How do spreadbetting companies acutally work?

[bortha]

Hi everyone,
Am new to this site, but enjoying some great comments from some obviously experienced people.
Have been spreadbetting for 6 months. Mainly forex, GBP/USD. Studied hard and now really pleased that I'm almost breaking even on a regular basis!
Sorry this is such a basic question and may have been asked before but I'd like to know how the spreadbetting companies actually operate.
I understand they profit from the spread but what actually happens when I make a bet? Do they lay it off, like the bookies? If I win, who actually is it that Im taking the money from? (and, more usually, who am I giving it to?)
Andy
Gone long Gone Short Gone fishing At least I caught some fish
PS Can some one please tell me how to work the text editor?

 

[bortha]

How sad is this???? Replying to my own question....just to see if I've cracked the text editor. This should be in blue if I have.
Me

 

[Tenapenny]

Hi everyone,
Am new to this site, but enjoying some great comments from some obviously experienced people.
Have been spreadbetting for 6 months. Mainly forex, GBP/USD. Studied hard and now really pleased that I'm almost breaking even on a regular basis!
Sorry this is such a basic question and may have been asked before but I'd like to know how the spreadbetting companies actually operate.
I understand they profit from the spread but what actually happens when I make a bet? Do they lay it off, like the bookies? If I win, who actually is it that Im taking the money from? (and, more usually, who am I giving it to?)
Andy
Gone long Gone Short Gone fishing At least I caught some fish
PS Can some one please tell me how to work the text editor?

Most people spreadbetting haven't got a clue what they are really doing, which is why 90% or more are losers over time. Most of your winnings come from these people who enter a trade for whatever reason yet have no exit strategy.Hope you will be one of the winners.

Can't help with the text editor I'm afraid. Bit of a technophobe.

 

[barjon]

bortha,

They lay off big bets and their net exposure for the remainder. Don't worry who you take the money from - just be pleased to get it

good trading

jon

 

[jamescummins]

Just to paraphrase what has already been said, spreadbetter earn money of the spread. By this, I mean they use the fact that they have a fairly constant flow of orders, for both buy and sells, and they always sell for a bit more than they buy at any given point. It is this market making (just means they will always buy and sell, and will quote a two way price) that they rely on, they are not in the business of taking a view either way. (They almost certainly do this as well, but that is down to the traders there, not their business model as such).
If you place a really big order, and they dont have enough volume on the other side, then they will hedge this in the markets themselves. So if you buy a billion USD/EUR of them, and they dont have enough sellers to match, they will go and buy in the interbank market to remain market neutral.

Hope that is of some microscopic use!!

 

[Lee Shepherd]

Have a read of 'The spreadbetting handbook' by Malcolm Pryor.

Just as jamescummins has mentioned.

It explains in full as to how they make money and also goes out of its way to expel some of the many myths out there about them.

Same as barjon has also mentioned, dont worry who you take the money off. If you go direct access you buy a contract that someone down the line will eventually lose on.
Dont feel bad about taking someone else's losses. Remember, if you get a job for a firm, someone else didn't.
It's all part of the game of life. Enjoy.

 

[globaltrdr]

Will Spread Betting Ever Become Successful In The U.s?

spread betting is growing everywhere but the U.S. why is that?:?::?:

 

[mb325]

I believe it's illegal to spreadbet (or even open a live account) in most US states. If they can't figure out how to tax it, they won't let you do it

 

[Tenapenny]

I believe it's illegal to spreadbet (or even open a live account) in most US states. If they can't figure out how to tax it, they won't let you do it

The land of the free??

 

[beebop]

The land of the free??

See what they did to pokersites....same sort of idea......