Using a GSL for a 100k short position ?

[leonarda]

Hypothetically (for me anyway!), if you had opened a 100k short stock position for a swing type trade (days-weeks), would you use a guaranteed stop loss?
The dangers are losing your house if a huge short squeeze occurs (eg.Porsche VW affair Oct 28 2008).
But the odds of this are miniscule, and even a normal stop-loss would cover you reasonably well, although could a short squeeze occur in out-of-hours trading(not sure that's possible?)
But do you want even a miniscule chance of losing your house...?

Your views...?

 

[DionysusToast]

Guaranteed stop loss = Spread Betting, right?

Who would be dumb enough to put in a $100k trade with an SB company? Surely the temptation would get the better of them...

 

[wackypete2]

If you are worried about losing your house you are in way over your head.

Peter

 

[leonarda]

If you are worried about losing your house you are in way over your head.

Peter

well that's the point of the question re shorting. I'd be able to cope with a 100k loss say, but not a 500k one if the short squeeze was 500% like VW in Oct 2008 was...

 

[pboyles]

well that's the point of the question re shorting. I'd be able to cope with a 100k loss say, but not a 500k one if the short squeeze was 500% like VW in Oct 2008 was...

Why are you spreadbetting? To save paying tax on all the money you are going to make? You know they are going to screw you with the spread and rollover charges and if it comes anywhere near your SL you will be taken out by a mysterious price spike.

 

[shortsell]

this place makes me laugh.

if you are swing/position trading large size in equities it makes PERFECT sense to spread bet.

just because pboyles and others don't understand the product it doesn't make it a bad one.

do we really think clients who are swinging positions with the big SB firms - positions woth £5-£10m notional - are dong so with concerns that their trades might be manipulated?

there are a number of respected financial institutions offering advisory spread betting to their clients and clearing through brand name spread betting companies - do you think they are worried about their trades being shaken out? of course not.

paranoid delusions of the uninformed...

 

[pboyles]

do we really think clients who are swinging positions with the big SB firms - positions woth £5-£10m notional - are dong so with concerns that their trades might be manipulated?
..

No they have no such concerns because they havnt the wit to do a bit of research before embarking on their latest get rich quick journey.

 

[shortsell]

No they have no such concerns because they havnt the wit to do a bit of research before embarking on their latest get rich quick journey.

of course, equity clients who swing £5-10m notional per position are traditionally a bunch of toothless halfwits aren't they?

your lack of knowledge is transparent as it is embarrassing.

 

[pboyles]

of course, equity clients who swing £5-10m notional per position are traditionally a bunch of toothless halfwits aren't they?

your lack of knowledge is transparent as it is embarrassing.

You know that FX brokers also manipulate spreads and even change their margin levels to rip people of?

 

[shortsell]

did you know that some footballers dive?

there are any number of completely irrelevent issues we can discuss whilst the market is quiet, but really we should concentrate on the one at hand - namely your belief that a serious investor in stocks shouldn't be spread betting.

you mention financing. what do you think a major spread betting firm charges for being long a UK stock overnight?

 

[pboyles]

of course, equity clients who swing £5-10m notional per position are traditionally a bunch of toothless halfwits aren't they?

your lack of knowledge is transparent as it is embarrassing.

Er...Mike Ashley ring a bell?

http://www.dailymail.co.uk/news/art...ed-tycoon-Mike-Ashley-lost-300m-HBOS-bet.html

 

[wackypete2]

what do you think a major spread betting firm charges for being long a UK stock overnight?

OK, how much?

Peter

 

[pboyles]

OK, how much?

Peter

Cant tell you, GW Bush banned you all from this spreadbetting lark.

 

[shortsell]

oh i see pboyles, you're the sort of guy who uses one example out of a million trades to prove your point.

in which case there's not a great deal of point in engaging you in conversation.

i would encourage anyone reading this to ignore pboyles' contributions with regard to the spread betting industry. he doesn't understand the product in the slightest.

 

[leonarda]

I agree with shortsell,
but lets get back to my question...

with a standard stop you theoretically are exposed to say a 500% loss in a 0.001% chance scenario (guess!!), and especially when dealing with a large position that could take longer to unwind if there's liquidity problems.
with a GSL you'd be exposed to say a 10% loss, but you pay an extra 1% charge every trade...

so taking my guestimates, and say 100 trades per year:
SSL: 500% loss that will probably never happen!
GSL: Extra 100% charge per year, so in 5 years of short selling you're in the same position. So say short selling 1 year out of 4, that's 20 years of trading and you're in the same position.

To me the only difference is peace of mind and happiness/comfort with your risk level when using a GSL.

oh I don't know...but that's why i'm asking the question...

 

[shortsell]

pete, typically most charge 2.5% over 1 month libor. obviously guys position trading size aren't going to be on 2.5% - in my experience 1.5-2% is closer to the norm.

pboyles, any thoughts on how this compares to leverage costs with a DMA broker?

 

[shortsell]

leonarda it's basically like house insurance. it's not a value trade - which is why insurance companies make money (over-simplified i know, but you get the gist). so from a value point of view, it's a no. from a sleep easy point of view - only you know the value of your sleep!

 

[wackypete2]

pete, typically most charge 2.5% over 1 month libor. obviously guys position trading size aren't going to be on 2.5% - in my experience 1.5-2% is closer to the norm.

pboyles, any thoughts on how this compares to leverage costs with a DMA broker?

ok, question since I'm in US and I don't know....Does the sb firm charge for overnight positions even if you are not leveraged?

Peter

 

[pboyles]

oh i see pboyles, you're the sort of guy who uses one example out of a million trades to prove your point.

in which case there's not a great deal of point in engaging you in conversation.

i would encourage anyone reading this to ignore pboyles' contributions with regard to the spread betting industry. he doesn't understand the product in the slightest.

You are rather touchy about this criticism, can I ask if you are by any chance involved with a spreadbetting company?

 

[shortsell]

yes they do pete - but then they suffer funding costs with their underlying brokers on the value of their notional too - without discounting cash on deposit. it's pretty much industry average over here in my experience.