Using my system with spread betting

[bikhod]

Hi

I am a swing trader in the cash market and the essence of my system is to go long when there is a pull back to the EMA8 (as long as EMA8 > EMA21 + other factors) [reverse rules for shorting). This system has worked nicely for me in US, which is where I trade.

I want to try spread betting, mainly for the tax reasons. Being new to spread betting, I am not sure whether my system will work as well as the prices are different and there is no volume data (something on rely on very heavily).

I'd appreciate any advice from spread betting gurus!

Thanks
Bikhod

 

[damianoakley]

Hi bikhod,

I would say that you should exercise some caution if you've been used to dealing in the cash market and are now considering spread betting.

With spread betting, you are going to find potentially wider spreads and price spikes which you won't be seeing in your current cash trading. I am not trying to negative about spread betting, but you could find that your tax advantage is cancelled out by the disadvantages of trading with a spread betting company.

Remember that when spread betting you are not trading the true market like you have been used to - you will be trading a derivative of the underlying market.


Thanks

Damian

 

[bikhod]

Hi Damian

Thanks for your reply.

Your comments are reflect what is going through my mind. As they say, when something appears to be too good (i.e. no tax) then it probably has a catch.

I actually doing 90% of my trading in the US using optionsXpress and Etrade and I am used to very tight spreads etc.

I can't quite put my finger on why something keep telling me give spread betting a miss - even though it just seems so attractive!

 

[bikhod]

Damian

Forgot - what is the closest to spread betting in the US? Is it trading futures / eminis?

Regards
Bikhod

 

[damianoakley]

Hi bikhod,

Personally, I would never trade anything else other than the actual market. I like to be able to trade exactly what I see and not someone else's version of it.

I would say that the closest thing to a "bet" in the U.S. would be Options, but again these need caution as they can be a loser's bet if you get some key things wrong when trading them.


Thanks

Damian

 

[nodga2000]

There's been a great deal of bad and good things said about SB on these threads, but their prices should reflect the underlying asset. As Damian says, it is a derivative product, so if they are not following the underlying you should ask them why!

Quick run down of the major players:

IG the oldest and biggest;
CMC generally the tigher spreads;
Finspreads best for the newbie.

Hope this helps! Good luck

Hi Damian

Thanks for your reply.

Your comments are reflect what is going through my mind. As they say, when something appears to be too good (i.e. no tax) then it probably has a catch.

I actually doing 90% of my trading in the US using optionsXpress and Etrade and I am used to very tight spreads etc.

I can't quite put my finger on why something keep telling me give spread betting a miss - even though it just seems so attractive!

 

[mburdge]

Damian

Forgot - what is the closest to spread betting in the US? Is it trading futures / eminis?

Regards
Bikhod

Hi Bighod,

I run a spread betting platform and a normal broker platform along side each oter 24/7.

The prices are always within a pip (2 at the most ) of each other, and there are no other strange spikes or problems with spread betting. (I have been doing it for 4+ years)

I have not experienced any disadvantages or problems in that time with my spread bet account.

What your trying to do should work fine. Use your existing data sources as normal, but place the trades through spread bet and pay no tax.

 

[roguetrader]

One presumes you are consistantly making in excess of £8500 a year, it would be interesting to see how you get along with the spreadbetting companies.

 

[the blades]

What your trying to do should work fine. Use your existing data sources as normal, but place the trades through spread bet and pay no tax.

Exactly - the product is a derivative - it's derived from the underlying in a calculable way. I trade through SB platforms (IG, CMC, Fins) and Directly (Interactive Brokers). Don't be put off by some of the myths about spreadbetting.

However, if you trade US stocks, you might not find the coverage you're after outside IG index and the spreads wont come near IB's.

UTB

 

[bikhod]

Based on the mixed oppinions sounds like the best course of action for me is to give SB a try with a small size first.

I average ~ 2% / month gain - I'll soon know if SB is dragging my average down!

Thanks to everyone for your comments.