Is Spread Betting a worthwhile means of trading?

[montmorencyt2w]

Is Spread Betting a worthwhile means of trading?

1) Yes
2) No
3) Don't know
4) Other comment (please add comment)



[gosh, these polls are addictive aren't they...?]

[I have put a time limit of 365 days on this poll]

 

[arabianights]

Only in a few circumstances where it makes sense

 

[Rossini]

With spread betting you have two options.

1. Trade a long TF and fills/delays matter very little.
2. Be prepared to have yourself put on 'dealer fill' and have to constantly move accounts to get around the problem.

 

[arabianights]

There are other cunning tricks you can do with spread betting.

For example - when a contract is limit up or limit down, you can get into it knowing you can get out... this essentially is giving you a very cheap option on it reversing, as all you'll pay is the spread. Similarly if it is reamining at limit high/low at the end of the day when you get out you can further more put on a position that is the opposite, on the basis that trend will surely continue through to the next day.

 

[Rossini]

good points.

 

[Black Swan]

of course it is...

On longer term Tfs, 2hrs + there is a very good argument to be had over and above using dma. A lot of our American *cousins* are green with envy re. its non tax advantages (and I'm not going to get into that one, it's free of tax endex).
Agree with Ross, if trying to scalp/operate of 3-5min TFs and you're put on dealer fill then treat it as a badge of honour and move on to dma..You then have no option, but you're safe in the knowledge that you have the knowledge..

 

[shadowninja]

Re: of course it is...

a badge of honour

Like it.

 

[meanreversion]

I've had an account with IG for a while, and traded mainly FX on that. More recently I opened an account with Interactive and started trading futures in FX and commodities.. spreads are significantly tighter in commodities there.

Spread betting is fine for a medium term system but beware that you do get charged overnight roll charge.. in FX this amounts to 2 pct/year. This of course does not apply to futures.

 

[Shanghai]

SB does allow you trade trade FTSE shares without having to pay 0.5% tax on each transaction. That can be a significant advantage.

 

[donaldduke]

Jesse Livermore made a killing in the bucket shops 120 year ago.. those same opportunities are still available to-day, in the UK at least.

He turned $10 into $10,000 back then.

I know that you can still turn just £100 to £100K, over a few years, using a good spread bet firm today

 

[meanreversion]

You can't turn £100 into £100k in a few years, it's not going to happen. You're as likely to win the £1mio prize with £5,000 of premium bonds.

Of course SOMEONE has done it, but this kind of return is not realistic and leads to excessive risk taking (on which the spreadbet firms thrive).

 

[arabianights]

Why on earth shouldn't you take "excessive risks" with £100?

Most of my spread betting accounts I blow up eventually, but I'm still up on them due to the few that I haven't... and I never seed em with any proper amount of money.

 

[Ambrose Ackroyd]

If you can make money by trading via spread betting ( and plenty do ), then it is a worthwhile means of trading, especially as profits are free of tax.

 

[arabianights]

Unless there's a significant opportunity cost... I'm sure I could make worthwhile money spread betting, but then I wouldn't be able to trade properly...

 

[meanreversion]

Let's say you risk £30 on your first trade, with your £100 account. That is excessive, 30 pct of an account on one trade is obviously too much.

Now, if that £30 is lost and then simply replenished from salary (eventually many times over), it's not really turning £100 into £100k is it?

 

[donaldduke]

You can't turn £100 into £100k in a few years, it's not going to happen. You're as likely to win the £1mio prize with £5,000 of premium bonds.

Of course SOMEONE has done it, but this kind of return is not realistic and leads to excessive risk taking (on which the spreadbet firms thrive).

its not that hard, you just need a good edge and they will give you all the leverage you need.

 

[meanreversion]

Earning 100,000 pct return in a few years is "not that hard"? Sure..

 

[Splitlink]

If you can make money by trading via spread betting ( and plenty do ), then it is a worthwhile means of trading, especially as profits are free of tax.

You took the words out of my mouth.

I wonder if it will become part of the new government's ways of getting money?

 

[meanreversion]

You took the words out of my mouth.

I wonder if it will become part of the new government's ways of getting money?

I don't think so. I think the punting community as a whole is either flat or down money when betting. However, the betting companies pay tax to the government, so it's in the government's interest to encourage betting by making it tax free.

 

[arabianights]

I saw an idea posted somewhere that I thought was rather interesting; essentially spread betting companies should offer unleveraged spread bets on unit trusts etc as a way of doing tax free investing...