Trading through a broker or spread betting?

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tulu

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Hi all,
I'm wondering why trading currencies and commodities through spread betting is classed as gambling when using a broker isn't? I see the main and perhaps the only real difference between the two is the huge spreads in spread betting. Am I missing something? Do you need a large amount of capital to set up a broker account ie thousands, and can you trade at say £1 a pip through a broker like you can spread betting? If so, why would anyone spread bet currencies?
 
Cheers lads. Looking through the site(s) there seems so many conflicting views as to spread bet or through a broker. It strikes me how there can be mountains of information to digest, the technical analysis, only for it to, in a nutshell, be classed as a gamble. Would a serious trader use spread betting or broker? By serious I mean someone who analyses the markets daily and is looking to make consistent profits. As people have noted, the difference in spreads far outweighs the tax advantage so working on that assumption it would have to be a broker wouldn't it? Just out of interest Paul, could you suggest any minimum capital requirements brokers demand in order to open an account and trade Forex and Commodities? I have read people can open a broker account with £1000 for example. Further, would you be able to advise on the favourable brokers please? FXPro seems a favourite?
 
everyonerich said:
paul.. alpari uk can trade as low as 10 cents per pips. SB is even lower? which sb broker you talking about
Click to expand...

I was comparing DMA to SB. I know Alpari do offer a form of DMA but the capital requirements to trade are $20K with that option and is much higher than a SB company.


Paul
 
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Why won't this "enormous spreads" nonsense lay down and die? The EUR/USD spread on Tradefair is always 1 pip. Until/unless they start rejecting your trades, you need to have some good reason (which I can't think of) to use a broker instead.
 
tulu said:
Cheers lads. Looking through the site(s) there seems so many conflicting views as to spread bet or through a broker. It strikes me how there can be mountains of information to digest, the technical analysis, only for it to, in a nutshell, be classed as a gamble. Would a serious trader use spread betting or broker? By serious I mean someone who analyses the markets daily and is looking to make consistent profits. As people have noted, the difference in spreads far outweighs the tax advantage so working on that assumption it would have to be a broker wouldn't it? Just out of interest Paul, could you suggest any minimum capital requirements brokers demand in order to open an account and trade Forex and Commodities? I have read people can open a broker account with £1000 for example. Further, would you be able to advise on the favourable brokers please? FXPro seems a favourite?
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To be classed as a gambler when one uses a SB and a serious trader if one uses a broker is, I suppose, a problem for many. :D

I have accounts with both and I have been in chatrooms with people with broker accounts who have ended the day with no more than me, an SB trader. I count myself honoured to be able to compete with my peers with such a handicap. Of course, there are many who are much, much better than me and they will do better than me, no matter where they have an account.

I don't think that one advantage has been brought up, though, that brokers seem to have. Maybe someone would comment on that. It is possible to switch the account from one currency to another with a broker. A definite advantage in these days of currency turmoil.
 
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thetroll said:
Why won't this "enormous spreads" nonsense lay down and die? The EUR/USD spread on Tradefair is always 1 pip. Until/unless they start rejecting your trades, you need to have some good reason (which I can't think of) to use a broker instead.
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The spreads are quite important to day traders and scalpers,they are less important to swing traders .I stopped trading certain instruments with a NON SPREADBETTING BROKER,simply due to the 4 pip extra spread.The 4 pip extra spread turned a winning strategy into a loser,not only due to the extra spread , but also due to getting stopped out more frequently and profit targets not being met .Extra spreads are killers.

By paying an extra spread ,trader is screwing himself.
 
It goes without saying that higher spreads are a bad thing!

I was refererring to the persistent belief that all spreadbet firms apply massive spreads. It simply is not true. There may be other disadvantages, such as execution delays/rejections, on the firms that offer the tightest spreads. But if you're getting reliable instant fills with a spreadbet firm (as I have been for months with Tradefair at up to £10/pip), it seems to me that they should be your default choice.
 
tulu said:
I see the main and perhaps the only real difference between the two is the huge spreads in spread betting. Am I missing something?
Click to expand...

sigh...:rolleyes: The difference in spread between my 'direct' accounts with Alpari and FXCM and my SB account with IG (on the 9 currency pairs I trade) are no more than 1 pip in most cases, other than GBP/JPY... The spread on FXCM spread betting, or FXCM 'dma' is virtually indentical...

As odt stated, unless you are working off a very short tf then the spread is not of that great an importance; other than the fact that you should always strive for professionalism...

As a new trader at this stage you should (IMHO) only be considering swing trading or 'mini-swing' anyhow...
 
spreadbetting is by far the better option, the spreads would have to be very very high compared to dma to outweigh the tax advantages of spread betting. This legal loophole wont be open forever you need to take advantage of it the best you can while you still can...
 
No one Knows said:
spreadbetting is by far the better option, the spreads would have to be very very high compared to dma to outweigh the tax advantages of spread betting. This legal loophole wont be open forever you need to take advantage of it the best you can while you still can...
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Really??? Explain...please...
 
No one Knows said:
Government will try and dip their hand in and start taxing sb profits once they figure out how much money they could get in tax revenue which will inturn make sb pointless.
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Never be as big as horse racing..ergo the status/description of *gambling* will remain, take an act of parliament to change it...:)
 
Black Swan said:
Never be as big as horse racing..ergo the status/description of *gambling* will remain, take an act of parliament to change it...:)
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They need to make up the deficit somehow and this is a very easy option for them, governments dont do the right thing for the long term, and this would be a quick fix to bring in more money in short term. In some european countries they have already reclasified poker and any profits made are taxable. Maybe if we close all these forums and stop telling people that their is skill to trading then spread betting will stay clasified as gambling and not subject to tax. :cheesy:
 
Jack Hughes said:
What about the tax they collect from the SB companies?
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I think that the real preference for SB's is not the tax, as much as the punter, trader, whatever he prefers to call himself, does not have to lay out so much money. Providing that the SB and the client get along together without conflict, there is a big difference to opening an account for thousands with a broker and, probably, losing a lot of it.

The taxable level has to be reached before any tax is paid, in any case, which would let a lot of people out.

If the government decided to tax SB clients, I believe that the reverse could happen. The client could write off his losses against his tax bill. How much revenue would the government really make out of it? Far more lucrative to tax the SB company.

Not being too expert in any of this, these are just thoughts crossing my mind.
 
If you open an account with an online brokerage like Scottrade or Ameritrade and buy shares of some stock, how are those shares kept and recorded. Can you use a different brokerage firm to sell those shares? Do the fee rates change when you do this?
 
To be classed as a gambler when one uses a SB and a serious trader if one uses a broker is, I suppose, a problem for many.
Click to expand...

I am proud to call myself a gambler.

When I see people scurrying off to their little rat holes every day from 9am to 5pm to serve their masters, I smile. When I see them in the street I make a point of telling them how i gamble for a living and what an easy life I have as a result.

The look of incredulity on their wizened faces makes me smile, especially when I tell them that my earnings are not subject to tax.

You should only be ashamed of being a gambler when you are a loser who takes punts.

Profitable systematic gamblers should be proud of their ability to beat the system.
 
you seem to have a particularly nasty attitude....the world goes round with people "scurrying to their rat holes"....obviously you couldn't make it any other way in life so feel the need to prove you are better by boasting ?!?


Ambrose Ackroyd said:
I am proud to call myself a gambler.

When I see people scurrying off to their little rat holes every day from 9am to 5pm to serve their masters, I smile. When I see them in the street I make a point of telling them how i gamble for a living and what an easy life I have as a result.

The look of incredulity on their wizened faces makes me smile, especially when I tell them that my earnings are not subject to tax.

You should only be ashamed of being a gambler when you are a loser who takes punts.

Profitable systematic gamblers should be proud of their ability to beat the system.
Click to expand...
 
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