Making Money With Spread Betting??

[Chorlton]

Hi All,


Can I ask whether anyone is making any consistant profits trading UK stocks through Spread-Betting??

The reason I ask is that I am finding it extremely difficult to maintain any profits due to certain practices which takes place with my SB company.

These practices include increased spreads at optimum moments of trading (even though the underlying stock's spread doesn't change), slow fills (but only when the market is moving against me!!), stop losses not being filled due to the sudden changes in SP and slow fills, etc, etc.

I know the obvious thing would be to simply try a diferent firm but I believe they are probably all the same but would welcome comments from other posters.

For the record, I also purchase shares in the traditional way but like the benefits that spread betting offers and hence want to use this instrument to trade, but obviously not if the above keeps happening.

Regards,

Chorlton

 

[the blades]

Hi All,


Can I ask whether anyone is making any consistant profits trading UK stocks through Spread-Betting??

The reason I ask is that I am finding it extremely difficult to maintain any profits due to certain practices which takes place with my SB company.

These practices include increased spreads at optimum moments of trading (even though the underlying stock's spread doesn't change), slow fills (but only when the market is moving against me!!), stop losses not being filled due to the sudden changes in SP and slow fills, etc, etc.

I know the obvious thing would be to simply try a diferent firm but I believe they are probably all the same but would welcome comments from other posters.

For the record, I also purchase shares in the traditional way but like the benefits that spread betting offers and hence want to use this instrument to trade, but obviously not if the above keeps happening.

Regards,

Chorlton

Hello Chorlton,

I'm making profits trading UK stocks through SB.

I use Fins, IG and now CMC for stocks. I hedge my portfolio (to a varying degree) with Capital and Fins, and ocassionally use CS for stocks.

The only time I've found the price to not be "100%" predictable is using CMC, who vary their aditional spread, "according to the orderbook".

In defence of CMC, I've found that most of the times their spreads are comparble, or only 0.2% above, the market spread. With the others, you'll pay around 0.8% but it will be fixed.

The above is obviously only my experience.

Who are you using, over what timeframes, and to what degree do you belive you are being shafted?

UTB

 

[DaveJB]

One I noticed earlier...
I've seen explanations for this that sound plausible, but I was convinced enough that 'bias' existed to take a screenshot earlier today.. quote 10885 - 10889 actual price at time 10888.72 (Dow). The SB company will, in my opinion bet against the current move for a short period - presumably they can see the smart money going the other way ( I did the screenshot when it had happened so often over 20 mins I thought it was taking the *****).

Why? I figure they're flattening out the swings - just a couple of points over short periods of time, but the effect of that is to make it essential you only profit from larger moves... you are maybe 4 pts down at entry to start with (even though the official spread is 4 or 5, if it's 100% against you that's that) and being a little late means you probably need say 7 pts move the right way, plus it has to hold long enough for them to move the price, just to break even.

On the other hand, if they get it wrong, someone will get a very good price - from my example they got it right, but if the price was about to rocket anyone buying would have got in a mere 28c below the actual price.

I'm still trying to decide the overall effect, I suspect it usually works in their favour, it certainly stops you taking very small moves, and it means your win:lose ratio has to be rather better than 50:50. You should also be looking to locate good sized moves - the spread is too big, IMO, to trade low amplitude swings on very short timeframes. For anyone able to place significant (ish) cash down SB is probably a mugs game, once they are capable of consistently finding what to trade and when - I'd say it's a good place to gain experience at low cost, but that the spread and the fact that the company are essentially moving prices to bet against you in the short term are noticeable handicaps.

Just my opinion, and to be truthful if you need that 2pts of 'bias' then you already bet the wrong way, but it is a bit like paying a couple of points extra per bet and you should maybe factor this in when deciding to enter the market.
Dave

 

[the blades]

One I noticed earlier...
I've seen explanations for this that sound plausible, but I was convinced enough that 'bias' existed to take a screenshot earlier today.. quote 10885 - 10889 actual price at time 10888.72 (Dow). The SB company will, in my opinion bet against the current move for a short period - presumably they can see the smart money going the other way ( I did the screenshot when it had happened so often over 20 mins I thought it was taking the *****).

Why? I figure they're flattening out the swings - just a couple of points over short periods of time, but the effect of that is to make it essential you only profit from larger moves... you are maybe 4 pts down at entry to start with (even though the official spread is 4 or 5, if it's 100% against you that's that) and being a little late means you probably need say 7 pts move the right way, plus it has to hold long enough for them to move the price, just to break even.

On the other hand, if they get it wrong, someone will get a very good price - from my example they got it right, but if the price was about to rocket anyone buying would have got in a mere 28c below the actual price.

I'm still trying to decide the overall effect, I suspect it usually works in their favour, it certainly stops you taking very small moves, and it means your win:lose ratio has to be rather better than 50:50. You should also be looking to locate good sized moves - the spread is too big, IMO, to trade low amplitude swings on very short timeframes. For anyone able to place significant (ish) cash down SB is probably a mugs game, once they are capable of consistently finding what to trade and when - I'd say it's a good place to gain experience at low cost, but that the spread and the fact that the company are essentially moving prices to bet against you in the short term are noticeable handicaps.

Just my opinion, and to be truthful if you need that 2pts of 'bias' then you already bet the wrong way, but it is a bit like paying a couple of points extra per bet and you should maybe factor this in when deciding to enter the market.
Dave

Dave,

Just to clarify, my info above was regarding stocks and not indeces.

When trading indeces (usually fading larger moves) I tend to get about 2 pts worse that the cash price.

However, I'm not sure if this would reflect futures pricing rather that SB bias. Either way, I expect to lose around the 2pts you've suggested (on the FTSE, too)

Have you done any work on the differences between the cash and futures prices?

Cheers,
UTB

 

[DaveJB]

Hi UTB,
that's fine - I was a bit busy and typing during pauses, so to speak, so I didn't see your post before completing mine. I'm looking at the Dow rolling daily, where the spread is around 4-5... occaisonally you see this shrink, I can only assume they're too busy shifting the one they're worried about to notice their ask is overtaking the bid in the wrong direction <g>

Truthfully I don't see it as a major issue - you aren't scalping on SB and if your p/l is going to nosedive by having the current quote a couple of pts away from where an evenly placed spread would be then you've had it anyway. It just niggles a bit that they scream if you suggest this happens, when I'm damn sure it does... it's like you can see the prices, and somebody is telling you you aren't.

It's really just one of those things you notice when you've nothing better to do that watch every pixel on the screen intently, and you are ready to foam at the mouth with anger when you lose less than you'd tip a decent waiter.

I only watch the daily rolling actually - this tends to rather resemble the cash, if not match it exactly for all I know, as I've looked at what I need to know for what I want to do and hang the rest. My limited experience of futures relates to when I was EoD'ing individual stock future quotes and trying to figure out why the price was different to the current close <g> FOr what it's worth I couldn't tell you of any funny business in futures, as they include interest and so forth so the prices are effectively behind a smokescreen anyhow as I see it.

I view it like this - use the daily rolling, and your charting program and datafeed will show pretty much the same price as your bet is at, minus commission of 2-4 pts. In a fast moving market you'll pay an extra couple of points at entry and exit, as often as not, due to "sluggish spread quote syndrome" which seems to generally work against you. As long as you appreciate this is likely you shouldn't get upset by it - the SB company IS betting against you, it might agree with you at times, and sometimes the 'SSQS' works in your favour. If you are as good at it as I am this is very infrequent, as it tends to work 'with' winners, and until I get a darn sight better at this I'm definitely not a SB winner. (I get a heck of a lot of practise per £10 mind).

Dave

 

[Chorlton]

Hello Blades,

I'm currently using Finspreads for trading stocks and have been doing so for over a year now. However, due to my current inability to place trades in the morning, I place my orders the night before. However, regardless of whether I use the underlying market SP or the Spread Bet quote, they are getting filled at levels which are very unfavourable to what I would expect.

One very recent example is where I placed a buy order last night to be filled at 1202 Market. The level at when I placed the order was 1208 Market but I felt comfortable that a slight retrace was on the cards and so wanted to buy in on the dip. At that time the market spread was 1p and Fins spread was about 10p.

Today, the order got filled at 1202 market (I think), however the Fins quote at time of fill was 1207, which suggests that the Fins spread at that time was around 10p (1202 market +5p = 1207 Buy & 1202 - 5p = 1197 sell) but this is only a rough guess.

However the market buy price at this current time (as I write this) is still 1202 buy yet the buy & sell price on Finspreads is now 1203 & 1192, so its clear that they have kept the spread around the 10-12p mark but have marked DOWN the price so now even though the Market SP is around the same level that it got filled earlier, I am now sat on a larger than expected loss!!!!!!!!!!!! I hope I have explained this clearly

This type of activity has happened a number of times to me recently and its only because I have been off work and constantly watching the screen that I have noticed this activity.


On my quest to find information about the pro's & con's of Spreadbetting, I came across an article which made interesting reading (well for me anyway!!) and explains why this is happening,

An extract on the article is below:

"The first reason is down to the fact that the Spread Bet companies make their own prices. Rememember, if you trade with them, you are trading their own proprietry derivative product, not the actual underlying share. Therefore you cannot accurately use real-market data to make trading decisions about a Spread Bet derivative. Logically, it is in the Spread Bet companies interest that they make money, which generally involves you losing it. That is an over-generalization, and of course these outfits hedge their positions in the real market so they will make money whatever the outcome of your trade. But for the purposes of this article, it is enough to understand that a Spread Betting company is under no obligation to accurately follow the underlying price in real time. The implications are fairly self explanatory!

The second reason is quite simple. Tax-Free profits are great in theory, but in order for your profit to be tax-free, you need to actually make a profit. I know that's an obvious thing to say, but what may not be so obvious is that due to the limitations of spread betting products already mentioned, plus other limitations such as larger spread, smaller choice of trading products, and so on, making a profit with the Spread Bet companies is more difficult than in the real market."

Based on this info, I am now seriously considering stopping SBetting or at the very least trying a different SB firm.


Chorlton

Hello Chorlton,

I'm making profits trading UK stocks through SB.

I use Fins, IG and now CMC for stocks. I hedge my portfolio (to a varying degree) with Capital and Fins, and ocassionally use CS for stocks.

The only time I've found the price to not be "100%" predictable is using CMC, who vary their aditional spread, "according to the orderbook".

In defence of CMC, I've found that most of the times their spreads are comparble, or only 0.2% above, the market spread. With the others, you'll pay around 0.8% but it will be fixed.

The above is obviously only my experience.

Who are you using, over what timeframes, and to what degree do you belive you are being shafted?

UTB

 

[the blades]

Hi Chorlton,

I haven't had problems with Fins - though I don't use limit orders, and have no experience of them with Fins or anyone else.

I'm more than happy with the service I've recieved, and as they say, you can only speak as you find.

That said, if you're having problems, then that's all that matters. I'd change too.

If internet access is the problem, can you not place orders over the phone, to avoid limit orders?

UTB

 

[Chorlton]

Hi Chorlton,

I haven't had problems with Fins - though I don't use limit orders, and have no experience of them with Fins or anyone else.

I'm more than happy with the service I've recieved, and as they say, you can only speak as you find.

That said, if you're having problems, then that's all that matters. I'd change too.

If internet access is the problem, can you not place orders over the phone, to avoid limit orders?

UTB

Blades,

Do you know which spreadbetting companies (other than Finspreads) you can place orders with outside of market hours????

I've registered with IG Index and now recently have an account but notice that I can't place orders outside of market hours

My current strategy means that I place my buy orders in the evenings and let them get filled the following day. Unfortunately, I don't have the ability during the day to access my account.


Thanks in advance,

Chorlton

 

[the blades]

Blades,

Do you know which spreadbetting companies (other than Finspreads) you can place orders with outside of market hours????

I've registered with IG Index and now recently have an account but notice that I can't place orders outside of market hours

My current strategy means that I place my buy orders in the evenings and let them get filled the following day. Unfortunately, I don't have the ability during the day to access my account.


Thanks in advance,

Chorlton

Hello there.

In short - I don't know.

I place my bets within the day and don't knwo about the order systems. But a quick call to them should sort it.

Cheers,
UTB

 

[counter_violent]

Blades,

Do you know which spread betting companies (other than Finspreads) you can place orders with outside of market hours????

I've registered with IG Index and now recently have an account but notice that I can't place orders outside of market hours

My current strategy means that I place my buy orders in the evenings and let them get filled the following day. Unfortunately, I don't have the ability during the day to access my account.


Thanks in advance,

Chorlton

C M C ( D 4 F ) has a 24 hr S B platform called Market Maker........Some spreads widen out of their respective market hrs eg Forex trading is 3 pips 24 hrs ..........aussie 200 index is 2 points from 10.50 pm .......4 points after 7.30 am ....etc etc but the point is you can open and close your trades 24 hrs / day


Regards C V

 

[Rex79]

hi Chorlton, I believe capital spreads take orders out of hours, and spreads are pretty good.

I'm in a similar prediciment to yourself - I prefer to place orders when the market's open, but can only check my charts in the evening.

I've been looking at mobile trading - IGindex and tradindex offer mobile trading but the spreads are too wide for my liking. The best looking mobile trading looks like CMC'c CFD trading - but they don't offer this service for S-betting

have a look on the link below : (click mobile walk through)

http://www.cmcmarkets.co.uk/eng/cfd/trading_software.jsp?subsection=4

In a couple of weeks I'm goint to try using a PDA to connect to capital spreads - I'll let you know how I get on.

Rex

 

[Chorlton]

hi Chorlton, I believe capital spreads take orders out of hours, and spreads are pretty good.

I'm in a similar prediciment to yourself - I prefer to place orders when the market's open, but can only check my charts in the evening.

I've been looking at mobile trading - IGindex and tradindex offer mobile trading but the spreads are too wide for my liking. The best looking mobile trading looks like CMC'c CFD trading - but they don't offer this service for S-betting

have a look on the link below : (click mobile walk through)

http://www.cmcmarkets.co.uk/eng/cfd/trading_software.jsp?subsection=4

In a couple of weeks I'm goint to try using a PDA to connect to capital spreads - I'll let you know how I get on.

Rex

Cheers Rex,

I'd also be interested in the mobile phone / pda costs for receiving the information as I currently feel that this could be an expensive way to trade, unless of course you are making a lot of money!!!

Thanks,

Chorlton

 

[Splitlink]

Hi Chorlton,

I mentioned in our talk on another thread that I was long on BP, CBRY and SPW. These are Finspread rolling bets. I've had no problem and BP has been open since before Christmas.

Split

 

[Chorlton]

Thanks Split..........

 

[trader_dante]

I've been SB'ing whilst in a full time job and managing to make, what I consider to be, very good returns.

I don't see why people find it so hard to make money doing this. People are quick to blame the companies but f you have an "edge" or a "strategy" and a good sense of money management it is not hard to make money.

 

[dwaynedibley]

Impressive stuff trader_dante, can you eloborate further on your system?

 

[anley]

Dante

Why are you wasting your time with such small amounts of money and spread betting?

If you're as good as you say you are, take £100k minimum into many millions (in a year) by trading the real markets, cash stocks, futures, fx, cfds etc.

Forget about the tax-free nature of spread betting, tax won't be your problem especially as people with superior results can always afford to employ really hot tax-experts to minimize the burden.

 

[trader_dante]

Well Anley, it's a step that I am about to take.
I will be leaving my job shortly and trading at an arcade.
However, the money I have made is a result of nuances in the SB companies themselves and not skill in the underlying market.
I strongly believe I could become a millionaire SB'ing but could probably never make a penny if I trade the real markets.
So that is why I SB.
To be honest, when I start at an arcade, I will probably still want to SB there.

Dante

Why are you wasting your time with such small amounts of money and spread betting?

If you're as good as you say you are, take £100k minimum into many millions (in a year) by trading the real markets, cash stocks, futures, fx, cfds etc.

Forget about the tax-free nature of spread betting, tax won't be your problem especially as people with superior results can always afford to employ really hot tax-experts to minimize the burden.

 

[anley]

OK, I understand. Make sure you keep that nuance to yourself even if you're tortured

 

[trader_dante]

I'm just always trying to find ways to beat the system. There seem to be so many.