To spread or not to spread?

[roberk]

If you've already decided that you don't believe what anyone says, Donald, then there's absolutely no point in discussing it with you. But for the benefit of other people reading, I'll still point out that your post is factually incorrect in many places.

Why, then, are so many successful traders with a real edge and consistent profits increasingly switching to SB to save the Capital Gains Tax? Oh I forgot - you don't believe what anyone says. So all the people here who have been making a living that way (for nearly 5 years in my case, and a little longer for others, I think) are just liars, are we, Donald?

That's your opinion, and you should state it as your opinion, not as fact. It happens to be totally mistaken. There are several of us here making a living that way. And many more in other internet forums, too.

With the sort of trading I do, I make MORE from spread-betting than I could with direct access. And I'm not the only one. Maybe it doesn't suit your trading, but please don't keep describing it as "impossible".

Why is it that on this site some people just can't bear, for some reason, to admit that spread-betting is a perfectly valid and reasonable way to trade?!



_Why_ does an intelligent guy like you apparently have such a problem with this, Donald? It's really very, very difficult to understand!

I opened a spreadbet account with CS a few months back, withdrew the money last week. I had the idea that the small size would be good for swing trading and I think it is valid for a few contracts with reasonably tight spreads such as ES. But some other contracts were virtual robbery (no offense to CS - as far as I can tell they are one of the better punting shops).
As I am mainly a daytrader it is beyond me how any daytrader could profit using a SB?
I average about $100/day commision with direct access but if I traded the same contracts SB this would be $300-600 depending on what derivatives.
I think SB is fine for people who trade as a hobby - and probably safer than going direct access where you need to put up big money- but for a genuine trading business, it doesn't make sense.

 

[Roberto]

I think SB is fine for people who trade as a hobby - and probably safer than going direct access where you need to put up big money- but for a genuine trading business, it doesn't make sense.

For a genuine trading business, it doesn't make sense to you, evidently.

Equally evidently (if you look around these and other boards, trading magazines and so on), there are many professionals with genuine trading businesses to whom it makes perfect sense.

It depends on your overall cost of doing business (which of course includes whether or not you pay tax on the profits), as has been very extensively discussed elsewhere.

I respect that for your own genuine trading business, your opinion will undoubtedly be 100% correct, just as I'm sure you respect really that for others' genuine trading businesses, the opposite may well be the case.

 

[fhb22266]

Well, a bit more of a learning curve this week - mainly due to trying different things with Bracket Trader (scaling in etc). Also got done by a couple of nasty spikes so that's something else that I've got to watch out for although I'm not sure how ou can really avoid them. Just unlucky I guess that I was long when the downward spikes occured.

I'm not using an automated system - just IB through Bracket Trader.

What automated system did you backtest? Sounds too good to be true.

Oh, and yesy, I'm trading YM. I'd be happy with 'only $7000 in three days' though!!

Edster

Hi Ed,

how are you getting on this week? I've had a pretty disastrous week trading. I'm going to have to go back to basics.

How do you find Trader Workstation? I downloaded the demo version and it looks pretty complicated to me. Does Bracket Trader simplify the TWS interface?

FB

 

[Edster]

Hi Ed,

how are you getting on this week? I've had a pretty disastrous week trading. I'm going to have to go back to basics.

How do you find Trader Workstation? I downloaded the demo version and it looks pretty complicated to me. Does Bracket Trader simplify the TWS interface?

FB

Haven't had much time to try the YM this week. Only done a couple of trades and am a whopping $35 up!
Last week wasn't so good. I was trading just for the sake of it (big mistake, I know) and was down about $200. Still up overall though and still learning.

I don't actually use the TWS platform. I use Bracket Trader and yes, it does simplify things somewhat!

Ed

 

[Roberto]

Edster
Arcade King
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Asteroids Champion!
Breakout Champion!
Space Invaders Champion!
Chopper Challenge Champion!
Wear the Shirt Champion!
Aggressive Alpine Skiing Champion!
Autobahn Champion!
Zoo Keeper Champion!

Has anyone suggested that you should get out a bit more, Ed?

 

[SIMONJ1968]

Good question!I am now getting away from spreadbetting as I have been hit a few times from the wide spreads. I am now trading Options - I am new to this and have only placed 3 trades in the past week or so and it seems a lot better! I have to admit, I attended a two-day course which ws excellent! I hope the returns prove to be better as has been suggested! I will keep you guys informed but as for spreadbetting, even though the spreads have narrowed, I still believe there is manipulation involved from the SB firms themselves!

 

[LION63]

Anyone trading via a spread betting company should know that you must use charts that show/follow the company's quote and not a chart provided by e signal etc. which shows the DOW or DOW futures. In the event that you use such charts, you face an uphill task and ultimately it will lead to poor results.

Spread betting is not as bad as some would have us believe, it very much depends on strategy. How can one pay a 4 point spread if the profit sought is 5 points? Not a logical endeavour - Move to DA. It is not for 'scalpers' - Move to DA.

 

[bulldozer]

Simon,
Uve made the right discision to move onto Options, its far better than SB.

bull

 

[fhb22266]

Anyone trading via a spread betting company should know that you must use charts that show/follow the company's quote and not a chart provided by e signal etc. which shows the DOW or DOW futures. In the event that you use such charts, you face an uphill task and ultimately it will lead to poor results.

Spread betting is not as bad as some would have us believe, it very much depends on strategy. How can one pay a 4 point spread if the profit sought is 5 points? Not a logical endeavour - Move to DA. It is not for 'scalpers' - Move to DA.

Yes, I would agree for intraday trading, but my best results have been futures spread bets over several days, then the spread is of little consequence.

I would like to know which charting package offers the SB companies quotes? AFAIK no one does. Sure the SB companies offer basic charts based on their own quotes but the charts aren't real-time or sophisticated enough. At least that's my experience - has anyone managed to find an SB firm providing price data in a 3rd party charting package:?:

 

[LION63]

Fhb22266,

I have always been of the opinion that the spread is irrelevant over a period of a week or so and agree with you. If a setup is good and the individual is looking to pick off 100 points or more would a spread of 4 or 8 points make the trade unprofitable? I view it as an expense.

I have never come across a third party that offers charts based on spread betting quotes but as I have an account with Deal4Free, I use their charts and strangely enough, they tend to mirror the movement in IG Index quotes. Neither have I come across a spread betting company that offers third party charts.

 

[mike001]

Lion63
Looking at the last few entries to this thread i reckon you should read about futuresbetting.com
on www.financial-spread-betting.com

They show the actual futures market and make their spread around the underlying bid/offer, so basically direct access trading but tax free because its SB!

The charts they give free are based on actual data from the underlying and not some made up price.

 

[LION63]

Mike001

I have taken a look at Futuresbetting.com and requested a brochure in order to obtain more information but unless I am missing something, their margin requirements are much higher than the likes of Capital Spreads, IG Index and Deal4Free. Apart from that, they do not seem to offer individual shares; it seems that they cater for Index, Currency and Commodity traders (I do not trade the latter two). Another thing that I noticed is that the currencies have opening and closing times, that would pose problems for traders as currencies trade round the clock. If a disaster happens out of hours the trader is left in limbo which is not a palatable situation.

The other link that you provided (www.financial-spread-betting.com) seems quite interesting and I would suggest that anyone reading this thread could do much worse than spend time browsing it.

All in all, thank you for the information you provided/shared.

 

[mike001]

Lion63
No problem. Don't you sleep! Take your point though about closing although to be fair i know you can put stops in with futuresbetting which are left at the exchange when they're shut.

 

[LION63]

The fact that stops/limits can be left with the exchange while they are shut should nullify the problem of freak events causing substantial losses. That effectively makes them a much better proposition than it first seemed because with the other spread betting companies that close, the trader is dead in the water. In some cases it does not even have to be a freak event, because as you know, currencies and commodities can move in a few hours.

 

[mike001]

Lion63
Absolutely. No one likes getting stopped but at least with futuresbetting you are stopped only if the price trades on the underlying market and what's more there is accountability there because you can check on the exchange websites the next day to see if that price did trade. With existing SB's you are stopped at their price.