Spread Betting

[Naz]

Yes dsmondi

Tradestation 6 for all US real time charts $80/month.Level 2 data and accompanying software,free from my US broker.

I get the Nasdaq level 2 direct access software free because i do enough trades for the broker to allow me this.But it is fairly standard practice for this to occur.Tradestation 6, (tradestation.com) Some people have told me is not available in the UK now to new users.So i should imagine e signal (esignal.com) would do the same job.

 

[Bankbuster]

I have been trading part time for 15 months using a spreadbet account and free live chart feed from lycos. A cheap and cheerful setup. My full time occupation allows me to daytrade after lunch, just in time for US market open. I only trade the daily DOW index because of its volatility and potential for huge profit. My trading experience is limited to the knowledge gained since I began spreadbetting. I am currently in a net loss position but believe my skills have improved sufficiently to eventually make some money. My daytrade technique is based on scalping. I also try to get in on the beginning of large swing trades.

I have an account with Deal4Free mainly because the software is easy to use and offers quick fills at £10 per point and below, and because of the apparent low spreads on offer compared to other spreadbet companies. However, I am becoming increasingly dissatisfied with this setup.

D4F typically offer a spread of 4 points on the DOW daily index, however the quoted spread is almost always 10 points away from the actual index level biased in favour of the current trend direction. The quoted spread is based on futures data and not the actual level of the index. The bias makes it very difficult for the spreadbet trader to get a fair price. Pre-orders are also triggered well ahead of the actual index level. In addition, the bias is volatile and can suddenly swing the other way. You can quickly find yourself 20 points down after just opening a position because of the bias phenomenon. This makes it extremely difficult to operate a tight stop loss system (I like to use 25 points). The same phenomenon can cause a 50 point profit to suddenly be reduced to 20 points. This panics many traders into exiting a winning trade too early. The bias then flicks back the other way leaving the winning trader reluctant to enter the market at a worse price. This is pure manipulation in favour of the spreadbet company and I am sick to death of it.

The clever traders are able to use the bias in their favour.This generally involves trading in the opposite direction to the general trend. However, I believe this is very difficult to master. My golden rule is to never take a price that is obviously too heavily biased unless you are planning a contrarian trade because your system indicates a reversal in trend (of which there have been many on the daily DOW just recently). Unfortunatley, this contradicts my trading with the trend preference.

More recenently, lycos have offered free realtime charting for nasdaq stocks and I have been using the data to assist my trade entry. The entry technique has similarities to a recent post by Naz.
I use 3 charts running concurrently. 1 and 5 min charts on the DOW and 1 min chart on Microsoft using a simple 100 MA. I have found that the DOW spread trend follows the Microsoft price action quite closely. So I use MSFT to act as a leading indicator. This stock heavily influences both nasdaq and dow indexes. MSFT bounces off whole number values and is a good leading indicator for entering long or short trades on the DOW index. I use the 5 min chart to judge trend, support, resistance and the 1 min charts for entry timing on either pullbacks for scalping or for breakouts away from support/resistance.

My decision making is based on taking account of numerous factors but I like to keep things simple with regard to entry setup. Am I trading with the trend, has the index pulled back to a suitable entry point, is the spread bias too large, are we close to key support/resistance levels. I also take account of calculated support, resistance and pivots based on previous intraday OHLC data, general market sentiment, expert opinion such as signalwatch and raptor web sites, max pain theory.

I believe it is extremely difficult to make speadbetting pay, however, it is possible and there are numerous spreadbet traders posting on the ADVFN daytraders thread that are successful. However, I now want to move on from spreadbetting. From what I've read on this site, it is easier to trade and more profitable using a direct access broker. I'm just not sure which way to go from here.................

Regards to all from Bankbuster

 

[manorpark]

Hello all must say that everyones posts are excellent on all subjects.I have used SB,s for 18 months and have found the experience mindblowing. I am now in the process of setting up with a direct broker as the constant rows with a certain SB is depressing me and affecting decisions that i make during trading.It started back in march when i confronted them about my stop being hit when their quote never came within 80pts of it their answer was volitile market conditions.Two weeks later after phoning to cancel a different stop the stop i had cancelled suddenly became active while i was away from home bringing me into a position that i didnt want causing a loss of 3K that situation took 3 days to sort out after them loosing the taped phone conversation i could go on and on .I am now convinced that they have a hidden agenda as you say bankbuster their price action causes you to throw the towel in on many a good trade because you doubt your entry in the first place when you see the way they move their quote about.Friday i had the phone put down on me when i asked if the current quote for US30 was for the cash,futures or D4F top 30.New SBs watch out its dangerous putting your cash with those wolfs. Good luck to you all. neil

 

[techMark]

Hi guys,

I've been through the the same thing with spreadbetting. Forget them. The next move is to open an futures account and trade e-mini S&P and e-mini Nasdaq contracts. There is an e-mini Dow but the volume is too low so far to be safely traded. The trading opportunities have been great recently and anyone with decent trading skills could have made some real money on a level playing field.

I'm using GNI @ $12 per trade which requires £10K to start your account. There are cheaper that also require less starting capital (will have to open one myself when I get around to it). Best thing is there are no dirty tricks - they just want to make their comission out of you. Immediate fills, all the order types, trading applications operational all the time, no bias, non of the stress and agravation you get from the SB companies, just you against the market.

You can loose a bunch of cash on futures too, but its the only way to find out whether you've really got what it takes or not. I expect I'll get shot down for saying that by the tiny minority who successfully take money from the SB bookies, but the rest who are demoralised by the SB experience will no doubt identify with it.

 

[options]

Just had a thought.
If the fsa/sfa etc are there to protect members of the public, how come the SB's are allowed to work the way they do?

How come you never see baby pidgeons?

And can anyone shed light on the subject of just how they manage to grow seedless grapes?

Options

 

[options]

Oh, and I agree with everything you say Techmark, though I'm still trading our futures through IB. Haven't got around to the e mini's yet. but you do get probs with no matter what and who you trade with. Had the computer freeze the other day as I was about to close a trade for a small profit.
Time everything got sorted out, I had a £70 loss.
I will only trade intraday for small amounts with the sb's.
They are good for sharpening skills. I mean if you can beat them you should be okay at the bigger stuff.

Options

 

[ChartMan]

Great posts, all you guys, and I hear what you say. There are people that make good money off SB's, but mainly on a longer timescale- tens of minutes. There is a Guy based on CTS ( The motley fool) who uses short term MA's to "scalp" the dow, making use of the "reverse bias" to work in his favour. I have seen his method, and his openly published results- some 1600 points in 6 weeks (recently). He presented this at the recent Solihul traders meet. There has also been a lot of discussion in the US chat room about this too.
There is no single answer here. Those that only have a small pocket have no option other than SB's, and only Fins at that. D4F still want 5K to open I think. Those that have deeper pockets can no doubt find some futures to trade, or EMini etc. Johnny T I konw uses a simple algorith, 30 min charts, buy and sell on RSI crossing 50. He has a 50 point stop loss, and a 150 point target giving a 3:1 R/R. His success with this is undisputable. It doesn't maximise potentials, and is not optimised, but it DOES give profits, regularly , and sees him into all the major moves.
For those that have commented that they are in loss after 15 months , shouldn't you be looking at an alternative strategy? I know, easy to say, nigh on impossible to do...... I really don't have the answer. Does anyone?
If the SB's changed their trading setup, to offer say £3 a side and no bias, I wonder how many of us would clean up, even with a spread....

 

[techMark]

Hi Options, agree with you about using SB to sharpen your skills, trying to 'beat the bias' can actually be a valuable skill later on when anticipating what your indicators are going to do soon.

But I hope that everybody realises that they are a revenue stream to the SB companies in exactly the same way that the punters down at Ladbrookes are. It's very demoralising and easy to come to expect to loose everytime you trade.

Give e-mini S&P a look. I came to the conclusion that the FTSE future is pretty useless to trade - the volume is just too low. If you're using stop orders, you get stopped out all the time on fakes - almost as bad as SB. They are very few fakes on e-mini s&p and emini Nas is almost as good.

Incidentally, cme supports stop orders so that your order is held at the exchange, in theory it doesn't matter if you get a computer freeze, your order is still live. Liffe does not support stop orders. If you use stops for your FTSE futs then they are held on your computer, so you are in trouble if you get a crash. If you don't use stops, then you're a braver man than me.

Good luck for next week

 

[techMark]

Chartman, we all have respect for you, but I can't understand why you defend spreadbetting.

I would like to bet, as most reading this thread are betting men and women, that almost everyone lost money in their spreadbetting accounts last week. And if you couldn't make money last week with all that volatility ...

 

[ChartMan]

Tech- I only defend it to a point. I sucks, you get robbed, and there are better ways, but I try to provide a broad and unbiased view of various situations. It is a fact, that there are winners using SB's. It is a fact there are losers. The balance, undoubtedly, weighs heavily on the side of the losers. There are those, like myself, that simply don't have the funds to open a $20k account and trade all the other nice alternatives that are around. There are those that have $unlimited in their account, and will lose most of it whichever way they trade.... I met one recently.... No stop loss, It'll recover, and if it doesn't , I'll drop some more dosh into the account.
Sadly, I missed all the action last week. Unforseen problems arose at work and I had to work every hour under the sun to resolve it. 16 hour days and all this weekend, and I can only just see light at the end of the tunnel. Had I traded I would probably have had my Bull hat on and gone long

 

[Naz]

I dont know if this helps.But here goes.

I am a scalper at heart and used to trade up to 180 round trips a day on one of the fastest proprietry Nasdaq level 2 systems.With an array of 64 orders of which 24 were hot key'd into my key board.Commisions so low it was a dream.

At that time the in stocks were between $150-$200.Now they're about $8-$15.

The moves were quick and fast and traders did very well.However now times have changed and for me the best moves come from sitting watching and waiting and pouncing like a lion at a watering hole when that wounded animal stumbles close by to take a drink.Like BGEN last week which i mentioned recently on the market chat thread.I had to wait agonisingly for it to pullback to a fib level before i could short it.But as soon it was there my stop could be reasonablely small and it rewarded with a 22% fall.

Yes i still scalp but not like before,there is not that much money in it any more.However i use the skills to get brilliant entry points and tight stops in US stocks.Like its been said before, scalpers entries for swing trades.The big profits have come from shorting the pullbacks in various US stocks either intraday or over 2/3/4 days.

My best was BGEN last week.Other winners were PRV,LPNT,STJ and one i was stopped out was EDS.My favourite to be watching this week is WBSN.

 

[orchard]

All this terminology is bamboozling me!! I am into what I call 'hit and run', particularly as I can now place stops on the net. I trade small (being a relative pauper) watch the prices, and as soon as I trade I decide an exit point and stick to it. It works wonderfully when my ISP does decide to cut!. Is this 'scalping?

 

[ChartMan]

No, it's a rock solid discipline!Keep at it.

 

[tjbw]

orchard

aiui 'scalping' was originally used by pit traders, who would buy at the bid price and sell right away at the offer thus gaining, or scalping, the spread.

Nowadays spreads are very small, and the term is used for short term trades for a typical gain of $0.25 see:

http://www.stocktradersdaily.com/Main/Help/TradersGuide/Terms/Scalp/

'hit and run trading' was coined by Jeff Cooper, see:

http://www.tradingmarkets.com/gall_tlp.site/main/cooper/

Barry

 

[redcloud]

Have you experienced problem in getting price with finspreads?
If you want to see my thread for this go to http://www.trade2win.co.uk/boards/showthread.php?s=&threadid=4060

Happen many time to have an error of system an other time a delay of getting price and this always when the market move consistently. For those that use D4F or Cityindex if happen how many time x day?

Redcloud

 

[ivor31]

Hello all
Great posts. This is so timely for me as i've just started trading with D4F. It did not take me long to notice how D4F index prices moved away from the index true value especially at extreme tops and bottoms,but seems to always come back to par eventually,if you can stay in. My fisrt week dealing with D4F i was up £130. Two trades on the FTSE and the rest just £5pt trades in VOD taking a 1p move when i got it. I have not yet seen any bais with the stock quotes but there is still time i suppose.
With my small capital spreadbetting has opened doors for me that otherwise is off limits. The ability to go short is the most important tool for me. Making money on a bad day is fantastic. Also my losses are less(so far). When i got it wrong trading shares there was a loss of £20 dealing costs immediatly,then stamp duty,then my stop loss amount this could total £30+. So using this same technique i'm out the same and lose less.
At first i thought this was to easy. I went short when i thought the index's rally had ended(spinning tops) and went long when i thought the drop had ended(small bodies,hammer) also confirming this by my AIQ charts.Then last week i gave back all my gains as i got every trade wrong. So i'm paper trading again.You guys have answered many questions i was starting to ask and have put more ammunition in my gun.Great stuff.

 

[orchard]

Hi Ivor 31
Like you I am short on capital and find spread betting the only logical way I can get into the market. I trade Wall St daily futures only from 7.00pm to close with FS. Now that they have a stop loss facility on the net, life is so much easier. I was losing money hand over fist, but I have discipled myself and this week made a profit!!!. I locked in profits where I could, and, even though I missed out on further profits it was comforting to know I could not lose. I am also doing an emormous amount of statistical info (probably too much) but it might come in handy (if I don't finish up with square eyes). Good luck with your spread betting. Keep us up to date.
Orchard

 

[steve-th]

for what it's worth her's my 2 pennies.
1. Day trading indecies is for mugs. I tried for a while till I realised that I was doing it for the buzz that gave a quick result. Those that complain about bias are using it as an excuse for losing. The SB co. is quoting it's "opinion" of where the level will be at some future time and is under no obligation to keep that even close to the current cash price.
2. Shares are quoted on the basis of the current market price + the SB"s spread. Shares also offer more volatility % wise than indecies and TA is more applicable as they are truly traded.
3. Paper trading is a total waste of time as without putting yourself on the line you will learn absolutely nothing. However this is not to say that the more you bet the more you will learn. To start with keep the bets v. small but meaningful ie slightly outside your comfort zone. That way you won't forget the lessons thrown at you.
4. Once you start "hoping" for a result, GET OUT, you are out of control.
5 Don't spend too much time reading stuff like this. It won't help much. Just got to suck it and see.
6 Altho. I try my best not to believe in it, GOOD LUCK

 

[orchard]

Hi Steve
Good reply. You are spot on about the comfort zone. I bet no more than £1 and lst week netted a profit of £163. Can't retire to the Bahamas, but it is a start. Aint it time we spread betters stopped moaning and just got on with it. Once you're into spreads, you learn the rules and the SB companies are in it to make profits, otherwise, where would we go??.
Here's to a profitable future!!!(for us)
Orchard

 

[sltsang]

Hi,
Hmmm, its not the bias I'm upset about, its them holding the order/s when we press the trade button, the longer they hold our orders, the worse quote to get in or out of a possition we'll get ( requote/s on CMC ), I have had +ved trades turning out to be -ved ones cause of requotes.