

Racer

I thought the Excel chart you showed in your post No9 explained the SB system superbly.

A picture is better than a thousand words.

Regards

bracke

 

[llew]

Timing is crucial

I've been SB the Dow for few years,and timing your entries is crucial to get on the right side of the spread.Observe for certain quick movements 3 to 5 minutes past the hour and after the halfhour.the market likes to test certain highs and lows at these times, if the market goes for a test then you can enter on the right side of the spread but not always beware.
Here is an example as you see the movements tend to be a few minutes after.
It is a risky entry though.
Llew

 

[blackcab]

Racer, that spreadsheet shows it very clearly. Do you get the SB quote data in downloadable form as a customer, or did you have to enter the numbers manually?

 

[Racer]

blackcab,
that spreadsheet was all my own work, (that I did some years ago) from watching the Dow and the spreadbet prices at the same time and writing them down. I wanted to investigate and analyse the daily dow to see if it was worth trading. I did several more spreadsheets as well and came to the conclusion that it isn't worth doing it (well for me at least!) Risk/Reward was unacceptable.

 

[Racer]

Think I will open a new thread re the daily dow with the spreadsheet and invite more comments