Article What can I make in my first year trading?

eddyjo

Active member
185 3
Why do interesting threads seem to descend into slanging matches between the "Alpha" male ego`s?
 

Roberto

Experienced member
1,069 11
I think it's because a very small minority of rather prejudiced members repeatedly produces "factual statements" that are actually completely untrue. If you correct them for the benefit of others (the only alternative being to leave them standing uncorrected, which clearly does nobody any favours!), they then apparently object to that and make unfounded and incorrect allegations about your motives for doing so, imputing some sort of "agenda" other than simply correcting a mistake. It's a great shame. IMHO the only remedy is to object to their posts every time (as I did to gullible's last one, which I see the Moderator has now very kindly removed), so perhaps the discussion can now continue without any more of that! Let's hope so, anyway.
 

Roberto

Experienced member
1,069 11
gullible said:
Roberto, What makes you think you are right
Gullible,

Any spread-betting firm, if they could really find a customer capable of winning £500,000 would be absolutely overjoyed to have him and keep him. They wouldn't carry that risk themselves, obviously. They can't afford to do that and their shareholders clearly wouldn't allow it. They would front-run him and make at least the same amount for themselves. It's how the industry works.

A suggestion for you: why don't you simply discuss it with Simon Denham (with whom you've discussed other things about spread-betting and always learned something)?

You and I both know that Simon is honest and straightforward and good at answering your questions. I can appreciate that I might have irritated you (and I'm sorry about that, by the way), and I expect that you'll accept explanations more willingly from other people than you will from me. And I don't blame you or criticise you at all for that.

But, to answer your question, I know it from my own experience (no, I haven't won that much yet, but I am now well into my 5th year of making my living this way, so I'm getting on towards it in total as my monthly income actually creeps up a bit each year), and I also know it from the 2 people in the industry I mentioned higher up in the thread, and I also know it from Directors of both the firms where I've spread-bet myself (I'm excluding Simon).

Also, if you'll excuse the comment (and I promise I don't mean this rudely!) I think the overall record around here rather demonstrates that I happen to know a little more about this subject than you do. That doesn't make me a better trader than you; and it doesn't make me cleverer than you; and it doesn't in any way make me a better person than you, so please don't take it personally! I'm sure that there are also hundreds of areas where you know masses more than I do and have loads and loads more experience. But you happen here (as sometimes before) to have expressed (as "fact") an entirely mistaken opinion about the one of the few things that I really do know about, so please humour me and allow me to correct it so that other people don't get misinformed, ok? :)
 

dr_d_michaelson

Junior member
23 3
Roberto said:
Gullible,

Any spread-betting firm, if they could really find a customer capable of winning £500,000 would be absolutely overjoyed to have him and keep him. They wouldn't carry that risk themselves, obviously. They can't afford to do that and their shareholders clearly wouldn't allow it. They would front-run him and make at least the same amount for themselves. It's how the industry works.

A suggestion for you: why don't you simply discuss it with Simon Denham (with whom you've discussed other things about spread-betting and always learned something)?

You and I both know that Simon is honest and straightforward and good at answering your questions. I can appreciate that I might have irritated you (and I'm sorry about that, by the way), and I expect that you'll accept explanations more willingly from other people than you will from me. And I don't blame you or criticise you at all for that.

But, to answer your question, I know it from my own experience (no, I haven't won that much yet, but I am now well into my 5th year of making my living this way, so I'm getting on towards it in total as my monthly income actually creeps up a bit each year), and I also know it from the 2 people in the industry I mentioned higher up in the thread, and I also know it from Directors of both the firms where I've spread-bet myself (I'm excluding Simon).

Also, if you'll excuse the comment (and I promise I don't mean this rudely!) I think the overall record around here rather demonstrates that I happen to know a little more about this subject than you do. That doesn't make me a better trader than you; and it doesn't make me cleverer than you; and it doesn't in any way make me a better person than you, so please don't take it personally! I'm sure that there are also hundreds of areas where you know masses more than I do and have loads and loads more experience. But you happen here (as sometimes before) to have expressed (as "fact") an entirely mistaken opinion about the one of the few things that I really do know about, so please humour me and allow me to correct it so that other people don't get misinformed, ok? :)
Great and informative post, Rob. Also full marks for diplomacy!

Gullible, I've been spreadbetting for longer than Roberto here and unlike him I HAVE won over 500,000 from it, and I totally endorse every word he says. That IS how the industry works. It ISN'T their money they're paying out, not to me and not to Roberto either. And we could do with an expert article in the KLab section to say so, btw. IGIndex and CityIndex regularly pay out five and six figure sums having hedged them and made profits themselves of course. A glance at the FT will also confirm this anyway.

David
 

Tuffty

Well-known member
442 8
Going slightly off topic here but did anyone else see the comment in the week end FT regarding IG Index closing their housing index book for a while towards the end of last year because it had become too onesided. I thought they used a demand push pricing system (i.e. they can't off lay their bets so the price gets pushed if there are too many sellers). My guess is that if they pushed the price down but there still weren't any buyers so their risk got too high (or rather there potential losses may have been to high) so they closed the book for a while. Do they do the same in binaries where it gets too scary for them?
 

Glenn

Experienced member
1,040 118
I think it was the Chairman of IGIndex who a couple of years ago admitted that they didn't lay bets off because it was just too expensive to do. He made a public statement to this effect. (a friend of Gerald Ratner perhaps ?). Effectively they take a view of the market each day and adjust their quotes accordingly in order to minimise damage and maximise profit. That is a summary of what I believe he said.

In fact the only SB company who allegedly hedge their bets is Cantor Index, which accounts for their bigger spreads.

Glenn
 

Roberto

Experienced member
1,069 11
No spread-bet firm needs to hedge _all_ the positions taken with them, because if they can balance their spread flexibly enough, they can try to engineer a situation in which half of the positions on a product hedge the other half, so that they carry no net exposure on that product.

On that particularl product, they then "make their living" from the spread, which is of course paid by winners and losers alike.

In practice, it will rarely if ever work out exactly like that, of course!

To the extent to which they _can't_ do that, they must then decide whether to hedge their "net position".

If the product in question is something like a currency-rate or an index, obviously they can't move the spread about more than a point or two just to avoid hedging, because obviously they can't be too far out of line with all the other spread-bet companies. To do so would create arbitrage potential for the punters every single time it happened.

On the other hand, if the product is a grey market like the one mentioned above, they can't hedge anyway, because there's nothing available to be used as a hedge, so they necessarily carry any net risk themselves. But in these cases they can avoid excessive net exposure either by adjusting the spread or, if necessary, closing the instrument. Some of the bigger companies will do this up to a point. Some of the smaller ones can't take even a smaller risk and they therefore tend not to quote on such "products" precisely because they can't hedge them.

This is all so obvious if you think about it, guys; and it's not exactly "classified information" anyway.

If a successful client suddenly opens a very substantial new position on any hedgeable instrument, depending on which spread-betting firm is involved, that position will either automatically be hedged or automatically be over-hedged.

Again, no secret here, and both the punters and the FSA are happy to know that in any event the funds will always be available to pay out the winning punters (not traditionally a problem, given the extent to which the average punter loses!).

Glenn said:
the only SB company who allegedly hedge their bets is Cantor Index
Sorry, that's mistaken, Glenn. Logic, experience and statements on these boards and in many other places from SB company staff all disprove it.

Why, oh why, does the mechanics of spread-betting always have to be such a contentious issue? Why do people seem to believe so many things about it that are just inaccurate? None of this stuff is information that's remotely difficult to get hold of or verify. Magazines are full of articles about it. They write about it in the Financial Times, in Shares magazine and in loads of other places - articles by perfectly well informed people with all the right experience and connections, interviews with SB company staff, and so on and so forth.

Why, therefore, do people persist with so many erroneous beliefs about it?

Do people really believe that there's some vast media conspiracy to deceive the trading public about the nature of spread-betting?!

It seems supremely ironic that one of the safest, best-regulated, most reliable and least taxable areas of trading can't be discussed without the most extraordinary accusations and imputations of dishonesty, crookery and fraud being made. I've even seen it alleged (once, briefly, in another thread here) that SB firms display different prices on an instrument to clients who are long and short of that instrument! It really is quite, quite bizarre and rather macabre that people can believe such things!
 

rossored

Senior member
2,104 54
dr_d_michaelson said:
And we could do with an expert article in the KLab section to say so, btw.
I believe there is one such article from a SB company in the offing - not sure which.
 

Roberto

Experienced member
1,069 11
axthree said:
Roberto, You know as well as I do that "There's none so blind as those who will not see".
Acknowledged and understood, Bob. But WHY is it always this area where people don't want to see?!

These can't _all_ be people who've done a bit of spread-betting and lost their money through over-trading, excessive position-sizing, trading without an edge and all the reasons traders normally lose?! In fact earlier "discussions" on these points have taught me that some of the protagonists actually have precisely NO experience of spread-betting anyway.

It's only "another trading vehicle" after all - it just happens to be the best-regulated and least taxable one. So where does all the prejudice and misunderstanding come from???!

And why does nobody else want to correct some of this misinformation? Every time I post anything on this subject I get a flurry of supportive PM's from the "silent majority" who clearly know better ... but why do they want to be so silent?! :)
 

Glenn

Experienced member
1,040 118
I'm not taking a particular side here, just stating facts; i.e. summarising what the Chairman said.

However if you think that "Logic, experience and statements on these boards and in many other places from SB company staff all disprove it." then I wish you well. Those items don't disprove anything, they just deny it.

"Magazines are full of articles about it. They write about it in the Financial Times, in Shares magazine and in loads of other places - articles by perfectly well informed people with all the right experience and connections, interviews with SB company staff, and so on and so forth."

Lol - Likewise if you believe everything you read in the press.

Like I say I have no axe to grind but I do get the impression that "the lady doth protest too much" in defense of the SB Co's.
As a customer, why should you care what other people think about SB co's; and to the extent that you get angry and hot under the collar ? Curious imho.

Glenn
 

Col_Stiffler

Junior member
32 2
I for one have been pleased with the direction this thread has taken - thanks a lot guys!

As someone fairly new to SB trading, I had read a few of the "misinformed" comments on various threads regarding the industry, from time to time - enough to worry me about what I could really expect if I were ever to become successful enough to do it full-time.
As Roberto has suggested above, I did ask Simon at CS a direct question on this subject on another thread, and as usual he gave a direct and seemingly very honest reply. I was happy with that, but after reading the above posts by Roberto and "the Dr", I'm even happier now.

Thanks again for taking the time to explain the situation and for being bothered enough to argue it out. This is what the forums are for, I reckon.
 

Roberto

Experienced member
1,069 11
Glenn said:
As a customer, why should you care what other people think about SB co's; and to the extent that you get angry and hot under the collar ?
You're not the first to ask me that, so it must be a fair question, I suppose. :)

I think the main reasons are:-

1. I just don't like seeing so much misinformation;

2. I don't like very opinionated and quite often rude people (NOT meaning you, of course!) with very little factual information being given the same "weight" as polite and well informed people;

3. It genuinely baffles me (as I've just mentioned in a couple of posts here) WHY people are so misinformed about something for which all the "corrective information" is widely available, and every time I wander into these one of these discussions I feel in some sense "determined to get to the bottom of it" but somehow I never do! The "fear of spread-betting" (if that's what it is!) is apparently comparatively widespread and I simply can't understand why, when it's so very well regulated and under-taxed too. :)

4. I find that "sitting out" the discussion completely, which I sometimes do (as you can see from the other thread that's currently running on this subject) doesn't actually satisfy me any better!

To be honest, it also surprises me a bit that apparently one can't correct obvious misinformation on a fairly public forum without being asked "what one's 'agenda' is"! I don't see that happening to anyone writing about any other subject. Do you? :)
 

rossored

Senior member
2,104 54
1lotwonder said:
i guess you must be some trade2win nark or something cos anytime someone questions you the post is removed.
I'm not quite sure what the point of this statement is?

Its quite simple to me. If people (that means anyone) report posts that are offensive, and we agree, then we remove them. Cut-and-dried. There's no agenda with Roberto or anyone else to my knowledge.

Please do not make posts like this - they are unneccersary and cause me and the other mods/admins grief when we really have better things to do than go around putting out silly little fires all the time.
 
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