Just saw the spreadbetting for retards topic. What''s so bad about it? It's tax free and there are no charges on making a trade. Right now I own stock which costs £12 per trade so it seems to be only a good thing. Are there daily charges associated with a spreadbet? How much?
I've looked into spreadbetting a while back.
I think the main problem I saw was the fact that you are buying from a price maker so you need to be careful who your broker is and also sometimes you may find be hard to exit the trade. In UK you don't pay CGT but you also can't offset your losses against future capital gains
Bid off spread is often large plus you can only get filled on the offer (or bid to short), that's a massive disadvantage right there.
Mornington Crescent
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As above, it depends on how you use it. The mechanics make it seductively easy to trade without due thought process about what you will do if price goes in your direction or against it. It's twice as easy to make errors of judgement because, unlike shareholding, you can short as well as buy. Plus, again, unlike shareholding, you can be liable for losses greater than your account size.
But there are tools and self discipline methods available to counter all these. The market is never your enemy, you are.
But there are tools and self discipline methods available to counter all these. The market is never your enemy, you are.
Sidekicker
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Nothing wrong with spreadbetting it just depends.
If you are a scalper, don't use it use DMA.
If you make less than 10k a year and trade stocks, use CFDs, you can trade inside the spread.
If you want level 2 stats, go DMA.
If you trade and the spread is less than 10-20% of your expected profit, go SB for tax advantages.
etc etc
what?
Yes, it's not a case of spread betting is better/worse than some other product, it all depends on how you trade.
If you're long term, holding a trade for many months, even a few years, spread bets are an excellent product. But if you strategy is to try and nick 10 ticks from the FTSE every day then it's virtually impossible to make money overtime.
Sidekicker
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not quite.
If you hold a spread bet for more than few months, you will find, the daily financing due to the leverage will cost you a lot.
If you are holding for a long time, the only way is to use the standard stock purchase system with zero to minimal leverage.
You can of course trade the futures contracts, but you will find yourself being charged a small financing fee every 3 months when the contracts swap.
donaldduke
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Firstly short term trading, like day trading, is not realistic with spread betting.
Traders struggle to make a profit even with short term direct access trading.
Spread bettors dont really stand a chance.
Longer term trading maybe more viable with spread bets but longer term trading is susceptible to multi month/multi year drawdowns, which most people cant handle.
So Spread betting is hard either way.. short term or long term.
The only really viable way to make money with Spread Bets is if you can exploit some sort of weakness in the SB pricing, or if you have inside info which may only be legal in the FX markets.
I know there will be some traders reading this who will disagree, they may currently be having a hot streak with their spread betting accounts, but invariably that luck will run out.
What I meant to say is that at some point you will need to exit the trade and may find yourself disadvantaged by dealing with a counterparty who not only knows your position but can quote a price that may more suit him and not you
darktone
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All in my experience.
In general theres not much thats bad about it these days. Spreads are resonable, platforms are pretty good etc. Id guess the main reason SB get such a bad wrap is that most people trade not so well, much easier to shift the blame than accept it.
One thing id say thats not so good is that clients can (and are in my personal experience) treated differently.
SB gets poorer publicity than other means of market access partly owing to the lower barriers to entry, such as tiny capital needed to open an account. The traders who are most likely to fail are generally attracted to SB first: these are also the people most likely to shift blame to a third party, rather than look to their own faults.
I suspect a large part of the problem with spread betting is the name - it sounds like gambling, which, of course, it is, albeit slightly more sophisticated (maybe) than choosing a horse from the racing pages of The Sun. 
I'm new to the whole thing, quite interested in spread betting. My aim is to make part of my income from it, it seems ambitious right now but if I could make £10k pa I'd be happy. As that's below the CGT threshold I'm wondering if spread betting is the best route for me, given that the biggest advantage seems to be exemption from CGT.
I'm new to the whole thing, quite interested in spread betting. My aim is to make part of my income from it, it seems ambitious right now but if I could make £10k pa I'd be happy. As that's below the CGT threshold I'm wondering if spread betting is the best route for me, given that the biggest advantage seems to be exemption from CGT.
pitscalper
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SB is for retail traders and you are almost certain to lose your money. I suggest you trade an instrument with a feed from the exchange. If you brokers interests are not aligned with yours you will probably lose. At least give yourself a chance, trade a proper instrument on demo while you save up for a proper account.
I dont use SB but do they even show you volume, if not how can yo trade without volume. I cant think of an analogy but it's like trying to trade without a complete set of data. I used to work at an investment bank and didnt see anyone there using SB.
I dont use SB but do they even show you volume, if not how can yo trade without volume. I cant think of an analogy but it's like trying to trade without a complete set of data. I used to work at an investment bank and didnt see anyone there using SB.
