Spread betting, a viable option to make a living out of?

[Alexbabwa]

Please forgive the naivete of this post, i do not spend much time in the trading community.

I have concerns that have only recently emerged as i am now considering trading for a living. I am seeing consistant gains of at least 50 pips a day, with perhaps one negative day once every 2 weeks. So i am excited at the idea of not having to work a 9 - 5 and eventually years down the line making more money than i know what to do with. But is this realistic? is being a good trader good enough? Some of my conerns are:

1) How soon will capital gains tax be dropped on spread betters? (i mean its inevitable right?)

2) Is my spread betting broker going to work against me if/when i get a very big account size? I mean they are bookies after all right? but then they make their profit in the spread.. so why would they care if you make a huge profit if they take a commission out of it? but then why do so many people complain of brokers shutting them down or sabotaging their trading. ARGH (would really appreciate some solid answers here).

3) I want to travel. I have tried the search engines but i can't figure out how to find what countries spread betting is legal in other than the UK and Australia.

4) I don't know what DMA is? or why a DMA spread betting company is less likely to be out for your blood?

If you could answer just one of these questions with facts and experience i would be very grateful.

 

[cuotes]

DMA stands for Direct Market Access, and from my point of view SB is not suitable for making a living.

You'll find plenty of info on this topic in several other threads.

ps. Yes, your SB is going to work against you. That's his job.

 

[Alexbabwa]

DMA stands for Direct Market Access, and from my point of view SB is not suitable for making a living.

You'll find plenty of info on this topic in several other threads.

ps. Yes, your SB is going to work against you. That's his job.

How is direct market access likely to work less against you if at all? why in your opinion is it not suitable for making a living? Why is my SB going to work against me and why is it 'his' job?

I would like to reiterate i am interested in facts and experience, justified opinions. Im sorry if this sounds rude but its hard to take any comments seriously without some sort of justification behind the opinions.

 

[neil]

then make the effort to use the search function on this site. These subjects have all been covered before over and over again. Use the search facility rather than expect people to keep repeating themselves because newbies are too lazy to use the search facility or "Traderpedia" etc the top of this page. Read them all then maybe come back to fill in gaps in your knowledge.

 

[Alexbabwa]

then make the effort to use the search function on this site. These subjects have all been covered before over and over again. Use the search facility rather than expect people to keep repeating themselves because newbies are too lazy to use the search facility or "Traderpedia" etc the top of this page. Read them all then maybe come back to fill in gaps in your knowledge.

I have read several, and those alone took me hours to read. Some of them have literally hundreds of posts. These posts are often useless information and while some are very informative they don't answer my questions directly. If i was interested in knowing 'Can some people make a living from SB' i might be content with the information i have. But i would like to know how exactly SB companies make their money so i can better understand their agenda. This is just one of my questions. You assume i have made no effort prior to this post, and then condone me to take the exact same steps i have made should i do a few searches (yeah, nice one). Might i suggest if you find this post offensive you simply ignore it as the damage is done, its posted. I do not intend on making another post with the same questions so your reply is a waste of both of our time.

 

[Paulie_5]

Ok, so first off - the difference between Spreadbetting and Direct Market Access :

Spreadbetting is placing a trade/ bet against a bookie. You are not contributing in any way to the markets, you are making or losing your money against your bookie. So if you place a trade and you get it right, the bookie is paying you. You get it wrong, you are paying the bookie.

Direct market access (dma) - you are a participant in the market. So (for example) if you are trading with one futures contract, you are buying / selling from somebody else actually in the market. This is facilitated through a direct market access broker. So you pay your broker a commission to buy/ sell the contract. He couldn't care less whether you make money or not. He gets his commission and he's happy.

So why are you worse off with spreadbetting ? Well this is the age-old debate that runs through numerous threads on this site.

The bones of it are :

Spreadbetting is tax-free. The government still classes it as gambling and as a result you are not liable to any income tax on your earnings. Also with spreadbetting, the barriers to entry are very low. If you've got £200, you can open an account and away you go. But, given that the bookie makes/ losses money from you ... well this is the bit that is quite contentious ... supposedly they play games to screw you over... people claim they will mess around with their pricing to deliberately stop you out or just plain close your account if you are doing too well. So it would appear that spreadbetting is not suitable to make a living for this very reason.

Direct market access is a different story. Firstly, the minimum deposit to open an account is much higher. Also, any income is taxable. But ... you are participating in the markets, you are one of the market and you are merely paying your broker a commission to do so. If you lose, you cannot blame anyone. "The market is" ....

I hope that explains it slightly clearer. And please anybody correct me if I'm wrong in any of my explanation.

Now please take Neil's advice and do a search to read up more on this.

Paulie

 

[Paulie_5]

I have read several, and those alone took me hours to read. Some of them have literally hundreds of posts.

I saw this after I just posted and I'd like to add ....

If you aren't prepared to spend hours, days, weeks even months reading endless posts on forums (and books etc) to understand trading, then you aren't suited to it in the slightest and won't succeed.

 

[neil]

I saw this after I just posted and I'd like to add ....

If you aren't prepared to spend hours, days, weeks even months reading endless posts on forums (and books etc) to understand trading, then you aren't suited to it in the slightest and won't succeed.

He will not succeed with his mental attitude. He cannot listen to any advice. I am not offended that he is too lazy to read or research. It's just so annoying to repeat stuff that can be found by the questioner with a little effort on his part.

 

[donaldduke]

I am seeing consistant gains of at least 50 pips a day

If you can make 50pips a day it wont be long before you are betting £2000 a pip and making £100,000 a day.

You will be one of the best traders in the UK. And will reach the UK rich list in a few years.

 

[Alexbabwa]

Thank you Paulie, you have answered two of my questions very well and those answers are now clear to me. As for your second post, i could list the various websites, tutorials and forum posts i have used in my research. However i have no interest in your approval or justifying my post to you. This forum is a community where people are free to ask questions and others are free to ignore them without complaining, a lot like the real world. It almost feels like people are just bitter, that perhaps they had to spend years learning and researching, so why should they give this information freely and repeatedly to newbies without a clue. I won't respond to any more negative, find out yourself newbie posts as there is nothing more i can say. That said thank you again very much Paulie, and even if i don't get some opinions to the other two questions this thread has not been pointless

 

[Alexbabwa]

If you can make 50pips a day it wont be long before you are betting £2000 a pip and making £100,000 a day.

You will be one of the best traders in the UK. And will reach the UK rich list in a few years.

I would like to believe that, but surely i can't have cracked it already. If my SB company doesnt shut me down, or tax laws don't slow me down, there will probably be something else. I get the impression you think spread betting is realistic for a career?

Having read countless posts i can't help wonder if the people reporting corrupt SB bookies are just bitter and couldnt make it as traders, or if there is much truth in what they say. In which case my faith in the FSA would be shaken. Many newbie sources on the internet such as investopedia say that only 5% of traders are successful (making consistent profits over years). Have you or anyone else seen a reliable post by or know of one of these 5% who spread bets? perhaps they only use DMA.

Anyway thank you for your encouraging post, this forum feels a lot less hostile now

 

[chezlaw]

Spreadbetting is placing a trade/ bet against a bookie. You are not contributing in any way to the markets, you are making or losing your money against your bookie. So if you place a trade and you get it right, the bookie is paying you. You get it wrong, you are paying the bookie.

Maybe I've got it wrong but I understand that they mostly don't hold large position against us and have either played us off against each other or passed our bets onto the real market. In either case they don't care who wins or loses, they make their money from the spread.

They may not care for some types of winning traders who move large position quickly or in illiquid markets but everything else should be much the same as being in the market - more expensive but tax-free and easy.

 

[gamma]

Please forgive the naivete of this post, i do not spend much time in the trading community.

I have concerns that have only recently emerged as i am now considering trading for a living. I am seeing consistant gains of at least 50 pips a day, with perhaps one negative day once every 2 weeks. So i am excited at the idea of not having to work a 9 - 5 and eventually years down the line making more money than i know what to do with. But is this realistic? is being a good trader good enough? Some of my conerns are:

1) How soon will capital gains tax be dropped on spread betters? (i mean its inevitable right?)

2) Is my spread betting broker going to work against me if/when i get a very big account size? I mean they are bookies after all right? but then they make their profit in the spread.. so why would they care if you make a huge profit if they take a commission out of it? but then why do so many people complain of brokers shutting them down or sabotaging their trading. ARGH (would really appreciate some solid answers here).

3) I want to travel. I have tried the search engines but i can't figure out how to find what countries spread betting is legal in other than the UK and Australia.

4) I don't know what DMA is? or why a DMA spread betting company is less likely to be out for your blood?

If you could answer just one of these questions with facts and experience i would be very grateful.

Hi Alexbabwa,
Have not read all the posts here but just to let you know
yes you can make a living from spreadbetting just learn the system and practice
and when you are ready go live
with regard to spreadbettting working against you this is absolute bull****

and this

If you aren't prepared to spend hours, days, weeks even months reading endless posts on forums (and books etc) to understand trading, then you aren't suited to it in the slightest and won't succeed

books and study yes
but reading posts on forums
you will learn very little from forum.
Very few posts on actual trading most good traders post here to pass the time so the subjects from good traders are very rarely on trading
Come join us on the bbmac thread as its one of the few posts that's to do with trading

good luck

 

[Jack Hughes]

Please forgive the naivete of this post, i do not spend much time in the trading community.

I have concerns that have only recently emerged as i am now considering trading for a living. I am seeing consistant gains of at least 50 pips a day, with perhaps one negative day once every 2 weeks. So i am excited at the idea of not having to work a 9 - 5 and eventually years down the line making more money than i know what to do with. But is this realistic? is being a good trader good enough? Some of my conerns are:

In theory, it's possible to become richer than Croesus by consistently making even 1 pip per day.

1) How soon will capital gains tax be dropped on spread betters? (i mean its inevitable right?)

How long is a piece of string.

2) Is my spread betting broker going to work against me if/when i get a very big account size? I mean they are bookies after all right? but then they make their profit in the spread.. so why would they care if you make a huge profit if they take a commission out of it? but then why do so many people complain of brokers shutting them down or sabotaging their trading. ARGH (would really appreciate some solid answers here).

SB will work against you immediately, to some extent.

As others have pointed out, if you can't find the rest of these things out for yourself, you won't have a chance of being a successful trader.

 

[Paul71]

DMA stands for Direct Market Access, and from my point of view SB is not suitable for making a living.

You'll find plenty of info on this topic in several other threads.

ps. Yes, your SB is going to work against you. That's his job.

Bollux. Here's a conversation i had with a guy from one of my spread betting firms last week. The trading desk answers the phone, i say hi Dave, he recognises my accent and says good morning how are you and all that, i ask for a quote, he puts my trade on, job done.

How the f*ck is that working against me?


Most people on this site should not be giving 'financial advice', it's bloody ridiculous.

 

[Jack Hughes]

Bollux. Here's a conversation i had with a guy from one of my spread betting firms last week. The trading desk answers the phone, i say hi Dave, he recognises my accent and says good morning how are you and all that, i ask for a quote, he puts my trade on, job done.

How the f*ck is that working against me?

Maybe because while he's being chatty the price is changing?

 

[Paul71]

Maybe because while he's being chatty the price is changing?

Jack,

It's all about knowing your market matey I don't really care about a few ticks/pts here and there, i like making two weeks money in one trade these days (at least), rather than a days money trading for two weeks. Most of the stuff written on here will see you broke before anything.

Golden Rules:

1) Learn the Game.

2) Play the Game.

3) Make money.

 

[Alexbabwa]

Jack, not helpful m8. You didnt explain how the SB company works against me, immediately, to some extent. As for the question regarding tax, you must realise i am not expecting definate answers, just interesting opinions.

Chezlaw, that is interesting. Ive now got two conflicting opinions to consider. Although i have no evidence, it was my belief that bookies purchased and sold from the market according to a clients bet size. Many of the other threads ended up like this, with different opinions clashing. I have rang up my SB company and they told me they make their money in the spread, but would not elaborate on whether they bought/sold from the market according to their clients bet.

Would anyone happen to know where i can find a list of countries SB is legal in? or point me in the right direction to be able to find a countries legislation regarding SB

 

[oildaytrader]

Put on a trade of 100 lots with spreadbetting outfit at buy ftse at 4901, market is moving higher ,spreadbettetting outfit goes to market to hedge ,price has moved matey , price has moved to 4909 but with spread 4912.

Trade directly to futures market buy at 4901 , filled at +/- 2

This is a common sense example of live trading with spreadbetting outfits.Traders are worse off .

If you make money pay the tax , cause the tax free is just an illusion.In above trader is worse off by 11 points ,deduct 2 points tax saving = 9 point loss on spreadbetttting outfit.Tax cheat is human nature, but tax savings on losses is good for cheaters.

 

[donaldduke]

Jack, not helpful m8. You didnt explain how the SB company works against me, immediately, to some extent. As for the question regarding tax, you must realise i am not expecting definate answers, just interesting opinions.

Spread betting firms will skid your stops, no doubt about that.
In fast markets you might get 100 pip slippage, whereas with DMA the skid might have only have been 20 pips for exactly the same stop.