Spread betting without leverage

[b0lty]

May seem a daft query but is it possible to spread bet without using leverage? I'd be quite happy to trade only with the funds I have in my account without leverage, which should be perfectly adequate for my needs. That way I can avoid overnight fees, avoid margin calls and having my account closed out due to unexpected high price fluctuations and stop losses being missed inexplicably....etc etc

Or should I simply be looking at an alternative means of investing those funds? One where I'm trading against the market rather than a spread betting company.

I'm pretty set on wanting to be able to long and short the FTSE 250. Futures, Options and CFDs are all alien terms to me and my Google searches haven't suggested I can short the FTSE, at least with Futures or Options. But maybe I'm just typing the wrong keywords in to Google.

Your input is greatly appreciated.

 

[tomorton]

Not sure I understand what your eventual aim is, but if you hold an SB position overnight there will always be a charge: a price spike can always catch you out: a stop can always be missed if the market gaps beyond your stop price.

Of course you can have a small SB account in total £ and not use all of the margin available. In fact you should.

Long and short an index is possibly self-defeating but you could do it - either open 2 SB accounts with different firms, or use a firm that offers you Rolling Daily / Cash bets plus monthly bets on the index, go long on one, short on the other: not a perfect match, but at least you wouldn't be trading 'naked' (i.e.without a hedging positon in case your direction is wrong).

 

[tokyojoe]

May seem a daft query but is it possible to spread bet without using leverage? I'd be quite happy to trade only with the funds I have in my account without leverage, which should be perfectly adequate for my needs. That way I can avoid overnight fees, avoid margin calls and having my account closed out due to unexpected high price fluctuations and stop losses being missed inexplicably....etc etc

Or should I simply be looking at an alternative means of investing those funds? One where I'm trading against the market rather than a spread betting company.

I'm pretty set on wanting to be able to long and short the FTSE 250. Futures, Options and CFDs are all alien terms to me and my Google searches haven't suggested I can short the FTSE, at least with Futures or Options. But maybe I'm just typing the wrong keywords in to Google.

Your input is greatly appreciated.

Hi b0lty, Spreadbet=Leverage,

Under normal circumstances they will close you out at best price if it goes t$ts up & moves hard & fast against you & there is a margin call, however it's the black swans that cause the real pain (owing them money outside your balance) I haven't suffered this myself as I do not hold overnight, nor do I set & forget (however many do set/forget & are making profit daily)

Spreadbet is a VERY risky way to go for many reasons, but so too is the open market, SB is the drug of choice for many, but must take the right dose

 

[b0lty]

Tomorton, as I understand it, the overnight charges from spread betting are due to the interest charged on your "borrowed" money from your leveraged position. So if I'm not leveraging, presumably I shouldn't be getting charged interest?

I'd also add that I'd prefer not to trade out-of-hours.

Looking for Long and Short as my strategy aims to pick up on both directions of the market. Essentially my strategy identifies both upwards and downwards movement of the market, so makes sense to deal in both directions if you've a better than 50% chance of knowing what direction it'll go? Oh sorry just realised you may have thought I meant go long and short simultaneously ... no I hope I'm a little more sensible that that.

Your comment about spikes and missed stops is noted. Can't have everything

 

[b0lty]

Tokyojoe, I'll add a little extra detail. I'm a bit of a programming geek and have developed an automated strategy which is based on end-of-day prices which then identifies the following day's SL/TP price points. I guess I'm concerned that an overnight change could trigger those SL positions that were intended to only work with open hours trading. That'd be a bummer. How realistic would it be to close positions at night and reopen the next morning? Theoretically the price could go for or against me the following day so should theoretically balance out? I guess the downside being the spread would rapidly eat me up if I'm doing that on a daily basis.

Is there not any other alternative which could be suitable for me beside spread betting?

 

[tokyojoe]

Tokyojoe, I'll add a little extra detail. I'm a bit of a programming geek and have developed an automated strategy which is based on end-of-day prices which then identifies the following day's SL/TP price points. I guess I'm concerned that an overnight change could trigger those SL positions that were intended to only work with open hours trading. That'd be a bummer. How realistic would it be to close positions at night and reopen the next morning? Theoretically the price could go for or against me the following day so should theoretically balance out? I guess the downside being the spread would rapidly eat me up if I'm doing that on a daily basis.

Is there not any other alternative which could be suitable for me beside spread betting?

I can only comment on what I know from mates on the institutional side of it, they have quant guys that tell them we'd be better off playing online poker than trying to write programmes that compete with their programmes, they have an inexhaustible supply of money to buy the best.
What ever automated system you produce would require constant tweaking, almost to the point of manual trading on intraday.

The obvious SL TL etc are heavily watched, then the little intricacies are dissected down to the DNA of the price, every possible scenario is covered.

Overnight isn't something I do as I daytrade, open flat, close flat.

I am concentrating much more on simplification of what I have learned

Your alternative is DMA broker, but as far as I can tell this is another can of worms with it's own downsides

 

[Jack o'Clubs]

May seem a daft query but is it possible to spread bet without using leverage? I'd be quite happy to trade only with the funds I have in my account without leverage, which should be perfectly adequate for my needs. That way I can avoid overnight fees, avoid margin calls and having my account closed out due to unexpected high price fluctuations and stop losses being missed inexplicably....etc etc

Or should I simply be looking at an alternative means of investing those funds? One where I'm trading against the market rather than a spread betting company.

I'm pretty set on wanting to be able to long and short the FTSE 250. Futures, Options and CFDs are all alien terms to me and my Google searches haven't suggested I can short the FTSE, at least with Futures or Options. But maybe I'm just typing the wrong keywords in to Google.

Your input is greatly appreciated.

No, it's not a daft question. Much of the spreadbet companies' profits come from forcing punters to take their financing rates (which are expensive) for any positions held overnight.

Futures are also inherently leveraged so if you're determined not to use gearing they don't really help. There are FTSE250 futures but I don't know how liquid they are. To short you just sell via your broker rather than buy.

The other option would be to buy and sell a FTSE250 ETF like MIDD LN.

EDIT: actually, having read the whole thread, futures would be fine for what you want to do. You just need an account with someone like Interactive Brokers and to be aware of the underlying exposure that you are risking with each contract (eg one future contract is about the same as a £32k position at current index levels).

 

[NVP]

May seem a daft query but is it possible to spread bet without using leverage? I'd be quite happy to trade only with the funds I have in my account without leverage, which should be perfectly adequate for my needs. That way I can avoid overnight fees, avoid margin calls and having my account closed out due to unexpected high price fluctuations and stop losses being missed inexplicably....etc etc

Or should I simply be looking at an alternative means of investing those funds? One where I'm trading against the market rather than a spread betting company.

I'm pretty set on wanting to be able to long and short the FTSE 250. Futures, Options and CFDs are all alien terms to me and my Google searches haven't suggested I can short the FTSE, at least with Futures or Options. But maybe I'm just typing the wrong keywords in to Google.

Your input is greatly appreciated.

well you can ............but the returns are abysmal...and the spread will kill you

N

 

[NVP]

I can only comment on what I know from mates on the institutional side of it, they have quant guys that tell them we'd be better off playing online poker than trying to write programmes that compete with their programmes, they have an inexhaustible supply of money to buy the best.

yep ...........someone who has guested on my thread used to write quant programmes for banks .............you wont beat them at that game

N

 

[gle101]

Tomorton, as I understand it, the overnight charges from spread betting are due to the interest charged on your "borrowed" money from your leveraged position. So if I'm not leveraging, presumably I shouldn't be getting charged interest?

I'd also add that I'd prefer not to trade out-of-hours.

Looking for Long and Short as my strategy aims to pick up on both directions of the market. Essentially my strategy identifies both upwards and downwards movement of the market, so makes sense to deal in both directions if you've a better than 50% chance of knowing what direction it'll go? Oh sorry just realised you may have thought I meant go long and short simultaneously ... no I hope I'm a little more sensible that that.

Your comment about spikes and missed stops is noted. Can't have everything

I did have a look at IC Markets and notice when opening a cTrader demo account today, that the leverage could be set down to 1:1. Also with ActivTrades the amount of leverage is adjustable, if it was down to 1:1 I can't tell.

 

[kalott]

May seem a daft query but is it possible to spread bet without using leverage? I'd be quite happy to trade only with the funds I have in my account without leverage, which should be perfectly adequate for my needs. That way I can avoid overnight fees, avoid margin calls and having my account closed out due to unexpected high price fluctuations and stop losses being missed inexplicably....etc etc

Or should I simply be looking at an alternative means of investing those funds? One where I'm trading against the market rather than a spread betting company.

I'm pretty set on wanting to be able to long and short the FTSE 250. Futures, Options and CFDs are all alien terms to me and my Google searches haven't suggested I can short the FTSE, at least with Futures or Options. But maybe I'm just typing the wrong keywords in to Google.

Your input is greatly appreciated.

no leverage is no problem

if you buy dax 1 gbp per point you only need 10 800 gbp in account

"overnight fees," is another story?

 

[b0lty]

I'm curious, why is automated trading considered non workable. I don't see how what I'm doing is different to other people looking for trends and trading them. I'm not trying to outsmart anyone, just pick up on patterns etc that appear over several days. I'm not looking to create the ultimate trading program that'll be better than financial institutions, just one that'll predict when to trade and choose the correct price more often than not.

Surely that's better than sitting about getting all nervous and trading whichever way the wind blows or my nerves take me?

 

[tomorton]

Tomorton, as I understand it, the overnight charges from spread betting are due to the interest charged on your "borrowed" money from your leveraged position. So if I'm not leveraging, presumably I shouldn't be getting charged interest?

I'd also add that I'd prefer not to trade out-of-hours.

Looking for Long and Short as my strategy aims to pick up on both directions of the market. Essentially my strategy identifies both upwards and downwards movement of the market, so makes sense to deal in both directions if you've a better than 50% chance of knowing what direction it'll go? Oh sorry just realised you may have thought I meant go long and short simultaneously ... no I hope I'm a little more sensible that that.

Your comment about spikes and missed stops is noted. Can't have everything

You will be charged interest overnight no matter how small your trade, though its higher the bigger the trade. Its like a hotel charging you the overnight tariff whether or not you use the pool next morning.

Sorry about my hilarious gaff, yes I did think you meant long and short on the same instrument simultaneously. You are very polite in the way you pointed it out. But it has been tried.

 

[tokyojoe]

I'm curious, why is automated trading considered non workable. I don't see how what I'm doing is different to other people looking for trends and trading them. I'm not trying to outsmart anyone, just pick up on patterns etc that appear over several days. I'm not looking to create the ultimate trading program that'll be better than financial institutions, just one that'll predict when to trade and choose the correct price more often than not.

Surely that's better than sitting about getting all nervous and trading whichever way the wind blows or my nerves take me?

I would say a little trial & error small size is the way forward b0lty, the auto route does seem to be a good way to take emotion out of it, especially if this is your field, you have past experience, so you are perfectly placed to trial it, I wish you well mate

 

[b0lty]

Thanks Tokyjoe. May the dealing gods bless your trades!

 

[gle101]

Thanks Tokyjoe. May the dealing gods bless your trades!

Yes, it wouldn't hurt to have their help at times.

 

[pigbear]

I'm curious, why is automated trading considered non workable. I don't see how what I'm doing is different to other people looking for trends and trading them. I'm not trying to outsmart anyone, just pick up on patterns etc that appear over several days. I'm not looking to create the ultimate trading program that'll be better than financial institutions, just one that'll predict when to trade and choose the correct price more often than not.

Surely that's better than sitting about getting all nervous and trading whichever way the wind blows or my nerves take me?

Automated may work if you keep your stake small i.e. £1 per point. However what it fails to take into account is volatility which is always changing. Last year the volatility of the Dow was between 80 - 200 points daily. Now its more like 250 - 400 points. That would mean changing your stops and putting down additional margin.
The simplest way to de-leverage is to open an account where they let you trade 10p per point. Finspreads do that but their order fills are laughable.

 

[b0lty]

Interesting you raise that point about volatility. I did just introduce some functionality to my auto trader which gets it to back analyse the last 250 days of data and adjust itself accordingly. It'll do this daily with less emphasis placed on price movement the further back in time you go. Seemed to do a pretty robust job of it too to my surprise.

 

[gle101]

Interesting you raise that point about volatility. I did just introduce some functionality to my auto trader which gets it to back analyse the last 250 days of data and adjust itself accordingly. It'll do this daily with less emphasis placed on price movement the further back in time you go. Seemed to do a pretty robust job of it too to my surprise.

Yes the main problem is risk and money management. How to set these parameters properly is a challenge in an ever changing market.

 

[luckystrike23]

It is my understanding that Ayondo allow you to cap your own leverage. So you could trade without leverage if you wanted to - besides financing fees are only charged on the borrowed portion. http://www.financial-spread-betting.com/spreadbetting/Ayondo-compare.html