Where are all the spreadbetting millionaires?

[Splitlink]

More seriously, for the rookie trader who is serious about learning the discipline and mindset necessary for success, direct access offers one opponent - the market. Most will still lose. Spreadbetting offers two opponents - the market, and the spreadbetting company. If you win, they lose.

All tricks can be and are used. Not allowing stop loss points where the punter choses, thus amplifying losses. Denying entry to a trade. Denying exiting a trade. Suspending online dealing. Widening the spread. Moving the spread. Stopping out of loss making positions, despite the underlying market being nowhere near the stated level. Etc, etc.

Spreadbetting companies are no better than the sidestreet bucket shops used by Jessie Livermore in his early days. And despite the nonsense about FSA regulation, they are not accountable to anybody. You have a problem Sir? Sorry, but I am afraid.....

What does surprise me is that you think that other types of investment, or tradng, or gambling are any better.

HBOS, Northern Rock, Leumann Bros, Merrill Lynch. Are they any different from Worldcom, Encon, Madoff?

The fact is, mate, I'm not so much worried about my SB company, as I am about where my capital is, at present. Don't tell me that the British government has taken responsibility for bank accounts when sterling is falling like lead against everything else.

Property investment? Pension funds?

I have held most of my capital in dollars for months but I'm still not happy about the bank it's held in.

I think you need to get your priorities in order.

Split

 

[Pippppin]

It is not exactly difficult to make £1m at spreadbetting if you are a highly skilled trader. It is no different to trading any other platform plus you have the luxury of tax-free profits.

si1503....You sound like the "Ministry run by children for schools and families" who proclaim that education standards in our state schools have never been higher, despite evidence to the contrary. If you can provide some evidence in the public domain of your statement I will take your claim more seriously.

 

[Pippppin]

What does surprise me is that you think that other types of investment, or tradng, or gambling are any better.

I think you need to get your priorities in order.

Split

Splitlink...I think you have misinterpreted my argument. I am not talking about where investments/trades are held, how safe a bank or broker is, or which companies to invest in. I have simply been comparing the mechanics of spreadbetting, with that of trading by direct access, and the tricks and cons perpetrated by the spreadbetting companies.

Let's face it. If more than a few traders were succeeding at spreadbetting, it would soon lose it's tax free status. The cannon fodder who I referred to earlier would also be able to offset trading losses for tax purposes.

 

[Splitlink]

Splitlink...I think you have misinterpreted my argument. I am not talking about where investments/trades are held, how safe a bank or broker is, or which companies to invest in. I have simply been comparing the mechanics of spreadbetting, with that of trading by direct access, and the tricks and cons perpetrated by the spreadbetting companies.

Let's face it. If more than a few traders were succeeding at spreadbetting, it would soon lose it's tax free status. The cannon fodder who I referred to earlier would also be able to offset trading losses for tax purposes.

You are talking about tricks and cons. So am I !

But I think that the tricks and cons perpetrated by the SB companies are small beer because, by being what they are, their reputation should have been questioned by the client before he asked for an account.

As it is, they are bookies aren't they? So their reputation is questionable when compared with such as those that I mentioned, previously. Or should be, in my opinion.

What I would like to learn from you, is what alternative broker do you suggest? Preferably one that is not going to go bust as soon as I have deposited 10,000 quid with them?

 

[anley]

I love these "95% of spread 'betters' fail" quotes...only "2% do this blah blah"...totally unsubstantiated claims based upon urban myth.
There also appears to be a general consensus that SB is 'dirty', 'low rent', not "nice and clean" like direct access... that's boll0x...not paying the revenue a penny of your winnings far outweighs the spread fees involved and the image issues. Making a grand in a week and keeping it, (despite the SB company making perhaps 200 quid out of your efforts) is OK by me...

Actually it's 100% substantiated, but I admit you won't find any official reports published.

I was a broker for over 10 years in margined products, and yes I would say 98% of our clients, including some very large ones, never made a bean overall, although many did have good runs. And we had about 3000 clients come through our door over the same period.

One of my best friends, ie someone I trust states the same thing and he is a long time executive at one of the spread betters.

For anyone to think that the figure is higher than 5% then you're just the kind of client that's going to be welcomed with a big flashy smile by the brokers .

 

[Pippppin]

You are talking about tricks and cons. So am I !

What I would like to learn from you, is what alternative broker do you suggest? Preferably one that is not going to go bust as soon as I have deposited 10,000 quid with them?

Splitlink....good question. For what it is worth my money is with OptionsXpress, and is in USD. But whether they are any safer than any other broker I have no idea. It is probably worth spreading it around several accounts.

Do you think certain brokers are particularly vulnerable? Gold was a great buy towards the end of November at around 750, but it is probably still safe to buy gold bars now, or silver. If Gordon Brown had not sold off Britain's gold reserves for peanuts we would be in a stronger position now to face the next phase...

 

[Splitlink]

Splitlink....good question. For what it is worth my money is with OptionsXpress, and is in USD. But whether they are any safer than any other broker I have no idea. It is probably worth spreading it around several accounts.

Do you think certain brokers are particularly vulnerable? Gold was a great buy towards the end of November at around 750, but it is probably still safe to buy gold bars now, or silver. If Gordon Brown had not sold off Britain's gold reserves for peanuts we would be in a stronger position now to face the next phase...

It's a brave man who will recommend a place to put one's money, these days. Even so, I was with a broker thirty years ago that got hammered. As it happened, my account was protected and was transferred to another broker but would that happen today?

Neither am I going to recommend gold, although it seems as safe anything going at present.

No. Each to his own poison and good trading!

 

[foredog]

Check if the broker is covered by the FSA compensation etc, the make sure your money is treated as CLIENT MONEY (get that in writing) and then it should be covered up to £50k.

NB Check the exact terms for client money etc

 

[Trader333]

Let's face it. If more than a few traders were succeeding at spreadbetting, it would soon lose it's tax free status

Unlikely in my view because then those that lose could offset losses against tax so the net position would be about the same.


Paul

 

[Black Swan]

Actually it's 100% substantiated, but I admit you won't find any official reports published.

I was a broker for over 10 years in margined products, and yes I would say 98% of our clients, including some very large ones, never made a bean overall, although many did have good runs. And we had about 3000 clients come through our door over the same period.

One of my best friends, ie someone I trust states the same thing and he is a long time executive at one of the spread betters.

For anyone to think that the figure is higher than 5% then you're just the kind of client that's going to be welcomed with a big flashy smile by the brokers .

So, you're re-affirming the point that 95% of traders are losers whatever the platform they use, whether or not they use direct access or not...

 

[anley]

Black Swan

Yes, but only with margined products. That's the real killer. The City of London for example is littered with excellent traders, ones that have made millions but then lost it all. They had the skill, knowlegde, street smarts and whatever else you need but the margin got them in the end. Most of them bounce back though.

Remember when thge IRA bombed the Brighton Hotel and nearly got Maggie? Afterwards they (IRA) said 'we didn't get her, but we only have to be lucky once, she has to be lucky all the time'.

And it's the same with margin, you only have to be unlucky once and it can kill you, or at least wipe 50% of your account out in a very short period of time and if that happens most people can't take it anymore.

Want a good real time example? A fella called Mark Shooter of Shooter Fund Management. One of THE best options traders around, made a lot of money, was super smart etc etc. B ut he's now busted out, lost £100's millions when volatility went throught the roof in the summer of 2007.

See, you only have to be unlucky the one time which is why 95%+ lose overtime. But as I said, if you don't use margin then the odds of success are pretty good, as long as you know what you're doing. But then humans are naturally greedy, why settle for 12% a year when with margin I could make 100%+...........

 

[Splitlink]

That is why I always try to persuade would be traders to become spreadbetters first. It seems to be beyond the pale to call oneself a spreadbetter. The point with a brokerage firm is the amount that the trader has to have in the account to start. This amount is an incentive to trade more than he should.

I have been with a broker and lost all of the account. Now, I ask myself, why did I go to a broker in the first place, when I was a novice? Now that I am able to hold my own in the market, I have no desire to go back or, even, look to see if there is a better SB firm around.

That is not to say one cannot lose everything in a SB firm, though. But it does allow one to be a tiddler and grow at a steady rate with a managable margin.

Split

 

[anley]

Yes, SB is a great training ground but only if you risk small amounts of money say £500. Personally I think you can learn far more by blowing £500 over a period of time (say 6 months) than you could ever do by buying a course for £2000+.

The secret though is to LEARN FROM YOUR MISTAKES....

 

[Black Swan]

Yes, SB is a great training ground but only if you risk small amounts of money say £500. Personally I think you can learn far more by blowing £500 over a period of time (say 6 months) than you could ever do by buying a course for £2000+.
The secret though is to LEARN FROM YOUR MISTAKES....

agreed to 1000% (if that is mathematically possible). Liked the points you made earlier in the thread too.

 

[jaet1989]

Black Swan

Yes, but only with margined products. That's the real killer. The City of London for example is littered with excellent traders, ones that have made millions but then lost it all. They had the skill, knowlegde, street smarts and whatever else you need but the margin got them in the end. Most of them bounce back though.

Remember when thge IRA bombed the Brighton Hotel and nearly got Maggie? Afterwards they (IRA) said 'we didn't get her, but we only have to be lucky once, she has to be lucky all the time'.

And it's the same with margin, you only have to be unlucky once and it can kill you, or at least wipe 50% of your account out in a very short period of time and if that happens most people can't take it anymore.

Want a good real time example? A fella called Mark Shooter of Shooter Fund Management. One of THE best options traders around, made a lot of money, was super smart etc etc. B ut he's now busted out, lost £100's millions when volatility went throught the roof in the summer of 2007.

See, you only have to be unlucky the one time which is why 95%+ lose overtime. But as I said, if you don't use margin then the odds of success are pretty good, as long as you know what you're doing. But then humans are naturally greedy, why settle for 12% a year when with margin I could make 100%+...........

This is where stops come in handy...

 

[Splitlink]

Yes, SB is a great training ground but only if you risk small amounts of money say £500. Personally I think you can learn far more by blowing £500 over a period of time (say 6 months) than you could ever do by buying a course for £2000+.

The secret though is to LEARN FROM YOUR MISTAKES....

Provided that the mistakes aren't lethal or, if they are, that you are a doctor

 

[kwickwool]

If you get an account with direct market access you remove all of the third party manipulations that you are talking about. This then means no requotes, no market manipulation at all, just the true market there in all its glory. Never requoted and time of trades <0.5 seconds. Trouble with using normal spread betting firms is that they are never fully offload your trade so if you make money they ultimately lose money. If the market moves against you then your order is completed, market moves with your trade you are requoted. Im not connected at all with any spread betting firm but futures betting with DMA is the only way to trade, especially with volitile times such as lately! gl all.

 

[Splitlink]

If you get an account with direct market access you remove all of the third party manipulations that you are talking about. This then means no requotes, no market manipulation at all, just the true market there in all its glory. Never requoted and time of trades <0.5 seconds. Trouble with using normal spread betting firms is that they are never fully offload your trade so if you make money they ultimately lose money. If the market moves against you then your order is completed, market moves with your trade you are requoted. Im not connected at all with any spread betting firm but futures betting with DMA is the only way to trade, especially with volitile times such as lately! gl all.

Yes, that is a very valid argument and has to be taken into account. There are two sides to every story and one must make up his own mind.

Split

 

[yakatan]

I was following CMC chart on NIKKEI and noticed that it began to dive, then came along one massive bar that went the other way (up). I immediately checked a japanese charts website and saw that there was no such spike going north. I contacted them the next day and was told that those spikes are not tradeable. I believed them until a few days later the same thing happened again.

If they are not obliged to quote you the underlying market price (Finspread calls it Our Price) then there is a severe conflict of interest (this criticism is also made by GNI touch which I think 100% hedges clients positions) and no amount of tight spreads, guaranteed stop losses and tax saving will help your account, these things just mean a slightly slower death.
I think it is a nonsense that the FSA allows SBs to quote their own prices and on top of that allow them to blindside clients by telling them that their prices follow the market. This is exactly like fixing a horse race which is fraudulent and a criminal offense.

 

[montmorencyt2w]

Provided that the mistakes aren't lethal or, if they are, that you are a doctor

...or your middle name is Lazarus.