anley

Senior member
2,730 229
Denzel

Look at how much money it costs you to pick up the phone (ie, bid-offer spread costs) and then work at bringing that cost down. Most probably means that you make fewer trades but this is a good thing for most people.
 

anley

Senior member
2,730 229
Also, look at how much money you would have made if you'd traded CFDs or futures and then work out how (if you made a profit) how much tax you'd pay.

For most people trading products that ARE taxable will mean more money in the end rather than trading spread bets where profits aren't taxable.

Don't let the marketing of tax-free get to you because for most people it's actually a disadvantage.
 

anley

Senior member
2,730 229
Simple, because most people lose therefore they can't use the tax losses against capital gains made elsewhere.

Also, yes there is no tax in spread betting but then look at the spreads. What's FTSE these days 6 points versus 1 point on LIFFE. Ever wonder why most professionals trade exchange based products that levy tax rather than spread betting which doesn't?

I've been saying it now for many many years but most people new to trading don't listen - For most people the cost of doing business is THE dominant factor of whether you'll make money (overtime) or not.
 

Roberto

Experienced member
1,069 11
anley said:
What's FTSE these days 6 points versus 1 point on LIFFE.
No, more like 2 points, actually. Depends where you trade it, of course. What's better, a 2-point spread tax-free or a 1-point one with 40% tax on the profits? Your unsurprising suggestion of "6 points" simply illustrates what we knew already: how out of date your information is.

anley said:
Ever wonder why most professionals trade exchange based products that levy tax rather than spread betting which doesn't?
2 or 3 years ago, maybe, when spread-betting was difficult, customer service was atrocious and the spreads were high, possibly. But now it's no longer true that "most professionals trade exchange based products that levy tax rather than spread betting which doesn't" so there's nothing to wonder about. Again, your inaccurate assertion simply shows how out of date your information is.

It depends entirely on what sort of trading these "professionals" do, Anley. Speaking for myself (and as someone who's been making a living exclusively from trading for 5 years now, I think I'm entitled to label myself a "professional"), I'm one of the MANY who have moved _from_ other forms of trading _to_ spreadbetting. I trade Forex, and I find it a real bargain to pay a 3-pip spread and no tax at all on my profits.

Of course, if I were doing high-speed scalping of the odd pip or two, as some professionals do, spread-betting would be absolutely useless for me. Obviously, it's not suitable for everyone: it depends what you're doing. But to assert that "most professionals trade exchange based products that levy tax rather than spread betting which doesn't" is remarkably prejudiced, and actually just plain wrong.

anley said:
I've been saying it now for many many years
You have indeed. Most of the circumstances, procedures, details and realities of the industry have changed rapidly throughout those years. Some people have learnt something and been flexible and adapted; others are still saying the same things many years later! :)
 

the blades

Experienced member
1,336 275
anley said:
Also, look at how much money you would have made if you'd traded CFDs or futures and then work out how (if you made a profit) how much tax you'd pay.

For most people trading products that ARE taxable will mean more money in the end rather than trading spread bets where profits aren't taxable.

Don't let the marketing of tax-free get to you because for most people it's actually a disadvantage.
After being put of SB'ing the Nickei with a 20 point spread I looked at CFD's. I was quoted a 20 point spread, plus comission. (plus tax, but that's obviously dependant......)

I'm looking at futures right now for this but can't seem to find what the spread on a Nickei futures contract would be. Could you advise?

UTB
 

the blades

Experienced member
1,336 275
further to the above debate....we've been here before, eh? :LOL:

There's no right or wrong. For many people, SB'ing is the cheapest way to trade, irrespective of tax. Stamp duty on UK shares is greater than the spread added by Capital Spreads. In some other situations, SB'ing isn't practical.

The maths for different situations aren't difficult and I can never work out why this "debate" is so divisive.

UTB
 

dr_d_michaelson

Junior member
23 3
anley said:
Ever wonder why most professionals trade exchange based products that levy tax rather than spread betting which doesn't?
Not only is this rubbish, it's actually ironic rubbish(!) because in fact the exact opposiute is true.

All the big SB firms these days are increasingly seeing professional traders register and deposit substantial six-figure sums because they're finally making the move away from other trading methods towards better regulation, better safety and security of funds, better customer service, smaller spreads and NO TAX. The ones whose prejudices don't stop them from assessing the facts, that is.

Not the ones who don't know what's going on, what the changes have been, and just keep saying the same thing over and over again for many years, of course.

anley said:
I've been saying it now for many many years
Really? The phrase "I rest my case" springs to mind ...

the blades said:
The maths for different situations aren't difficult and I can never work out why this "debate" is so divisive.
It's divisive because when prejudiced and opinionated people make inaccurate statements, there will always be annoying, irritating people like me who actually know the facts turning up to correct them.

Sorry about that. :)
 

anley

Senior member
2,730 229
dr_d_michaelson said:
Not only is this rubbish, it's actually ironic rubbish(!) because in fact the exact opposiute is true.

All the big SB firms these days are increasingly seeing professional traders register and deposit substantial six-figure sums because they're finally making the move away from other trading methods towards:

better regulation, better safety and security of funds, better customer service, smaller spreads and NO TAX. The ones whose prejudices don't stop them from assessing the facts, that is.

Sorry about that. :)
Hey Mich

As you know the facts so well please explain these points;

1) Why have the professionals only just realised the advantages of spread betting when SB has been around and well established for over 15 years?

2) How is a spread betting company better regulated than a broker say like GNI in the UK or IB in the US?

3) How is the security of funds with a spread betting firm better than the security of funds with the above 2 brokers

4) How do the SB companies do better customer service than regular brokers of Exchange based products? That is a very strange point you make there.

5) Have you ever seen a 1 tick spread on a FTSE spread mkt or a $0.10 on a Gold SB market for example? And while you're at it please name JUST one financial product that has a smaller SB bid-offer spread than its associated Exchanged traded product.

6) What would you say to the tax-man if he comes knocking at your door asking for some tax and all you traded was spread bets. Would you show him a glossy advert from say City Index which says 'all profits tax-free' and then slam the door in his face. Or would you be petrified that he'd class spread betting as your main source of income and order a full audit of your financial affairs with tax to pay? And don't say it can't happen because it can and has.

Answer those questions intelligently and we can talk some more. Otherwise stop making a fool or yourself.
 
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anley

Senior member
2,730 229
The Blades

Yes, Nikkei tick size on the Exchanges is 5 points. Trading CFDs on them is not the way to go in my opinion. However if you're looking for a long term trade why not use spread bets. They do have a role to play it's just for most people they do far too many trades therefore pay out far too much money in cost of doing business.

I myself often use spread bets but only for long term trades, in fact the only trade I have on now is long June Gold and I've had this trade now for over 2 years. Just kep rolling and rolling it over.
 

the blades

Experienced member
1,336 275
anley said:
Yes, Nikkei tick size on the Exchanges is 5 points..
Many thanks Anley,

I do use spreadbetting for both shares and index bets. But the 20 pt spread is prohibitive with the profit target I have in mind. It seems I'll be dabbling in futures for this one - here's hoping I don't burn my fingers.

Thanks again,

UTB
 

Peter36

Junior member
17 0
I have read David Bakers article carefully and it contains very sound advise for all spread betting "Newbies " It must have taken a lot of time and research to put all of this together, well done David.
Peter36
 

DaveJB

Experienced member
1,159 42
Hi Peter,
If you're still watching this <g> I've been going over the KLab to see what's in there, and looked at my SB article (crikey, didn't know it had been that long ago) and saw your comment. I'm apparently not subscribed to the thread so didn't get it emailed - my apologies for being so tardy with my thanks for the comment.

With regard to some of the points made earlier in the thread, I think it's important to realise that there's a balance in all trading vehicles - when you gain in one area you probably lose in another, whilst not the only benefit to this method the fact that you can trade with a very small initial stake is important to many. The SB companies are doubtless making good money from recognising that by moving downmarket they can pull in a lot of small to medium players.

Being leveraged is also important for those who want to trade short timeframes - I LIKE daytrading on 1 minute charts and the like, but I recognise that daytrading requires me to find a way to trade small moves for worthwhile profits...look at Mr Charts' (sadly now not posting) articles here - 'anatomy of a trade' I think they're called, there are a couple - you can see the size of move we're looking at. To make a decent return you have to trade 1000 shares (direct access) which entails having about £15000 UK in your account to avoid falling foul of the pattern daytrading regs, or SB'ing.... which you do rather depends on whether your account amounts to £15k+ or £500.

Dave
 

cz4802

Junior member
15 0
I am glad that the author noted that leverage can work for you but also work against you in a big a way.
 

DaveJB

Experienced member
1,159 42
There are invariably two sides to every coin, and provided you spend a little time dispassionately examining whatever takes your eye then the potential to lose every bit as quickly as you can win is generally apparent.
 
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