new_trader
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Tubbs said:
No
No
Directional
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vergis92 said:
remember that with an SB firm you are not trading on the "real" underlying market - you're trading on the SB firms artificial bet market. So when you "buy" from an SB firm, the SB firm is "selling" to you... so you're long and they are short.
your example of the SB firm making £105 if you win or losing £95 if you lose would only be accurate if the SB firm actively hedged every single trade into the market you are betting on... so if the SB firm was market neutral at all times they would only make money from the difference between the spread they charged you and the underlying market price they hedged against.
But they dont hedge, because 95% of traders lose money - probably an even larger percentage of spread betters lose money since only a percentage of succesful traders would risk the perils of trading with a non-direct-access SB firm.
why hedge a trade if you know you have a fair chance of making much more money from the unhedged trade?
besides, many trade bet sizes are in unhedgeable increments, plus many spreadbets are on unhedgeable markets, like the daily dow, etc - bets on the cash indices are on unhedgeable markets since you cannot trade on the cash index in the "real market" world.
Olipro
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I believe you'll find that the firm is a lot cleverer than you may think.
If you're going short, and you win, in all likelihood, the "loss" the SB firm allegedly encounters in fact is simply negated by the overall position held by its clients meaning that in reality, rather than taking money off the firm, you're taking it off another trader who's against you.
Generally speaking, it's a lot smarter to run a business based on taking price differences between what your clients pay as a way of making money as opposed to "betting" that most of your clients will lose and enable you to win overall, not to mention that of course, if you make $1000 in a trade, you might have bought cheap off some guy selling and then sell it to another guy later on, and of course, it's still possible for both those people you dealt (anonymously) with in your SB to have profitted too, although some market hedging on the part of the firm would have been necessary, but either way, CFDs and SB bookmaking is a business not a game of odds against clients, after all, betting that your clients will destroy themselves means you're going to need some new ones sooner or later to keep your cash flow up, or ultimately implode.
Personally, I trade CFDs rather than SB and I'm extremely happy with it; whoever I'm taking money from, be it another trader, or indeed the firm, I have had no issues with them whatsoever.
If you're going short, and you win, in all likelihood, the "loss" the SB firm allegedly encounters in fact is simply negated by the overall position held by its clients meaning that in reality, rather than taking money off the firm, you're taking it off another trader who's against you.
Generally speaking, it's a lot smarter to run a business based on taking price differences between what your clients pay as a way of making money as opposed to "betting" that most of your clients will lose and enable you to win overall, not to mention that of course, if you make $1000 in a trade, you might have bought cheap off some guy selling and then sell it to another guy later on, and of course, it's still possible for both those people you dealt (anonymously) with in your SB to have profitted too, although some market hedging on the part of the firm would have been necessary, but either way, CFDs and SB bookmaking is a business not a game of odds against clients, after all, betting that your clients will destroy themselves means you're going to need some new ones sooner or later to keep your cash flow up, or ultimately implode.
Personally, I trade CFDs rather than SB and I'm extremely happy with it; whoever I'm taking money from, be it another trader, or indeed the firm, I have had no issues with them whatsoever.
CityTrader
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Arbitrageur said:
Wrong. The SB firms devide their punters into 2 basic categories. The joe punters who constitute 95% of their client base, who regularly lose money. These guys bet over the internet, they come and they go. And then the larger SB firms have the clients who either by virtue of their "luck" or their " size" , the SB firms will never take a naked position against them- i.e everything is automatically hedged.
SB firms pay gaming tax on the amount of money WON from punters- the reasoning being that the more the punters lose, the more the bookie wins - thus the bookies want the larger ( lucky/sizey) punters to win, as every bet is hedged, and they ( the bookies) dont pay gaming tax on these bets.
CT
CityTrader
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Tubbs said:
Who???? In 30 years in The City I have never heard of him. nor has any of the handful of mates also from the City who i've asked. Sorry!
Directional
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CityTrader said:
interesting. thanks for clarifying. As you also point out, the OP is still incorrect in thinking that the SB is position neutral and only profits from the spread. in the majority of cases the SB firm will be trading the other side against the punters position as MM
CityTrader said:
You have a good point, Thanks for the explanation,
From a phychological point of view I prefer to think of myself as being a 'Speculator' or investor
in a global entity where everything is related to the market and then the real world out there.
rather than a gambler in a one to one winner/loser closed loop game,
i.e. It makes you feel better if you make £1,000 at the expense of a million people
rather than at the expense of one or two...
this way no one can argue that successful trading is an unethical job since many
other professions make money at the expense of others in a similar fashion, property investors etc.
i got so good as spred betting last year that ig asked me to a corp day offering me a day at the races or car racing at brand hatch..me thinks they wanted more from me than i wanted from them??
who on hear has heard of the great spread betters who in the end get offered jobs up in the city because they get so good?
who on hear has heard of the great spread betters who in the end get offered jobs up in the city because they get so good?
Jack o'Clubs
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LOL. You don't think that invite was because you're giving them £1000/trade, less the half pip spread and a nominal comm it costs them to hedge your position?taba said:
Directional
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taba said:
holy moly! thats like trading 100cts in the futures... if you're for real, do you know how much you would save yourself in spread if you were trading with a direct-market-access SB firm?
I'm always astonished that so many guys who genuinely trade half-decent size with SB dont seem to spend much time investigating the more "professional" routes to execute their trades.
Directional
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i seem to end up pimping TWF quite a bit recently - theres a FTSE spread savings calculator here where you can put in the number of trades you are doing and the spread at your current SB, and see if you could save using DMA SB
http://www.twowayfutures.com/FTSE-spread-betting-savings-calculator.htm
http://www.twowayfutures.com/FTSE-spread-betting-savings-calculator.htm
Whats better between TWF and Worldspreads if I'm looking to trade DOW (mostly)
and the Cable?
In terms of:
1. Spread
2. Stability of platform
3. Min deposit required
4. Ease of funds transfer (deposit / withdrawal)
5. FSA regulated?
6. Tax implications on TWF? (or is it considered as betting anyway?)
Cheers,
Karmit
and the Cable?
In terms of:
1. Spread
2. Stability of platform
3. Min deposit required
4. Ease of funds transfer (deposit / withdrawal)
5. FSA regulated?
6. Tax implications on TWF? (or is it considered as betting anyway?)
Cheers,
Karmit
Jack o'Clubs
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For TWF:karmit said:
1. Market spread + volume related commission built into the spread you trade. Rate card is on their website.
2. Fine, although apparently due for a big upgrade. Only problem I've found is that it's not open all the hours that the exchanges are open.
3. £5k I think. Margins are then as per the futures exchanges, more or less.
4. Fine - UK bank account.
5. No, Gibraltar based.
6. No tax, structured as a 'bet'.
Someone else can answer for Worldspreads, as I have no experience of them.
new_trader
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taba said:
Amazing, you are so good at trading yet you only know about spread betting firms...
JTrader
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Only the individual spreadbetting firm can really answer that question.
Some spreadbetting firms are definately better than others.
Having read other members comments, i would not dream of going near finspreads.
The best spreadbet firms I have had extended contact with are definately WorldSpreads and Twowayfutures/Futuresbetting. Besides having the best spreads in the markets I am interested in, both of these companies have good customer service staff who seem to speak openly, honestly, helpfully and in a non-hostile way.
Some spreadbetting firms are definately better than others.
Having read other members comments, i would not dream of going near finspreads.
The best spreadbet firms I have had extended contact with are definately WorldSpreads and Twowayfutures/Futuresbetting. Besides having the best spreads in the markets I am interested in, both of these companies have good customer service staff who seem to speak openly, honestly, helpfully and in a non-hostile way.
Last edited:
For me spreadbetting = spread + betting.
Spread = the price you pay for your stake. Your contribution to the jackpot
Betting = casinos, fruit machines , etc ....so that means that the spreadbetter expect to pay a % of their jackpot to the customer while they keep the rest for themselves as a profit. So they expect you to win sometimes but overall to loose. Or if you are a winner, your profits can not be greater than the "jackpot".
A spreadbetter is not a market maker, ie a company that matches offer and demand on behalf of their customers. So even though spreadbetters and market makers might seem to do the same kind of business, behind the scenes their business is different.
Spread = the price you pay for your stake. Your contribution to the jackpot
Betting = casinos, fruit machines , etc ....so that means that the spreadbetter expect to pay a % of their jackpot to the customer while they keep the rest for themselves as a profit. So they expect you to win sometimes but overall to loose. Or if you are a winner, your profits can not be greater than the "jackpot".
A spreadbetter is not a market maker, ie a company that matches offer and demand on behalf of their customers. So even though spreadbetters and market makers might seem to do the same kind of business, behind the scenes their business is different.