So basically spread betting is a con?

I've said this a couple of times but the thing about spread betting companies is they need to make a profit. If you're a **** trader then do what you like... they won't care as they'll make money from taking the other side of your trades and hedging you if you're too big.

If you're a good trader, it all comes down to how well they can hedge you. Their profit will come from the spread between the prices you pay and the open market ones. If you trade a pound a point they can't hedge you. If you trade only news it's very difficult to hedge you. If you scalp constantly, again it is very difficult to hedge you. So you are effectively taking money from them rather than the market. There is no reason at all why they would want to keep your business as you are just costing then money. On the other hand buy shares at twenty grand a point and they'll be very happy to deal with you - they can buy the shares to hedge you; they take the spread as profit and you don't care because you get your winnings tax free. Everyone is happy.
 
That is an interesting point, the SB companies hedge your bet if you bet big, as i was getting confused to as why Mike Ashley the NUFC owner would place bets with IG if he or the general knowledge is that SB companies make it difficult for you to profit.

Anyway thank you all im ever so greatfull for your wonderful insight and experience.
 
the problem is the ease at which complete novices can gain access to what essentially is a replica of professional markets. i suspect a great deal of the spreadbetters have little or no experience of markets other than that they know of somebody who made a killing and want a slice.

SB's are none other than market makers for retail clients and like any other market maker they make money on the spread and how well they hedge.

face it: making money in the markets is tough....
 
gooseman said:
the problem is the ease at which complete novices can gain access to what essentially is a replica of professional markets. i suspect a great deal of the spreadbetters have little or no experience of markets other than that they know of somebody who made a killing and want a slice.

SB's are none other than market makers for retail clients and like any other market maker they make money on the spread and how well they hedge.

face it: making money in the markets is tough....
Click to expand...

I agree with that. I would also say that 'the markets' are a fantastic 'advert' for themselves. Loads of different shares / indecies / forex all moving 100's of points per day - "look how easy it looks on these charts!" Immediately people are drawn in thinking that they can make sense of the chaos.

Steve.
 
The longer your timeframe the more happier they are to take your bets..

But even for intra day traders its not a complete con. You can make money even day trading, just dont expect to make millions trading this way.

A guy starting out with a small pot can make 10s of thousands a year and maybe even 100s of thousands over a career as a day trader doing spread bets with the larger companies.

Its not a complete ripp off scam where your chances of making money are zero.

Its a game, the Spread Bet company make the rules, and rules are stacked heavily in their favour..
 
>>Its a game, the Spread Bet company make the rules, and rules are stacked heavily in their favour..
<<

so one needs to devise a set of rules that puts the odds in your favour. ie in effect become the bookie in what is for most an unknowable market. its a different mindset from what one might expect. we think the market is knowable and the more more we know the more we will win. whereas what you know is usually irrelevant to making wins. If 90% lose then why don't they do the reverse of what they do to lose and win? because we believe we can know what is going on.

when i first started i increased my account quickly by 60% then i just began losing runs for no apparent reason. then i worked it out when i started i didn't know anything so there was just the system. Then i began reading news sites, fx sites, the postings on boards, etc and spend half a day reading this stuff and began to think i knew what was going on and began losing.

So i stopped reading all that stuff went back to the charts and the demo and stopped losing. Now i work on the basis of 20 trades and work out a win lose ratio. as long as the win is over say 55% then in the long term i will make money. which is how bookies think. ie in terms of win ratio systems. If the system doesn't give the long term win ratio then its back to the demo to find one that does.
 
oiltanker said:
>>Its a game, the Spread Bet company make the rules, and rules are stacked heavily in their favour..
<<

so one needs to devise a set of rules that puts the odds in your favour. ie in effect become the bookie in what is for most an unknowable market. its a different mindset from what one might expect. we think the market is knowable and the more more we know the more we will win. whereas what you know is usually irrelevant to making wins. If 90% lose then why don't they do the reverse of what they do to lose and win? because we believe we can know what is going on.

when i first started i increased my account quickly by 60% then i just began losing runs for no apparent reason. then i worked it out when i started i didn't know anything so there was just the system. Then i began reading news sites, fx sites, the postings on boards, etc and spend half a day reading this stuff and began to think i knew what was going on and began losing.

So i stopped reading all that stuff went back to the charts and the demo and stopped losing. Now i work on the basis of 20 trades and work out a win lose ratio. as long as the win is over say 55% then in the long term i will make money. which is how bookies think. ie in terms of win ratio systems. If the system doesn't give the long term win ratio then its back to the demo to find one that does.
Click to expand...
This is good thinking. It is all about getting favorable odds. Don't trade when odds are stacked against you too heavily. The odds are always in favor of the SB or the DMA broker in one way or the other, through market conditions, the rules, the spreads, the commission, even normal mind functioning. You are in fact starting out on the losing side in every single bet. It is like the Casino, the odds are stacked in their favor. You have to learn the strength of the SB and their weakness, in order to come out consistently on the winning side. The single most important mistake most newbies make, is not (as one might think) missing out on setting a stop loss, but poor money management. People do take way too high a risk with their trading capital. One must learn that statistical variations occur, and that one can eventually get caught up in them. If you don't have enough funds to get you through these variations, resulting in a incredibly high number of losing trades, you will simply be thrown out of the game.
 
i want to trade shares, i want to trade them over a 3 month period, i want to go long for as long as 12 weeks. Is that possible? or will they cancel my contract if they think im trading shares rather than gambling?
 
You will be fine.

If you are doing something that they perceive as taking advantage of "their" inefficiencies then they will stop you. But if you are doing something long term then they will get their spread and get their interest and be happy little parasites. And feeding well, they will leave you to your own game.
 
Trader333 said:
Which SB company do you stand a better chance of profiting from than IG ?


Paul
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About two years ago I left IG as stops (not grtd) always seemed to slip,and IG says its "normal". So this may be historic, but i'm inclined from these boards to believe, it is still the case.

Cap Spreads & Worldspreads, have never slipped a stop, at the time, or since. Could be i'm just lucky.

Why do you think IG are better??

Looking at the platform it does appear to have a modern look about it, probably same engine under the hood though.

Thanks.
 
Why do you think IG are better??
Click to expand...

Because you don't get any of the issues being discussed in this thread. Also every stop I have used with them has been at the price I specified. I don't use them for everything as I have a DA account but they have been good in all trades that I have used them for.


Paul
 
Trader333 said:
Because you don't get any of the issues being discussed in this thread. Also every stop I have used with them has been at the price I specified. I don't use them for everything as I have a DA account but they have been good in all trades that I have used them for.


Paul
Click to expand...

Thanks for that,

This sounds really good and possibly encourages me to go back now that they have the trailing stop facility.

Would you mind me asking what you traded with IG.............or put it another way, do or did you trade the dow ftse cac dax and/or cable.

Many Thanks.
 
I don't know if IG do have trailing stops but I will check. I have only used them for FX and Indices trading to date.


Paul
 
Reading all this.... Can anyone assess what would happen - if I make 5-6 trades a day possibly all withing 30 min and win overall 500 betting up to 50.

Your opinion - will IG (or other major companies) artificially adjust price feed (or any other way) to hit my stops (or somehow else put me out of the game)?

Thanks
 
maxima said:
Reading all this.... Can anyone assess what would happen - if I make 5-6 trades a day possibly all withing 30 min and win overall 500 betting up to 50.

Your opinion - will IG (or other major companies) artificially adjust price feed (or any other way) to hit my stops (or somehow else put me out of the game)?

Thanks
Click to expand...

No they will put you on dealer intervention which means all your trades will be checked manually by a dealer to make sure you're not taking advantage of delays in the pricing feed. But to be honest they are not going to bother too much with £500.

Also I might add that creaming 1 or 2 pips per trade is propbably going to lose you more money in the long run that you make.
 
Hoggums said:
No they will put you on dealer intervention ...

Also I might add that creaming 1 or 2 pips per trade is propbably going to lose you more money in the long run that you make.
Click to expand...
Why do you think it going to be manual? Some of the companies have 100 threshould (per bet).

I am talking about 3-4 pt per trade. I am good at exactly it. When I try to apply wisdom of books and all that patterns and stuff - everything is going south very quick. :)
 
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