Spreadbetting US stocks

[blueclaret]

Hi,

Does anyone daytrade US shares by spreadbetting or is it not worth it because of the spreads? I am currently using IG Index and I imagine the spreads are the same on other companies. I'm trying to trade US because of the hours as I work in the day (UK). Any advise will be appreciated.

 

[Pippppin]

Hi,

Does anyone daytrade US shares by spreadbetting or is it not worth it because of the spreads? I am currently using IG Index and I imagine the spreads are the same on other companies. I'm trying to trade US because of the hours as I work in the day (UK). Any advise will be appreciated.

Hello blueclaret

Good question. I have been position trading (not day-trading) US stocks with IG-Index for five years (on and off), and I have reached the conclusion (reluctantly) that I am wasting my time (and money). IG offer an excellent selection of US stocks, but they are smart enough to realise that the more markets they offer the more money they make.

Spreadbetting (I have concluded) is for amateurs. It is like dealing with a back-street bookie, who can offer you whichever prices suit them at the time. IG's highly sophisticated technology, and the fact they are not part of the real "market" and are thus answerable to nobody, means that they can manipulate everything including:

- the spread
- where the spread is positioned relative to the market
- the price you get filled at
- whether you get filled at all
- whether you get stopped out, and where

It is hard enough making money in the real market, without the barrage of obstacles IG-Index put in your way as well. The reason I used IG was they offer guaranteed stops on US stocks. However, you pay a heavy price for the privilege, making it even harder to make a profit.

I have recently switched to OptionsXpress. I can trade stocks, options and futures with them. I am dealing with the market, not with a distortion of the market.

If you must spreadbet use Capital Spreads - many fewer US stocks (about 300), but enough, and much fairer spreads and less skewed spreads. If you are daytrading you won't need guaranteed stops, but if you do maintain positions overnight you could hedge by selective use of puts and calls.

This is only my experience and there may be others who trade US stocks very successfully using IG-Index. I haven't met (or heard of) any. IG view their customers as mugs, because the vast majority are.

PS My background is commodity trading (since '96)

 

[timsk]

Hi blueclaret,
I have day traded U.S. stocks in the past via a spread bet firm and didn't do too badly until I had a blow up, losing 70% of my account. To be fair to the SB firm, that was entirely my own stupid fault - I can't blame them for that! The pro's and con's of SB firms are well documented here on T2W; some would say completely exhausted, so I won't go over old ground. Obviously, the spreads are a lot wider than direct access brokers, which makes trading faster timeframes a tough old row to hoe. The advice commonly given is that spread betting is better suited to swing or position trading, and I concur with that. However, as a testing ground to trade on the cheap, I think it's a good place to start. It avoids the $25k SEC rule and, if you can break even or manage a small profit spread betting, then this bodes well if and when you decide to switch to direct access. I now trade direct access via I.B. and I'm in no hurry to return to SBing. It's a bit like driving a car with power steering for the first time; once you've done it, there's no way you're going back to car that hasn't got it.
Tim.

 

[blueclaret]

Thanks for the replies. So the alternative is to have $25k for direct access?

 

[timsk]

So the alternative is to have $25k for direct access?

Hi blueclaret,
If you want to daytrade U.S. equities via a direct access broker, then yes, this is a SEC requirement. Potentially, you can get around this by trading CFD's so long as you're with a broker who charges commission for trades as opposed to a SB firm who will build the commission into the spread. I've never traded CFD's and don't know a great deal about them, so please do your research to ensure that this is the right product for you should you elect to go down this route.
Tim.

 

[tar]

Hi blueclaret,
If you want to daytrade U.S. equities via a direct access broker, then yes, this is a SEC requirement. Potentially, you can get around this by trading CFD's so long as you're with a broker who charges commission for trades as opposed to a SB firm who will build the commission into the spread. I've never traded CFD's and don't know a great deal about them, so please do your research to ensure that this is the right product for you should you elect to go down this route.
Tim.

Hi Tim , totally diffrent Q : Do u think daytrading Us stocks is better than daytrading Forex ?
Thanks

 

[timsk]

Hi Tim , totally diffrent Q : Do u think daytrading Us stocks is better than daytrading Forex ?

I've never traded FX so I'm unable to contrast and compare the two. That said, there are one or two obvious comments to make.
The U.S. market is open from 9.30 - 4.00pm EST which is excellent for traders based in western europe. Not so good for traders in other parts of the world, whereas, you can trade FX 24/7 if you want to. Although, that in itself could be a disadvantage (work / play - life balance and over trading etc.) Many equities traders (not just U.S.) like to use volume which isn't available with FX. There are 1,000's of stocks to trade, so even on thin, rangebound days there's usually something to be found that's of interest and tradable. FX is limited to a certain number of pairs which is restrictive on dull, flat days. On the other hand, FX traders aren't having to hunt down something to trade, they get to know the pairs they trade very well and, if there's nothing doing, they go and play golf - or whatever. It's horses for courses; one mans meat is another man's poison etc. When I joined T2W, most members traded stocks and indices. Now, I'd guess that well over half the membership trade (or aspire to trade) FX. It's dead trendy, hip, sexy and more fashionable than a Paris boutique right now. Excellent reasons to steer well clear in my view!

Tim.

 

[henry766]

Blueclaret , you can trade u.s.stocks direct with i believe $2000 as long as you don't day trade, or atleast rarely, though margin is 2:1 max