SB Bias!

[stevet]

dsmodi

at first i thought u meant that the spreadbettors futures price expires expires at the close at the real quoted cash index price - which would have been real interesting - but i guess if it did the spreadbetting company would have been out of a business a long time ago!

what i think you are saying is that the spreadbetting cash price expires at the real cash price close, which in realty may give some little benefit if the spreadbettors original cash price was off the futures and fair value - and at any rate there may be a couple of points to your favour as there is no spread

if, as you say this is the case - i suspect spreadbetting companies know that no one can query their prices for the normal trading day, but if their cash index price ended at a different level than the real cash index - their phones would be ringing off the hook with irate traders blaminng the spreadbetting companies for their losses

but of course in your example the key would have been to go long at the right time, taking advantage of the down move to enter at a good price in line with the trend of the day, after the few minutes of volatilty that happened after the report and then hold to the close, and i guess the one or two extra points that u might have enjoyed from being closed at the close price would have been a real bonus, but the key would have been to be in a winning trade

i guess the real value of what u r saying is that if you have not closed a position already when you are a minute or so from the close time - you may as well hold onto the position since the balance of risk is in your favour as you will be closed out at what is effectivly the mid price, and not the ask or bid price- but u would have to pay real attention to where the fair value was prior to the close in order to be on the right side of that mid for it to be a real advantage

the emini dow futures trades on after 16:!5 (NewYork Time) and after the other emini indexes , but i guess the spreadbettors cut their futures contract at the close of the pits

 

[rglenn]

The story ends in a fairly predictable manner. We were on the brink of following him when the ftse did break out and he dropped the entire £1.5m.

This is what you call being too greedy!!

Why didn't he just keep the £1.5m and even live of the interest.

And if he wanted to continue dabbling do it on a smaller scale.

It is typical of us humans- some people are never satisfied.

 

[stevet]

rglenn

not so much greedy, as just really enjoying unskilled trading ( at least on the way up) and using high stakes to increase the volatility and therefore the winning amount, and he only got to £1.5M by continuing to trade - if he had reduced size on his earlier trades or banked an earlier amount - he would not have got to £1.5M and £1.5M only seems big when u dont have it or especially if you just lost it! - once u have it - you heart is gonna be real set on £3M and on the way down, if you are an amateur trader - real set on just getting back to where u were

and if he already has £100M in the bank - those trades would be the same to him as for someone who was up a few quid - trading is the same as going to the casino, and in the same way, you can be a punter and they always lose to the house, no matter how much they are up, but in the markets - you, or anyone can be the house - and the point is - if u get to £1.5M though real trading skill - the last thing you should do is quit

 

[jls483]

Hi Sidinuk,

> We had someone on here a while ago who was using the exact
> same system, apologies because I can't remember who it was.
> I know there was a huge debate and basically he was told it
> would all end in tears.
>
> As they say, "Losers average losers".

I think you might be talking about me and what came to be known as "suicide trading". Although my methods are not exactly the same as Mr £1.5m man we are alike in our aversion to stop losses. The difference though is I've now trebled my pot since I started trading in November rather than lost the lot - but and there are a few buts.

- I only trade in tiny amounts, one or two pounds a point so there is no danger of me going bust. I put an immense amount of time into cash management to make sure I have a good balance between risk and return.

- I have only been doing it since November 02 so as has been pointed out I can't claim, yet, to have a system that works in all markets.

Anyway I definitely don't want to start another subthread in this excellent thread - so if I've just offended anyone please bite your tongue or start a new thread! The reason for posting was just to say it was me and the only tears so far are tears of joy.

Could I also add my thanks to ProBookie for his fascinating comments. For tax reasons I do all of my trading through SBs and it is fascinating to hear any insight into the business.

And may I also take a pop at mma who really has been badly upset by his spreadbetting experience. I am sure there is truth in what he is saying, but there are ways of going about saying it ...

John.

 

[rglenn]

Jls483

Congratulations on your profits! Well done.

You have got the right idea - keep stakes small - and don't get greedy.

When I first started trading - that was one of the first lessons I learnt.

 

[sidinuk]

John,

My apologies for not remembering it was you! Glad to here that 'suicide trading' is working for you. Just remember to stop when you get to £1.5m!

 

[ChartMan]

This is the best read I've had in ages. Just what we need for a top dog BB. :cheesy:

 

[mma]

* a client who regularly makes big money, would you mirror his play for hedging reasons or simply to make money for your firm *

Happens more than you think , the bookies will never admit it though , was a time whenever I called, my name was shouted to the head dealer at finspreads , so that he could follow my trades

And no I never average losers.


* And may I also take a pop at mma who really has been badly upset by his spreadbetting experience. I am sure there is truth in what he is saying, but there are ways of going about saying it .. *

Upset ? hardly , I just enjoy giving it straight back to SB firms who pretend to be goody 2 shoes when clearly they are as bent as a doornail.

And you can have a go at me as much as you want , so long as you don't mind that I may do same to you ..... kinda changes things for you don't it ? I mean we can't have a level playing field now can we ? ..... HAR HAR HAR .

 

[sidinuk]

MMA said:

Happens more than you think , the bookies will never admit it though , was a time whenever I called, my name was shouted to the head dealer at finspreads , so that he could follow my trades

Perhaps when the dealer shouted: "I've got that awkward 'winner' on the phone again" you actually misheard him.

Please don't take offense, I'm only kidding.

 

[TheBramble]

Yeah! Easily done...

Maybe they came to bank so much on his trades they actually said "it's that banker again..."

And I too, mma, am just joking.

 

[stevet]

if you trade any size over certan limits i presume they have to bring in the head dealer for him to check how it might affect their hedging positions - and of course the trading history for each punter is going to affect that decision - regardless of how much of the book they do or do not hedge - and i am sure that whenever any size comes in - they know no one would trade any real size with them - so they figure someone has found a hole in their system

some profesionals do use spreadbetting companies - but they have whole different reasons and in particular special deals

but despite mma's extensive and "long winded" explanations - i still have not figured out what his beef with them is, especially as he says he made money out of them and most spreadbetting personel, far from hiding the fact, seem happy to admit that over time they dont have any winners - thats why they have no interest in trading themselves - most are young kids up for a buck - but stickwith the day job!

when you put your hand in the lions cage to grab his food - dont be surprised if you become his food!

 

[fudgestain]

Probookie

Usually any business prefers bigger customers over smaller ones and minnows while all may be welcomed. Same goes for stockbroking and commodity broking - the big player better than the small.

So what do the SB firms want? Only minnows and eschewing size generally?

I would have thought that big and bigger size ought to be welcomed because spreadbetting has a unique tax advantage.. if you can give an accurate spread price, say on the Dow and FTSE indices, that wont be moved against the big player. Also hedging big size ought to be practicable for a nimble dealing set up.

Is there not a big bright beckoning future for the really professional SB firm doing sh*tloads of big size business?

 

[sidinuk]

Is there not a big bright beckoning future for the really professional SB firm doing sh*tloads of big size business?

I think you'll find this is actually fulfilled by the proper futures markets which are much more efficient and cheaper even taking into account the SB firms 'unique tax advantage'.

 

[fudgestain]

One is aware that use of the direct underlying futures market is more effective but there are tax/regulatory/etc consequences one does not want.

Probookie does not need to answer my latest questions; its entirely his option to do so or not. Also the need to hedge is not necessarily implied for substantial size business unless it is derived from particular customer/s found to be successful operator/s.

 

[CityTrader]

..

 

[stevet]

there are two types of spreadbetting business already - one is for retail and one is for professional - but for perhaps obvious reasons - one of them may have smaller trade size, but produce juicier profits

 

[Bro]

Stevet,

I hope you don't mind me asking you some questions for my first post.

Retail or professional spreadbetting - which is juicier? How would you find a spreadbetting service for professionals distinct from a retail service?

Is there a spreadbet service for professionals doing big quantities in the indices such as the DOW?

 

[stevet]

its best to assume that spreadbetting for professionals is by invitation

and the only way to do big quantities in the dow futures is do it with a pit traded contract and unless you are in the pit - thats a real difficult trading medium

and with other liquid electronic markets - you would just be looking at whatever the normal trading size would be - say for example, around 25 to 100 emini s&p's

 

[mma]

* Perhaps when the dealer shouted:
"I've got that awkward 'winner' on the phone again" you actually misheard him. *

Non taken . Actually they called out my name only , these people are vain fags , and they think if they follow you they are complimenting you - self flattery . so I have no feeling one way or the other as to if they follow me or not - couldn't care less.

 

[SuddenDeath]

SB bias in price....

"Does anyone knows a way of overcoming the opening bias that an SB company marks up/down the indices by."

This is my understanding:-
A SB company is basically a single market maker operating their own rules. They have to protect themselves first thing from a potential flood of orders in one direction, just like many market makers do for equities.
Most SB co's do not hedge the positions they take on, because it is an expensive thing to do. I know of only one which does hedge (Cantor), and their spreads generally appear to be wider then the rest. The rest are effectively gambling against you, and, in the case of the open, making it more difficult for you to beat them at a time when they don't know what orders will come in.
There is nothing you can do to overcome this except
1. as you say, find a company with smaller spread or bias
2. or don't trade the open

I don't know whether Cantor skew or widen the spread at the open. Perhaps others might know.

Glenn

Hi perhaps if you had more than one account and your saw a large enough difference in price between a couple of SB companies couldnt you just buy with one company and sell the same amount with another, a 30pt difference you could esentially make risk free profit.