Best Thread Other Side of the Screen

[Splitlink]

I don't understand how a trader can employ the services of a dealer without paying him commision. How much that is will depend on what the trader deems to be a rate that will give him a profit at the end of the trade. Lots of folk say that trading is a zero sum game as if that was not an acceptable state of affairs. Personally, I think it reasonable and if it were not so, then I would wonder where the dealer's profit was being made.

My point is that every trader, who takes various trades per day, or week, must keep a profit and loss book. If he does not, then he is gambling. Nothing wrong with that, as long as he faces the facts, and realises what he is doing, especially if he is responsible for others.

 

[darktone]

Single table poker tournaments are a good way of thinking about ZSG or NSG in trading imo. 8 players around a table. 1 or 2 pros. 2 or 3 regulars and the remainders are 2 bob chancers. The table host takes a rake (or spread). There are lots of scenarios you can game play with. my 2c.

Good point, A poker example seems simpler:-
Same 8 players, no rebuys.
1) A table with no rake/dealer costs = ZSG
2) A table with rake/dealer costs = NSG
3) A table with no rake but one privileged player who can conjure up fresh chips with a click of his fingers = ??.. Im guessing a positive sum game.

If this is true then it could be argued that as banks can create money via speculation then 'trading' is not ZSG/NSG.

 

[peakoil]

Well said Splitlink, paying the spread (a form of commission) is not just confined to spreadbetting. I too have no problem with the fact that it's a zero sum game, especially when things are going well

I don't understand how a trader can employ the services of a dealer without paying him commision. How much that is will depend on what the trader deems to be a rate that will give him a profit at the end of the trade. Lots of folk say that trading is a zero sum game as if that was not an acceptable state of affairs. Personally, I think it reasonable and if it were not so, then I would wonder where the dealer's profit was being made.

My point is that every trader, who takes various trades per day, or week, must keep a profit and loss book. If he does not, then he is gambling. Nothing wrong with that, as long as he faces the facts, and realises what he is doing, especially if he is responsible for others.

 

[pigbear]

My first post from someone who hasn't been consistent at this business. Firstly this cash malarkey. All cash indices at SB are based on future exchange prices. This means during the cash session the futures will mimic the cash. However if market moving news events occur then the futures will move faster because its just one product. For e.g. the Footsie is made of 100 companies and the S&P 500.
This is the reason for price discrepancies between the SB cash graphs and the actual cash graphs.
The other traps SB use is small spreads and low margin requirements. Everybody says DMA is fair but how many DMAS accept £500 deposits? The way they catch most of us out is the spread. Most are now quoting 1/2 point spread on the Dow. So we all focus on beating that instead of developing a consistent methodology. That's my 2c.

 

[peakoil]

@pigbear, hi there, sorry but, as someone with many sb years tucked away, I can't agree with the following.

"The other traps SB use is small spreads and low margin requirements. Everybody says DMA is fair but how many DMAS accept £500 deposits? "

You will find, hopefully one day, that small spreads are nice, and the smaller the better! As for leverage, sorry again, but that's a blessing for me too, as can tie up cash elsewhere, provided that is, I keep the discipline of sizing my bets within my means. I do realise nonetheless, that for newcomers, it's too easy to become over-leveraged, and lose accordingly. I sympathise with you to some extent. And maybe the sb companies should do more to ensure that newcomers realise just what they are taking on, in reality, when they do bets like, for example, £10 per point on Ftse with a £500 account. But, having said that, I might argue too that we are all adults and have a responsibility to learn for ourselves, exactly what the leverage possibilities means, and gambling addicts aside, we must take responsibility to bet responsibly as adults, within our means, with freedom to choose what we do with our money.

Anyway my two cents, and I do wish you well with your spreadbetting.

 

[LLSS]

How do SB firms feel about opening a buy and sell on a stock at the same time? The idea being to close the profitable position, then wait for the trend to end and close the other with minimal loss or break even, maybe even in profit too. I know the indices are so volatile you possibly couldn't open both positions fast enough, but on stocks this isn't a real problem.

Another idea would be to close one when the trend after a particular event has been established and keep open the profitable one.

Hello Stargunner,

It isn't too much of a problem to be honest (may depend on your broker i suppose) but in general from what I have seen countless times, this method usually ends badly for the trader and so it can only be beneficial to us.

Using an approach such as this requires too much accuracy and no one can pick tops/bottoms perfectly so what you would find is, if you opened up one side, and then your trade begun going against you, you would probably have to take some pain on it. Other factors such as spread and financing charges (swaps etc) will also factor in meaning that you have even more odds stacked against you.

 

[rjmahan]

Hi,
Just a quick series of questions / observations from me.

I am a reasonably profitable (though still small £20-30k account size) spreadbetter. I deal in individual equities, generally on the quarterly contracts. I can hold positions for many, many years. I mostly invest via spreadbet cos to minimize CGT liability. Usual (initial) position size £5-10k -ocassionally running up to £30.

I don't place stops - generally I will exit a position when the facts on the ground change / I change my mind / things have played out. I am not highly leveraged so I take huge profits -300% 400% and, inevitably occasional 75% / 100% losses.

Are there many like me about ?

How do the spreadcos see guys like me ? It often feels like guys like me are a neglected minority - the marketing is all based around so many pips on the dax etc...

Any advice on how to improve / How the spreadcos see me.

I am often a little concerned that the individual equities side of the business will go away.

Comments appreciated.

 

[CityMasterTrader]

Hi,
Just a quick series of questions / observations from me.

I am a reasonably profitable (though still small £20-30k account size) spreadbetter. I deal in individual equities, generally on the quarterly contracts. I can hold positions for many, many years. I mostly invest via spreadbet cos to minimize CGT liability. Usual (initial) position size £5-10k -ocassionally running up to £30.

I don't place stops - generally I will exit a position when the facts on the ground change / I change my mind / things have played out. I am not highly leveraged so I take huge profits -300% 400% and, inevitably occasional 75% / 100% losses.

Are there many like me about ?

How do the spreadcos see guys like me ? It often feels like guys like me are a neglected minority - the marketing is all based around so many pips on the dax etc...

Any advice on how to improve / How the spreadcos see me.

I am often a little concerned that the individual equities side of the business will go away.

Comments appreciated.

Hi there. Firstly I wouldn’t be worried about the equities side of SB disappearing anytime soon. Although marketing seems to focus on FX, indices and commodities, I’m pretty sure equities still makes up an significant part of the business. With regards to how the companies view you, I’d say you are a fairly typical client, with a healthy pot trying to make money in a tax efficient way. If you feel like you want better service speak to them and see whether you can negotiate a better spread or more service. However, don’t forget that for the benefit of tax free gains, you are paying a spread on top of the market price for every trade (unlike CFDs using Direct Market Access) which will be eating into your profitability. In terms of not placing stops, this is fine if you can keep a constant eye on your positions. Otherwise my rule is to always have a stop just in case, and to always be looking for at least 3.0x upside versus risk. So if I am prepared to lose £1,000, then I must be aiming to make £3,000. I know I won’t win every one, but I know that 1 win in 4 will keep me at breakeven. Increase the multiple and you can cover more losses. Decrease it and you risk struggling. Risk vs reward is key.

 

[tar]

Hi there. Firstly I wouldn’t be worried about the equities side of SB disappearing anytime soon. Although marketing seems to focus on FX, indices and commodities, I’m pretty sure equities still makes up an significant part of the business. With regards to how the companies view you, I’d say you are a fairly typical client, with a healthy pot trying to make money in a tax efficient way. If you feel like you want better service speak to them and see whether you can negotiate a better spread or more service. However, don’t forget that for the benefit of tax free gains, you are paying a spread on top of the market price for every trade (unlike CFDs using Direct Market Access) which will be eating into your profitability. In terms of not placing stops, this is fine if you can keep a constant eye on your positions. Otherwise my rule is to always have a stop just in case, and to always be looking for at least 3.0x upside versus risk. So if I am prepared to lose £1,000, then I must be aiming to make £3,000. I know I won’t win every one, but I know that 1 win in 4 will keep me at breakeven. Increase the multiple and you can cover more losses. Decrease it and you risk struggling. Risk vs reward is key.

According to IG's report - P8 - Indices is 46% of the business , FX 23% , Shares 19% and Commodities 6% ...

http://www.iggroup.com/content/files/interim_pres_jan14.pdf

 

[rjmahan]

I do find its annoying I am paying market spread + spreadco spread - I would be prepared to enter at bid and pay just spreadco spread but no-one seems to offer this sort of service - any idea why - I can get on the order book with IG and some other providers but no spreadco...

 

[CityMasterTrader]

Don’t forget spreadbetting always involves an additional spread on top of the bid/ask price in the market (that’s how they make their money). If you want market prices you’ll need to use something like CFDs on which you can get Direct Market Access (DMA). Or You need to research to find the spread betting provider offering the tightest spread versus market. Research on the tools you use is key. Good luck.

 

[BigDeal]

I have found this thread really interesting, and it dispels some of the myths. I have had stops triggered in the past and felt they were 'captured' but realise that this would be futile based on my trading levels. Once I'd started becoming profitable I wondered whether I'd be asked to close my account. I am reassured that this will not happen!
I've been spreadbetting for just over 10 years, and lost fairly consistently for around 7 of those, principally because I had no discipline, idea of what I wanted to trade, did no research before trading, and just enjoyed the gamble TBH. However I eventually got to the point of realising I had to stop or get my act together. One thing I had done over the years, however, was keep records of what I'd traded. I analysed all my previous trades and looked at where I'd been successful. I now trade full time and am consistently profitable. I have a very simple strategy. I never place stops because I pairs trade, ie hedge instead, usually the main indices (and I only use SBs who do not automatically impose automatic stops because that would be a nightmare for the strategy I adopt. I use 2 different brokers. I have even managed to negotiate better overnight financing charges with one of them which has made a massive difference to my profitability.