I think you have all missed one cruical point.leverage If you trade the YM its usaly $1200, you may get $500 if you doing size,if you can hadle 100 lots a week.
Exaple,1,Buy the dow future 20 pound a point,with a 50 point stop.Now this is where spreadbetting comes in to play,if you are a postion trader. Margin would cost you 1000 pounds,now if you where to trade with IB or others.you would pay $8400.in UK pounds about 4665 pounds.
Most lose S/B BECUSE THEY TAKE ADVATAGE OF THE MARGIN. The small guy with a 1000 pound account can place up to 10 pound a point on the Dow with no stop.and the market only got to move 100 points away, like today the Dow is down over 100 points and he be out of the game.in a matter of one day trading,this is why most lose.at S/B
Exaple 2,No. A futures broker is an agency broker on to the exchange, so your really operating in the big boys?.Subject of guaranteed stops, theres no such thing With future broker. . I think that people should probably drill down into the overall costing and see whether there better off with a guaranteed stop or an on-exchange stop over a long period of time. If you are holding over night.
Example 3, Trading the Dax,the small guy can trade this for as little as 1.00 pound a point,but with real brokerage I think im not sure I don't trade it, about 10 pound a point.
Further more I would go on and say S/B is best one on holding for 1 to 3 days, or if you going to trade intraday no more than 2 bets, and find S/B Firm that will offer you screen price. For you stops not they quote. I know Dff don't add they spread if you stopped out.
S/B got its advantages and disadvantages. And by the way Im not supporting S/B. It's a choice one got to make.for ones self. For day trades I use a future broker. But I can make money intraday from spread betting, because I always sell in to strength and buy in to weakness, so they quote price works in my favour. So for those who say S/B is for fools, I say these people are ignorant
CJ
Exaple,1,Buy the dow future 20 pound a point,with a 50 point stop.Now this is where spreadbetting comes in to play,if you are a postion trader. Margin would cost you 1000 pounds,now if you where to trade with IB or others.you would pay $8400.in UK pounds about 4665 pounds.
Most lose S/B BECUSE THEY TAKE ADVATAGE OF THE MARGIN. The small guy with a 1000 pound account can place up to 10 pound a point on the Dow with no stop.and the market only got to move 100 points away, like today the Dow is down over 100 points and he be out of the game.in a matter of one day trading,this is why most lose.at S/B
Exaple 2,No. A futures broker is an agency broker on to the exchange, so your really operating in the big boys?.Subject of guaranteed stops, theres no such thing With future broker. . I think that people should probably drill down into the overall costing and see whether there better off with a guaranteed stop or an on-exchange stop over a long period of time. If you are holding over night.
Example 3, Trading the Dax,the small guy can trade this for as little as 1.00 pound a point,but with real brokerage I think im not sure I don't trade it, about 10 pound a point.
Further more I would go on and say S/B is best one on holding for 1 to 3 days, or if you going to trade intraday no more than 2 bets, and find S/B Firm that will offer you screen price. For you stops not they quote. I know Dff don't add they spread if you stopped out.
S/B got its advantages and disadvantages. And by the way Im not supporting S/B. It's a choice one got to make.for ones self. For day trades I use a future broker. But I can make money intraday from spread betting, because I always sell in to strength and buy in to weakness, so they quote price works in my favour. So for those who say S/B is for fools, I say these people are ignorant
CJ
bbmac
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These posts on spread betting absolutely amaze me. As some-one has already posted in this thread, the relative merits re tax etc of using a spread betting co. for your trading have been well covered and discussed elsewhere on this board and many other places.
Whilst I accept that SB companies are in effect bookmakers, and do play some 'dirty tricks ' in relation to their manipulation of price, but overall their instument prices have to resemble the underlying market prices. I'm not going to go into exactly the edge that I use to profit at SB, as it would soon dissappear, but the starting point is to find the instument (s) with the least ersosion, ie the smallest spread as a % of the instrument's average daily range. Secondly you have to understand how spread betting companies work and what they are likely to do with price in certain market conditions, and how to protect yourself accordingly such as knowing where to place your stops to give you the best chance of them not being hit for example... This only comes from hour upon hour, day after day of studying what they do with their bid/offer during certain market conditions. Armed with this knowledge, you then need a tried and tested trading plan that can cope with all market conditions, ie both ranging and trending ....In my case an integrated strategy based on sound technical analysis and with an eye to the overall geopoloitical and economic/other fundamental factors affecting your chosen insrtumenet generally and specifically intraday.
As for the point made that it is even harder to make money using SB intraday, again I absolutely dispute this, and know of succefull consistently profitable daytraders who SB.
Of course there will come a point that you notice that your fills aren't as tight, and that you are getting requotes a little too often etc, which is probably the SB telling you that they don't want you any more...they may even offer you just manual execution etc...in which case it will be necessary to fid an alternative 'trading vehicle.' In the market that I trade..forex, even the brokers are in effect bookmakers but offer the ability for larger overall position sizes, but again, the same knowledge above applies.
enough said.
Whilst I accept that SB companies are in effect bookmakers, and do play some 'dirty tricks ' in relation to their manipulation of price, but overall their instument prices have to resemble the underlying market prices. I'm not going to go into exactly the edge that I use to profit at SB, as it would soon dissappear, but the starting point is to find the instument (s) with the least ersosion, ie the smallest spread as a % of the instrument's average daily range. Secondly you have to understand how spread betting companies work and what they are likely to do with price in certain market conditions, and how to protect yourself accordingly such as knowing where to place your stops to give you the best chance of them not being hit for example... This only comes from hour upon hour, day after day of studying what they do with their bid/offer during certain market conditions. Armed with this knowledge, you then need a tried and tested trading plan that can cope with all market conditions, ie both ranging and trending ....In my case an integrated strategy based on sound technical analysis and with an eye to the overall geopoloitical and economic/other fundamental factors affecting your chosen insrtumenet generally and specifically intraday.
As for the point made that it is even harder to make money using SB intraday, again I absolutely dispute this, and know of succefull consistently profitable daytraders who SB.
Of course there will come a point that you notice that your fills aren't as tight, and that you are getting requotes a little too often etc, which is probably the SB telling you that they don't want you any more...they may even offer you just manual execution etc...in which case it will be necessary to fid an alternative 'trading vehicle.' In the market that I trade..forex, even the brokers are in effect bookmakers but offer the ability for larger overall position sizes, but again, the same knowledge above applies.
enough said.
As identified above...leaverage has a lot to answer for, but I would expand on that and say too much in the pot (leaveraged or otherwise) combined with too little knowledge seems to be the worst combination particularly if combined with personal circumstances that lean towards a necessity to generate funds to live off...that combination would seem to push people too far too fast before they have the knowledge required to win consistently.....I read somewhere if you can stick around long enough you will probably move into a winning position,but of course you can't do that if you exhaust your pot...
any 1 who spread bets and doesnt think they are gambling is in denial. their egos will not let them admit what they are doing BIG PROBLEM
i will admit that there are professional gamblers and it is possible to make money on a consistent basis by gambling - but u must admit what u r doing b 4 u can understand what u r doing to do this. the odds of doing this and being successful at gambling are even smaller than trading though so why bother
bbmac is the only 1 here who has put forward any explanation as to why/how he goes abot doing what he does - so probably has the most understanding and more likely to get anywhere
as 4 leverage - unless u know what u r doing backwards - your better off without it.
i will admit that there are professional gamblers and it is possible to make money on a consistent basis by gambling - but u must admit what u r doing b 4 u can understand what u r doing to do this. the odds of doing this and being successful at gambling are even smaller than trading though so why bother
bbmac is the only 1 here who has put forward any explanation as to why/how he goes abot doing what he does - so probably has the most understanding and more likely to get anywhere
as 4 leverage - unless u know what u r doing backwards - your better off without it.
bbmac
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thirteen: I entirely disagree, the premise of your and other's argument is that if you trade through a broker/marketmaker then you are gambling. The simple truth of the matter is that using a retail broker for any type of trading is just very convenient, and has opened up the world of trading to the masses, ably aided in recent years by the internet. This is particularly the case in the forex market where there is no centralised exchange and placing orders directly on the interbank market generally requires bigger account sizes than most can muster. It would of course be beneficial to trade directly on an exchange and cut out the 'middle-man' but for most this is just not possible, so the middle-man provides the access, for which he seeks a profit. It really is as simple as this. Wether you place a trade with a middleman or directly on an exchange, it is effectively the same thing, you are speculating against the future value of the instrument you are trading. The whole derivative market, be it futures, options or swaps has no true underlying value, and it is only in this sense that you are gambling.
Further, you have to understand what drives the price you are trading beit from a broker or direct from an exchange, in the instrument you choose to trade. In my case, trading the forex market through a retail broker, the price I trade is made up of both the underlying futures price of the interbank instrument and the order book of the broker, in this sense, price action study come in to it's own, assisting in being able to read the order book in terms of where the big orders and stops are.
Further, you have to understand what drives the price you are trading beit from a broker or direct from an exchange, in the instrument you choose to trade. In my case, trading the forex market through a retail broker, the price I trade is made up of both the underlying futures price of the interbank instrument and the order book of the broker, in this sense, price action study come in to it's own, assisting in being able to read the order book in terms of where the big orders and stops are.
Likewise, and for the same reasons and others.bbmac said:
I agree entirely with the poster above about the ways in which people go wrong with spreadbetting. If you treat it as gambling, I imagine you're overwhelmingly likely to lose.
In my experience, in other threads here and elsewhere, people with strongly anti-SB views have usually had an unfortunate experience or two with it in the past, hence the strength of their personal views. These experiences sometimes arise from over-trading or inadvisable position-sizing or both.
Margin tempts people.
sun123 said:
From general reading on the FX market, the concensus seems to be that on average 90% of traders lose money, 5% break even and 5% make money. Harsh reality but makes sense when you consider that the very best traders can become immensely wealthy. In the zero sum game of FX trading all that concentrated wealth has to come from somewhere.
I think that's exactly right. Everyone tells me there's quite a substantial turnover of people in"online FX trading. I wonder if the 90/5/5 figures might be slightly exaggerated, but the point is doubtless entirely valid. For a big variety of economic reasons, there are many people around "middle age" both in the US and Europe who acquire some sort of capital sum, either as redundancy money, fruition of insurance policies, sale of inherited real estate (quite often), or from whatever other source, who "wander" into the markets and often last 18 months or so. A very small proportion of them survive for the longer term, and a very small proportion of those go on to become immensely wealthy.mcd said:
Trader333
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It appears that the issue here is one of defining "Gambling" and in my view engaging in any activity where the outcome is uncertain and money can be lost is gambling. The fact that people like to dress it up by saying that they use direct access brokerages (as I do myself) does not alter the fact that the activity itself can still result in a loss.
Also and in my view, SB is the ideal medium for position traders and the likes of Aussietrader and others make their living by these means. For me, I could not trade intra-day using SB and anyone who can must be very highly skilled and I think that you could count them on one hand on this board but there are many who use direct access who consistently make money.
At the end of the day I have no problem with anyone who tells me that I am a gambler because I think that we all are and the only word missing if that is the case is "Professional"
Paul
Also and in my view, SB is the ideal medium for position traders and the likes of Aussietrader and others make their living by these means. For me, I could not trade intra-day using SB and anyone who can must be very highly skilled and I think that you could count them on one hand on this board but there are many who use direct access who consistently make money.
At the end of the day I have no problem with anyone who tells me that I am a gambler because I think that we all are and the only word missing if that is the case is "Professional"
Paul
Roberto said:
I agree 90/5/5 does sound a little severe. Take a look here http://www.fxstreet.com/nou/content/107550/content.asp scroll just over half way down to the heading labelled "Trading". There's also some other interesting and up to date facts & figures there mostly from BIS which is generally regarded as very authoritative. Probably won't make you a penny more in trading profits mind you 😉
roguetrader
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Precisely Trader333, it is gambling any way you slice it. Personally I don't see why acceptance of this should be such an issue, save possibly the idea that "gambling" has a bad name and evolks comments such as "gamblings a mugs game" Gambling is a very broad term and as you say if you are putting something at risk for an uncertain outcome then you are by definition taking a gamble and as such are a gambler. Once you have accepted that then I think it grounds you so that you never lose sight of the risk involved in the business. I think a lot of new wouldbe traders are lulled intoo a false sense of security by following the view that it isn't gambling and subsequently lose sight of the risk, that is until itbradsides them with a double digit % loss
Hi all,
very entertaining post and a lot of useful joustling for a beginner to watch.
One thing - and I hope I can be forgiven my clear lack of experience here - that is repeated ad naseum here had given me a nasty taste in the mouth and made me wonder if something I thought I understood, is in fact very much more complicated that at first appear:
I am myself small fry and using SB as easy access, and here is my understanding of what it is:
The only difference between SB and direct access trading is that you pay a spread.
Simple as that? I would really hate to have misunderstood something fundamental about this, so please enlighten me!
I realise that there is a theorectical matter of speed of execution of the orders, but with most of us on internet platformts anyhow, isn't that neglible?
I also aknowlegde that there of course is a matter of not scalping for 1 or 2 points when you pay point in spread, likewise the psychological factor of having 'commited' yourself as you have paid the spread when you execute the trade.
What i seem to get a hint of from the above is that there should be a matter of difference between what my SB broker gives me and the factual underlying marked. I have always found the prices quited for sale to me to be the exact same as the underlying marked as quoted by my data provider (vis a vis is eSignal so that should be pretty trustworthy).
I really am slightly worried that now everybody will go 'Duh,!' but I will rather face the embarassment now if I have misunderstood something in a fundamental way.
If, on the other hand, I am right, I really cannot see why the use of broker type can dictate the semantics behind the word 'gambling'.
Please enlighten me before I get commited to en erroneous understanding of SB.
Thanks.
very entertaining post and a lot of useful joustling for a beginner to watch.
One thing - and I hope I can be forgiven my clear lack of experience here - that is repeated ad naseum here had given me a nasty taste in the mouth and made me wonder if something I thought I understood, is in fact very much more complicated that at first appear:
I am myself small fry and using SB as easy access, and here is my understanding of what it is:
The only difference between SB and direct access trading is that you pay a spread.
Simple as that? I would really hate to have misunderstood something fundamental about this, so please enlighten me!
I realise that there is a theorectical matter of speed of execution of the orders, but with most of us on internet platformts anyhow, isn't that neglible?
I also aknowlegde that there of course is a matter of not scalping for 1 or 2 points when you pay point in spread, likewise the psychological factor of having 'commited' yourself as you have paid the spread when you execute the trade.
What i seem to get a hint of from the above is that there should be a matter of difference between what my SB broker gives me and the factual underlying marked. I have always found the prices quited for sale to me to be the exact same as the underlying marked as quoted by my data provider (vis a vis is eSignal so that should be pretty trustworthy).
I really am slightly worried that now everybody will go 'Duh,!' but I will rather face the embarassment now if I have misunderstood something in a fundamental way.
If, on the other hand, I am right, I really cannot see why the use of broker type can dictate the semantics behind the word 'gambling'.
Please enlighten me before I get commited to en erroneous understanding of SB.
Thanks.
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A
aussietrader
I have just tuned into this thread and have found it interesting. Personally, I regard all trading as gambling of a type. However the word 'trading' as opposed to 'betting' is much more palatable to spouses, associates etc when the question of 'what do you do?' actually arises.
Some of the best traders in the world refer to 'bets' on financial markets. I use spread betting for a couple of reasons. Firstly, I am a profitable trader so the tax free concept is great - although this is still untested in Australia.
Secondly, and this is much more important in my view is one of risk. With a spread betting firm onecan trade in very small size that lets one keep bets at a very small proportion of capital. Thus for me, I can trade more markets as my system determines without having hundreds of thousands of pounds allocated to a trading account.
Being a positon trader I never really know when a great trade will come along but they do happen often enough to allow me to make money every year over a 12 month period. I know of people losing for three months (or longer) and then making it all back (and more) from a trade or two. For me this type of trading works but then again I do not rely on trading exclusively to eat.
I start each year with set trading balance and profits at years end go to other investments (or my wife!!). This keeps my asset pot growing and develops other income sources for when I retire to Cap d'Antibes!.
My suggestion to you is this - get a job or develop a skill to make some money to live off that also allows you to learn about trading. Take you 20K and put half of it in the bank to get some interest and learn to trade with the other 10K. If you can't make money with 10K you won't make it using more capital.
I would suggest you become a longer term trader initially (with small bets) and then you can shorten the trading time frame as your knowledge and experience allows.
Whatever you decide - all the best with it.
AT
Some of the best traders in the world refer to 'bets' on financial markets. I use spread betting for a couple of reasons. Firstly, I am a profitable trader so the tax free concept is great - although this is still untested in Australia.
Secondly, and this is much more important in my view is one of risk. With a spread betting firm onecan trade in very small size that lets one keep bets at a very small proportion of capital. Thus for me, I can trade more markets as my system determines without having hundreds of thousands of pounds allocated to a trading account.
Being a positon trader I never really know when a great trade will come along but they do happen often enough to allow me to make money every year over a 12 month period. I know of people losing for three months (or longer) and then making it all back (and more) from a trade or two. For me this type of trading works but then again I do not rely on trading exclusively to eat.
I start each year with set trading balance and profits at years end go to other investments (or my wife!!). This keeps my asset pot growing and develops other income sources for when I retire to Cap d'Antibes!.
My suggestion to you is this - get a job or develop a skill to make some money to live off that also allows you to learn about trading. Take you 20K and put half of it in the bank to get some interest and learn to trade with the other 10K. If you can't make money with 10K you won't make it using more capital.
I would suggest you become a longer term trader initially (with small bets) and then you can shorten the trading time frame as your knowledge and experience allows.
Whatever you decide - all the best with it.
AT
roguetrader
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Jyde said:
Hi Jyde, just to clarify my own personal opinion, since I have been one of the people talking about gambling. For me the way in which you place your trade has no relevence, direct access,online broker, or even telephone broker. We are placing cash at risk for an uncertain outcome in pursuit of cash return. We do know beyond all doubt that a % of these will result in lost capital though beforehand do not know which ones, therefore we are gambling.
JumpOff
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roguetrader said:
Not sure I follow, or perhaps I just disagree. A retail operator purchases inventory knowing that some of the capital will be lost. Let's say it's clothing - the retailer knows that 50% of the items usually sell at retail (for a profit of $5 each), 25% usually sell at the "sale price" (the wholesale cost), and 25% will be probably be marked down at clearance (for a loss of $5 each). The retailer doesn't know before hand which item will be a gainer or a loser, is it gambling?
Have you seen the figures on how many start up businesses fail?
JO
roguetrader
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To answer your questions simply, yes,.and yes.
You see my view addresses two sides of a long running arguement. those who do not trade and condemn trading as simply gambling, and those who respond to this by bending over backwards to try and prove it's not gambling. The first group are at fault by their attitude, guilty of not realizing that most things in life are a gamble and susequently not all forms of gambling are reprehesible. Like your example above, though not generally considered a gamble in light of what he knows he is clearly taking a gamble. as do those in the many startup businesses. As for the second group, in truth those who are successful at trading, well it really doesn't matter what they think since their opinion can do them no harm. The people at risk are the ones coming into the game who soak up the idea that it's not gambling and subsequently they trade with great size risking way more than they should. If you took the same people to a casino and said put that much on that table in most cases they would tell you to takea running jump. Now if they were able to accept from the outset that trading was a form of gambling then they would be more attuned to the risk and treat the market with the respect she deserves. But that is only my humble opinion.
You see my view addresses two sides of a long running arguement. those who do not trade and condemn trading as simply gambling, and those who respond to this by bending over backwards to try and prove it's not gambling. The first group are at fault by their attitude, guilty of not realizing that most things in life are a gamble and susequently not all forms of gambling are reprehesible. Like your example above, though not generally considered a gamble in light of what he knows he is clearly taking a gamble. as do those in the many startup businesses. As for the second group, in truth those who are successful at trading, well it really doesn't matter what they think since their opinion can do them no harm. The people at risk are the ones coming into the game who soak up the idea that it's not gambling and subsequently they trade with great size risking way more than they should. If you took the same people to a casino and said put that much on that table in most cases they would tell you to takea running jump. Now if they were able to accept from the outset that trading was a form of gambling then they would be more attuned to the risk and treat the market with the respect she deserves. But that is only my humble opinion.
So all in all, everything that does not have a 100 % assured outcome is gambling?
As nothing in life is thus certain, all must then be gambling.
If everything but everything is gambling, the word has no meaning and thus no relevance.
Surely not.
I would still like to know if there is something apart from the actual spread the sets SB apart from other execution methods before my ignorance start costing me money. I know this is probably a very naive question, but you know how you can get something basic wrong and then keep gong with it? Anyone?
Thanks.
As nothing in life is thus certain, all must then be gambling.
If everything but everything is gambling, the word has no meaning and thus no relevance.
Surely not.
I would still like to know if there is something apart from the actual spread the sets SB apart from other execution methods before my ignorance start costing me money. I know this is probably a very naive question, but you know how you can get something basic wrong and then keep gong with it? Anyone?
Thanks.
