Best Thread Spreadbetting, the myths and what is the reality?

[charliechan]

good point re hedging risk an, but then again, the whole idea of hedging losers is false imho. i dont think they really do hedge that much if at all.

reasons people hedge are to either:
lock in a price
flatten vol
get more leverage

none of these as far as i can see are really appropriate to the sb model. maybe flatten vol, but with 90% of your customers positions going your way, whats the point.

going back to the casino analogy, or better yet a high street book maker, they will often lay off a large bet amongst other bookies, but the majority of customer positions they will not tamper with, simply cos as every bookie knows, the average gambler is on a hiding to nothing.

simple.

 

[charliechan]

bookies, casino's, spread betting. it's all the same gig. full of punters who think they have a system that will beat a negative sum game. MACD, RSI, horse form, card counting.

same game, same mugs, same rules

 

[timsk]

bookies, casino's, spread betting. it's all the same gig. full of punters who think they have a system that will beat a negative sum game. MACD, RSI, horse form, card counting.

same game, same mugs, same rules

Hi cc,
Would you mind clarifying your position on this issue - because I'm really not sure where you stand!

 

[arabianights]

flatten vol is the reason they do it

 

[charliechan]

oooh look. it seems i'm not the only one willing to share the truth and get get stoned by the 'unbelievers':

SO, HOW DO TRADITIONAL SPREAD BETTING FIRMS MAKE MONEY?
Spread betting firms may act as a market maker and run a trading book against their clients, regardless of whether you are trading a spread bet, CFD or an FX contract. This means that when you open an FX position with them they can take the opposite side of your trade and your position will not be traded in the market. If your position makes money, the broker will be out of pocket, if you lose money your broker will make a profit of the same amount as your loss.

http://www.cityam.com/markets-and-investments/your-broker-trading-against-you

 

[arabianights]

Dude, that's a marketing manager for an FX firm saying that to drum up business.

You're basically right anyway you know...

 

[max7]

guys
1. so with SB co , can i day trade US stocks quite often, or will they stop me from doing it.?
2. any experiences in day trading with SB?
3. suggestion of a SB co which would be fine with day trading.?
many thanks

 

[timsk]

guys
1. so with SB co , can i day trade US stocks quite often, or will they stop me from doing it.?
2. any experiences in day trading with SB?
3. suggestion of a SB co which would be fine with day trading.?
many thanks

Hi max7,
1. Yes, you can day trade US stocks with a SB firm all day long every day - no problem. No restrictions apply to SB firms.
2. Yes, some. There are two sets of issues to consider. The first is the general position regarding SB firms that's been discussed in this thread and elsewhere. The views of charliechan and Co. are contentious, but many people share them and you ought to consider them carefully, IMO. Then there are issues re. U.S. stocks in particular. SB firms tend to only offer a relatively small selection of stocks to trade, e.g. the Dow 30, Naz 100 plus a handful more. This would be way too restrictive for many day traders. The other concern is spreads, which can be very wide. SB spreads on very popular instruments such as equity indices and major FX pairs are quite tight because they are heavily traded. U.S. equities are less so - and their spreads reflect this. Depending upon your precise trading style, this may or may not be a problem.
3. Any and all SB Co's are 'fine with day trading' in as much as there are no restrictions that I know of. You'll have to look at the different Co's, test their platforms, compare their spreads and check out their range of instruments etc. to decide which one is best for you.
Tim.

 

[Falken]

The problem with SB is that they get all the newbies. Lack of basic trading skills and poor money management lead to frustration, which in turn is directed towards the SB. Sure, there are some security issues with trading SB, but overall there isn't much different compared to trading the real market.

Can you please further explain these "security issues" gle? I've just read this whole thread now and I must say I'm a bit confused.

 

[lasso49]

I personally do spread betting on indices. As I'm from Germany thats 90% on DAX 30 - the rest is NASDAQ and S&P. The quotes I get show no differnce - if I compare to other brokers or so called realtime charts (in Germany its no prob at all to get a realtime chart on DAX 30 for free) - and I never had the feeling that my spread betting company plays against me. Daytrading there is absolutely no problem - holding positions over night is another story if gaps happen and your S/L is hit far below. But ok - that's trading and no matter if you spread bet, trade CFDs or whatever the same will happen on every account with any broker. I'm not sure - but I guess it would be no problem at all for big players like - pushing quotes in a special direction. It should be simple - look at your order book and know about S/l and TP levels of your clients. Then calculate what gives you best profit. Nobody can proof they do - but they would be stupid if they don't take advantage of their order books. The simple question is how sure are you about your own bet? If I spread bet my S/L is above important Support Levels and my TP beyond important Resistance Levels. Thats the only way I can protect myself - and cause most of orders should be triggered at those levels it should be a safe way to grab some profits.
It did not make me rich - but neither made me poor and if it stays this way it's ok for me.

 

[gle101]

Can you please further explain these "security issues" gle? I've just read this whole thread now and I must say I'm a bit confused.

Yes here are a few important ones.


1. Money risk management, always, not more than 2% of you capital in a position (included stop loss).

2. Do not trade with broker who doesn't offer you a user predefine stop loss in points (manual stop needs to be avoided). Stop loss must always be in place (unless you trade on arbitrage of course).

3. Have several SB up and running in case you need to hedge, in case you SB goes down.

4. Avoid trading the news with market order, you set up wide open yourself for huge slippage.

5. Be sure you understand the risk of overnight positions. If you do trade overnight, trade with a SB who offers off hours trading.

6. Do not overtrade

 

[MasterOfTheUniverse]

Hi, I'm new here and couldn't create a new thread so thought this one may be a good place to start, was really just wondering what is the next step after spreadbetting as I feel I have outgrown it, I am fed up of all the advantages being in their favour as trading is already hard enough! I only deal in the US markets (I don't like mornings so 2.30pm start is great for me!) the thing is IG do cover a lot of US equities so I need to be able to access at least that amount, I guess I'm looking for suggestions on what would be the best charting and trading software for being able to go long and short the US from the UK and which covers at least as much of the US market as IG, I think I am ready for DMA, any suggestions?? Appreciate any help!

 

[Splitlink]

Hi, I'm new here and couldn't create a new thread so thought this one may be a good place to start, was really just wondering what is the next step after spreadbetting as I feel I have outgrown it, I am fed up of all the advantages being in their favour as trading is already hard enough! I only deal in the US markets (I don't like mornings so 2.30pm start is great for me!) the thing is IG do cover a lot of US equities so I need to be able to access at least that amount, I guess I'm looking for suggestions on what would be the best charting and trading software for being able to go long and short the US from the UK and which covers at least as much of the US market as IG, I think I am ready for DMA, any suggestions?? Appreciate any help!

A good place to start and a good name to start with.

The next step after spreadbetting depends how successfull you have been in your trading. You'll need a few thousands, instead of a few hundreds, to be able to afford an account with a broker.

I'm serious about this. With a broker you trade with contracts and the loss factor is multiplied accordingly. I have not found SB firms that bad. I'd like trailing stops but that is about all.

 

[MasterOfTheUniverse]

Thanks Splitlink, this thread really disses the SB firms - do you like them then? Yes I can put a few grand into a proper broker but which one would cover the requirements I outlined above?

 

[Splitlink]

Thanks Splitlink, this thread really disses the SB firms - do you like them then? Yes I can put a few grand into a proper broker but which one would cover the requirements I outlined above?

Why should I not like them? Do you think that brokers are any better? Trading is a hard game in any form. I am not entering into a debate that has been going since T2W started. All I advise is that you be careful with your cash and the best of luck because you will be trading with a lot more money than before. If you have not been able to make money spreadbetting you must analyse the reasons. Is it the SB firm, or you? I do not need to know your answer. You must ask yourself that question.

 

[Black Swan]

Thanks Splitlink, this thread really disses the SB firms - do you like them then? Yes I can put a few grand into a proper broker but which one would cover the requirements I outlined above?

Really, does it, I thought it was quite constructive tbh..well it was at the start anyhow..

 

[MasterOfTheUniverse]

There seems to be a general gist that professional traders wouldn't use a SB company and that DMA is the way to go, I've never tried DMA so I wouldn't know, I joined this site to find out peoples recommendations on it, I actually really enjoy SB and yes I have had all the usual problems but it just makes me more careful with stops and there isn't really much they can do if something keeps going your way but with all the rollover costs, wide spreads etc just curious as to whether trading by DMA would eliminate these? Also would like to know if there are any actual really successful spreadbetters? Has anyone made a million? Just knowing that someone had made it through SB would give me some hope.. ;-)

 

[shortsell]

i personally know several people who are up £1m+ on spread betting accounts.

obviously a stranger telling you that on an anonymous forum means nothing, but as you asked, yes, there are people who have made (and continue to make) that sort of money.

 

[MasterOfTheUniverse]

i personally know several people who are up £1m+ on spread betting accounts.

obviously a stranger telling you that on an anonymous forum means nothing, but as you asked, yes, there are people who have made (and continue to make) that sort of money.

Really? Cool, do you know what they would have started off with? A 5/50/100k account? I need to make a million in the quickest time possible..

 

[shortsell]

haha - don't we all.

no, most of them would have started off with anywhere between about 300k and a million i suppose.