Stopped out of Live Cattle

[betsetter]

Hi Guys
Not been Spread Betting very long.
I took out an Up bet on Live Cattle on 3 Mar at 702, 1.50 per point with a stop loss at 614.
It seems to have been steady since then around 695.
To my amazement my position had dissapeared off the screen on Monday night 29th March. It had been stopped out.
I could not find any data of the commodity dropping that low. According to Sharescope the days low was 695.
I rang the betting company and they sent me a screen shot:-0:-0. It seems the bid price had dropped to 600 on the day.
My question is was my stop loss to narrow at 12.5 % and does this accur often with commodities?

Thanks in advance.

 

[pboyles]

Hi Guys
Not been Spread Betting very long.
I took out an Up bet on Live Cattle on 3 Mar at 702, 1.50 per point with a stop loss at 614.
It seems to have been steady since then around 695.
To my amazement my position had dissapeared off the screen on Monday night 29th March. It had been stopped out.
I could not find any data of the commodity dropping that low. According to Sharescope the days low was 695.
I rang the betting company and they sent me a screen shot:-0:-0. It seems the bid price had dropped to 600 on the day.
My question is was my stop loss to narrow at 12.5 % and does this accur often with commodities?

Thanks in advance.

Your spreadbet company have probably increased the spread and that has taken out your stop. Sharescope will be the genuine price but your spreadbet company dont have to give you this price, they can quote you whatever price they want. You can double check the prices on other free sources like Yahoo finance etc but I'm sure this is what has happened.

This happened to me several times and that's why I dont spreadbet any more.

 

[FXTrend240]

why would you spreadbet cattle!?!?

 

[betsetter]

Hi FXTrend
Not sure I understand that reply. Why not?
Its a commodity and goes up and down the same as anything else.
Please clarify.

 

[shadowninja]

Your stop could have been inappropriately small for the instrument. Might be worthwhile looking at the daily ATR and using that as a basis for determining the stop size. Ultimately, I don't think many people on here trade live cattle, as amusing as it would sound to trade and I think that's really the point of FXTrend240's reply. It does sound cooler than, say, Euro vs USD, mind.

 

[N Rothschild]

i trade it, i wouldn't be to bothered about being stopped out, its not going any higher. although these prices make no sense to me, they are no LC prices..?

LC is trading at 96.5c per lb..

 

[pboyles]

Your stop could have been inappropriately small for the instrument. Might be worthwhile looking at the daily ATR and using that as a basis for determining the stop size. Ultimately, I don't think many people on here trade live cattle, as amusing as it would sound to trade and I think that's really the point of FXTrend240's reply. It does sound cooler than, say, Euro vs USD, mind.

The point is that it traded nowhere near as low as the stop but he still got taken out because he's spreadbetting... but don't forget it's all tax free so that makes it OK

 

[N Rothschild]

anyway despite the price discrepancies, you should have had about a 100 point buffer between the recent lows and march 2nd price

 

[Black Swan]

The point is that it traded nowhere near as low as the stop but he still got taken out because he's spreadbetting... but don't forget it's all tax free so that makes it OK

Ouch that's harsh...I'm with Shadow, sounds cool betting on cattle, bit like Billy Ray Valentine with his pork bellies and frozen orange juice, getting stopped out wouldn't have fazed him...

"Cause I'm a karate man! And a karate man bruises on the inside! They don't show their weakness. But you don't know that because you're a big Barry White looking mother****er! So get outta my face!"

 

[pboyles]

Thanks for your contribution, makes a lot of sense

 

[ns1000]

What month were you trading? Ignoring the nonsense pbyoles says about SB companies being able to do what they like with the price (if they fill your stop 12% below the market they also have to fill limits, so they would stick to the market price on an exchange based instrument), it could be an mistake, or it could have been a genuine price. When were you stopped - I'll check the price on Bloomberg - it's possible that Sharescope will only show the floor session, not the electronic (or vice versa). If you were trading a back month, thin liquidity on an electronic market could make a difference.

 

[betsetter]

Thanks for the replies, some interesting ones.
First of all I don't care how cool or uncool LC is. I'm not walking through town with wellies full of cow crap. I'm just clicking the mouse. Its just another market same as gold, ITs or anything else that goes up and down. If I think I can make some money out of it then I'll have a go. Somebody is making money out of them or they wouldn't exist, right? It hasn't worked on this occasion but never mind a small setback and some experience gained.
The question here is, did the spread betting company widen the spread artifitially to trigger lots of stop losses, then narrow it again just as fast. I must admit it does look dodgy.
Someone mentioned using the ATR but the underlining commodity didn't seem to move so it wouldn't have made any difference.
I lost £130 but it could have been thousands at £50 a point.

 

[ns1000]

It's a common misconception but widening the spread doesn't necessarily trigger a stop. If you're long, there would normally need to be a trade in the underlying market at or below your stop, irrespective of where the bid is, or the market offer needs to be at or below your stop. Which month were you trading, and when was your stop hit?

 

[betsetter]

Hi
The month was September and the stop was hit on Monday.

 

[ns1000]

You've lost me -definitely September Live Cattle? Sep doesn't seem to be an active month, and the price looks odd too. Should be more like 9500.

 

[betsetter]

hi
Sorry I should have made it clear that this was the ETC Live Cattle.
Anyway,I'm prepared to give this company the benefit of the doubt. If they did this sort of stuff, they would soon lose clients.
But my original question was, Was my stoploss low enough and do these drops happen often.

 

[jonnyace]

hi
Sorry I should have made it clear that this was the ETC Live Cattle.
Anyway,I'm prepared to give this company the benefit of the doubt. If they did this sort of stuff, they would soon lose clients.
But my original question was, Was my stoploss low enough and do these drops happen often.

Re the stoploss only you can answer that in relation to money management, ie how much can you afford to lose, re the spike down yes these do happen regularly on livestock as the liquidity, especially overnight, is tiny relative to gold/forex/s&p etc.. Therefore if a fund or producer decides to dump their holdings outside the pit hours you can get a massive short term price swing.

US brokers will allow clients to set a stop loss on the closing price to negate this effect to some extent - UK spreadbetting companies will not

Hence trading livestock/softs/grains is very much not the same as trading the higher volumes contracts.

Give it up now - they spreads and out of hours price moves will kill you. The only way to do it is with a US broker and a $25k account minimum.

 

[ns1000]

Re the stoploss only you can answer that in relation to money management, ie how much can you afford to lose, re the spike down yes these do happen regularly on livestock as the liquidity, especially overnight, is tiny relative to gold/forex/s&p etc.. Therefore if a fund or producer decides to dump their holdings outside the pit hours you can get a massive short term price swing.

US brokers will allow clients to set a stop loss on the closing price to negate this effect to some extent - UK spreadbetting companies will not

Hence trading livestock/softs/grains is very much not the same as trading the higher volumes contracts.

Give it up now - they spreads and out of hours price moves will kill you. The only way to do it is with a US broker and a $25k account minimum.

A post of ignorance and prejudice.

1) We're talking about ETC - so basically a share, not the underlying commodity http://uk.saxobank.com/en/trading-p...||4970504926&gclid=CMDwrJG89KACFUUqDgodoT83vQ.
2) No SB will make an out of hours market either on these ETCs or the underlying commodity, so your comment about out of hours spreads seems to come from your own prejudices and false assumptions.
3) On the one hand you say that the contracts are illiquid (which is of debateable veracity) and on the other that you have to trade them with a US broker. What difference does the broker make?

 

[jonnyace]

A post of ignorance and prejudice.

1) We're talking about ETC - so basically a share, not the underlying commodity http://uk.saxobank.com/en/trading-p...||4970504926&gclid=CMDwrJG89KACFUUqDgodoT83vQ.
2) No SB will make an out of hours market either on these ETCs or the underlying commodity, so your comment about out of hours spreads seems to come from your own prejudices and false assumptions.
3) On the one hand you say that the contracts are illiquid (which is of debateable veracity) and on the other that you have to trade them with a US broker. What difference does the broker make?

A post by someone no doubt employed by Saxo et al

A good example of why I always try not to get involved with forums - the advice on this thread from myself and others is to try and help a rookie stay away from a market which only benefits the broker, especially in the UK.

Im not going to dignify the personal nature of the above post but please see the responses to the points raised below:

1. Simple answer - gaps on opening
2. As above - if the overnight market spikes the opening price of the ETC gaps and the spread widens
3.The self interest in this answer is staggering - no one in their right mind should trade these derivatives with a UK spreadbetting company. End of.

 

[ns1000]

A post by someone no doubt employed by Saxo et al

A good example of why I always try not to get involved with forums - the advice on this thread from myself and others is to try and help a rookie stay away from a market which only benefits the broker, especially in the UK.

Im not going to dignify the personal nature of the above post but please see the responses to the points raised below:

1. Simple answer - gaps on opening
2. As above - if the overnight market spikes the opening price of the ETC gaps and the spread widens
3.The self interest in this answer is staggering - no one in their right mind should trade these derivatives with a UK spreadbetting company. End of.

You must be eaily staggered. Stick with facts, rather than blind prejudice and you won't be pulled up on them.