i have recently noticed that more firms are emerging offering spread betting and betting exchange covering finiancial bets................does anyone believe that in the long term, the stock markets will fall because of this? some investors are now moving to spread betting because of no commission is charged and no duty.
increase in spread betting-lead to long term fall in stock markets
TheBramble
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They're quite independent mechanisms.
The various exchanges are there to exchange stocks, commodities, etc.
SBs are there for punters to bet on the (SB's version of the) underlying instruments' price movement
I've not seen any comparison of the amounts traded in each, but am guessing the exchanges DWARF the collective SBs by a fantastic amount. And they in turn are dwarfed by the enormity of the FX market.
I wont be drawn into a pro- or anti-SB discussion as the SBs have their uses, and there are, I am informed, some very successful SB punters. But your average SB player is very different in terms of longevity, capital base and position size to your average market player.
The various exchanges are there to exchange stocks, commodities, etc.
SBs are there for punters to bet on the (SB's version of the) underlying instruments' price movement
I've not seen any comparison of the amounts traded in each, but am guessing the exchanges DWARF the collective SBs by a fantastic amount. And they in turn are dwarfed by the enormity of the FX market.
I wont be drawn into a pro- or anti-SB discussion as the SBs have their uses, and there are, I am informed, some very successful SB punters. But your average SB player is very different in terms of longevity, capital base and position size to your average market player.
True enough, but that's not the same as hedging all positions. It's only their _net_ exposure on each instrument that they need sometimes to hedge, after all. Many clients' positions are hedged by other clients. To some extent, with many instruments (but not all), that's how and why they adjust the position of their spreads, after all.Robertral said:
Am also guessing, but I still feel absolutely certain this is right!TheBramble said:
Certainly true, but perhaps gradually becoming a little less true every year: successful traders are increasingly switching to the SB route as CGT becomes more and more of an issue to them (i.e. as they become more stable and successful). A very small minority, certainly, but still these days a significant number of people.TheBramble said:
I don't blame you for not wanting to get into a discussion of the merits of SB, because the reality is that people will attack you if you do.
Every single time the subject comes up on these boards, I get at least a couple of PM's from people here (some of them long-standing members who have never posted at all) saying that they're planning to switch to SB now that they're making a steady living, and asking for various bits of information. This happens often enough for me to think that it doesn't _only_ happen here, among t2w members.
I suspect that it may be more of a common position (exactly as it was for me about 3 years ago) than one would imagine. These people, I suspect, are not so different from your "average market player" because many of them _are_ in fact your "average market player".
But obviously, as with any form of trading, there are also far more people who are losing money than winning it.
dr_d_michaelson
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I'm not at all surprised. Spreadbet firms are increasingly wary of "new customers" who are actually sophisticated and profitable traders opening new accounts with six-figure deposits and winning consistently. Of course they hedge these people on sight, and rapidly learn to over-hedge them. I think it's at City Index that such people have jokingly become known as "tax exiles".Roberto said:
The point is that the increase in spread-betting at the moment includes quite a few people switching for tax purposes, exactly as alluded to above. A proportion of the UK survivors and successes in trading gradually gravitate to SB for the obvious reason. This has also caused an increase in hedging by SB companies.
But returning to the title of the thread, I can see no possible reason why any of this should contribute to a fall in any stock markets. Equities are going to have enough trouble this year without needing to worry about that on top of everything else.
David
the blades
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TheBramble said:I've not seen any comparison of the amounts traded in each, but am guessing the exchanges DWARF the collective SBs by a fantastic amount. And they in turn are dwarfed by the enormity of the FX market.
QUOTE]
I'm fairly sure you're right here, Tony. But isn't it true that a very large slice of the pot is now through CFD's - so the question of the effects on the volume of derivatives on the "real" market is an interesting one for me.
But as ususal, I don't have the answer!......
UTB
the blades
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Roberto said:I habitually get shot down in flames for saying less.
yes, but I'VE got less stars than YOU have........
UTB
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Don't Believe it
I have been about long enough to have heard first the 'screen jockeys' (us guys) then derivatives being blamed for market crashes. At worst at times of uncertainty SB's and the other usual suspects increase volatility. More people can act simultaneously precipitating a crash which also brings forwards the time of the inevitable bounce when a move is overdone, hence increased vols.
Overvaluation moves market downwards, in balanced markets, views by traders are unlikely to be unanimous and therefore will broadly never be to one sided.
George Soros never broke the Pound overvaluation did he was just the biggest recognizer of the fact and decided he would shove the 'cliff edge dancing lunatic' (ie £ at the time) over the edge before someone else did. The fact that GBP was placed in the precarious situation was brought about by a fundamental overvaluation at the time. Soros may have been responsible for the acceleration of the move in a short time frame, where if unnoticed it may have been allowed to drift down more serenely.
People can expect the usual suspects being trotted out ie. program trading in the US last time as stops were triggered in '87, everytime there is a postmortem on a crash in an underlying asset, usually howvere value orientated assesment will later conclude it couldn't have happened unless there was not an existing market anomaly in existence to start, other wise value funds would be buying up the cheap stuff.
In short - We don't kill we just like to add to the violence when the decision has already been made
Tuffty said:
I have been about long enough to have heard first the 'screen jockeys' (us guys) then derivatives being blamed for market crashes. At worst at times of uncertainty SB's and the other usual suspects increase volatility. More people can act simultaneously precipitating a crash which also brings forwards the time of the inevitable bounce when a move is overdone, hence increased vols.
Overvaluation moves market downwards, in balanced markets, views by traders are unlikely to be unanimous and therefore will broadly never be to one sided.
George Soros never broke the Pound overvaluation did he was just the biggest recognizer of the fact and decided he would shove the 'cliff edge dancing lunatic' (ie £ at the time) over the edge before someone else did. The fact that GBP was placed in the precarious situation was brought about by a fundamental overvaluation at the time. Soros may have been responsible for the acceleration of the move in a short time frame, where if unnoticed it may have been allowed to drift down more serenely.
People can expect the usual suspects being trotted out ie. program trading in the US last time as stops were triggered in '87, everytime there is a postmortem on a crash in an underlying asset, usually howvere value orientated assesment will later conclude it couldn't have happened unless there was not an existing market anomaly in existence to start, other wise value funds would be buying up the cheap stuff.
In short - We don't kill we just like to add to the violence when the decision has already been made
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