timsk
Legendary member
- Messages
- 8,727
- Likes
- 3,424
Hi Bakez,
An interesting question!
In theory, I think you're right, although the best person to talk to is your SB rep'. I'm not sure what happens to the spread if the price waterfalls down to 1p or so. I imagine that the SB company wouldn't give a quote and/or have a cut off point for all open trades - but I'm only guessing.
Tim.
PS. Generally speaking, the answer to the question in the thread title is that most people lose. On the risk spectrum, penny shares are as risky as a very risky risky thing - unless you know something that others don't.
An interesting question!
In theory, I think you're right, although the best person to talk to is your SB rep'. I'm not sure what happens to the spread if the price waterfalls down to 1p or so. I imagine that the SB company wouldn't give a quote and/or have a cut off point for all open trades - but I'm only guessing.
Tim.
PS. Generally speaking, the answer to the question in the thread title is that most people lose. On the risk spectrum, penny shares are as risky as a very risky risky thing - unless you know something that others don't.
Luminox
Junior member
- Messages
- 44
- Likes
- 2
The spread is usually less than double the bid/offer.
Yes - too much!
Luminox
Junior member
- Messages
- 44
- Likes
- 2
tar
Legendary member
- Messages
- 10,443
- Likes
- 1,314
I don't understand the OP's question , yes you wont lose more than "150 pounds + rollovers and commissions" ...
Thanks. My colleague is chancing his luck on spread betting penny shares and it just sounded too good to be true. he says that a 10k per point bet on a 0.07p share has a maximum loss of £700 + spread,etc.
yet if by the off-chance the share rises 1p, he'll make 10k!
It just seemed like the SB providers would not allow such upside with such a lowside risk.
Is he correct?
Yeah. some based on market cap.
tar
Legendary member
- Messages
- 10,443
- Likes
- 1,314
What are the chances for a 0.07 stock to rise 15 folds to 1p ? yes it happens but not that often , its ok to bet on such shares with a SB firm , they know what they are doing : they may hedge big bets on such shares , plus they earn from daily rollovers and from Bid/Ask wide spreads , for example at Spreadex Oxus Gold is at 1.81/2.18 but Forte Energy is at 0.32/0.36 and Range Resources is at 1.2/1.25 however Baron Oil is at 1.39/1.61 ...
Last edited:
L
Liquid validity
I would, especially with SB - prone to go phone only a lot due to
lack of liquidity, that and wide spreads (up to 25% spread in some cases).
Maybe for the odd swing trade punt on something that looks interesting,
otherwise I'd leave them well alone.
Lax rules on AIM reporting and general lack of transparency are other reasons
to steer clear.
lucas_king
Member
- Messages
- 96
- Likes
- 3
It depends on how many ‘ticks’ that spread betting provider considers per point.
If they have it as 15p > 16p > 17p etc then yes, 15 points x £10 = £150 loss.
If they have it as 15.1, 15.2, 15.3p as their increments for example, you would then make or lose £10 for every 0.1p it moves, losing £1,500 if it drops to £0.