why SpreadBet??? its not professional

[Pringle]

I agree GammaJamma. I have been full time spreadbetting for nearly four years and have found it the perfect platform for me. (See my other posts in Spreadbetting section).
Surely in trading we are all trying to make money by predicting the direction a particular instrument. Therefore the best way (for me) is to benefit from the tax advantages and commission free spreadbetting. I don't give a monkeys if it is deemed 'unprofessional' by some smug people, don't care that i only have one screen and no data feeds - surely the object of the exercise is too make money. I'll happily put up my record in trading via spreadbetting against any direct access trader (in percentage terms).
Having said that SB is not for everyone. It is hard for intraday trading for example (though not impossible). For swing trading over days and weeks for currencies , commodities and indices I find it perfect.

Pringle

 

[Splitlink]

Read a lot of views now about which is best way to spread bet, which platform, etc.

What I do not understand, is why on earth would a serious trader use this platform (other than as an occassional extra tool).

The only way to trade that I can see where you are on an even playing field is to get yourself professionally set up with direct market access to the Futures Markets.

Am I missing something?

If you can't make money spreadbetting my advice is- don't go to a futures broker. The only people who should criticise spreadbetting companies are those who have found spreadbetting less profitable (but profitable) than trading with a broker.

I've traded with both and found that the difference between the two is small, taking the tax question into consideration. I would, also, say that index trading is also better with a broker because, IMO, it is essentially an intraday trade and intraday trading is no good with spreadbetting.

The main reason that I left broker trading, though, is that I prefer a more peaceful life i.e. position trading. I lost money intraday trading which I do not do with swing and position trading.

Split

 

[bundbaby]

In Trading Terms spreadbetting AND using brokers is like going to the casino to make money.

Be like the Casino - get direct access or go to a trading bureau - make the prices, dont take the prices!

 

[RUDEBOY]

Trading? I trade because i can. Maybe i am too self indulgent. I like to prove to myself that i am correct. Can you disect my words.....probably not? I get an end product out of trading, considering what is written on here sometimes, other people don't. Why? The markets are not a mystery, some of the individuals who take on the markets are a mystery to myself and probably to themselves and other people. There is no 'buzz' factor where the markets are concerned, the markets are simple and straight forward. My buzz is T2W. I love being involved within the minds of people....it's great fun. Sincerely. RUDEBOY.

 

[Splitlink]

In Trading Terms spreadbetting AND using brokers is like going to the casino to make money.

Be like the Casino - get direct access or go to a trading bureau - make the prices, dont take the prices!

Would you give me some names/links, please? Closer than IB, for instance? I'm always ready to try something new.

Split

 

[bundbaby]

Would you give me some names/links, please? Closer than IB, for instance? I'm always ready to try something new.

Split

Hi Split.
I know a trader working from home with a new set up called a "virtual arcade" in australia. He gets real time prices and gets professional direct access. He is linked up to one of the outfits I know quite well. If that is the route you want I could put you in touch with the group here in UK and you could also speak/email the guy in Australia to see how he's getting. I take it you are in spain? Is that correct? If you like I could expand a little - but not much point if thats not want interests you.
BB

 

[Splitlink]

Hi Split.
I know a trader working from home with a new set up called a "virtual arcade" in australia. He gets real time prices and gets professional direct access. He is linked up to one of the outfits I know quite well. If that is the route you want I could put you in touch with the group here in UK and you could also speak/email the guy in Australia to see how he's getting. I take it you are in spain? Is that correct? If you like I could expand a little - but not much point if thats not want interests you.
BB

Thanks for the offer, BB. I'll keep you in mind, if I decide that I want a change from what I am doing, if that's OK with you.

Split

 

[Stockjunkie]

being the market often has associated high costs.

if you really want to be the market , that really means :

1) work for a bank

2) buy a seat as a local

1 is lousy as you would be an employee
and 2 cost a hell of a lot of money 100's of 1000's of $

 

[Anonymous]

being the market

?

Those were the old days. Now it's the latest technology, and it's not 100's of 1000's of $, maybe 10 or so 1000 $ for a start.

 

[charliechan]

Some SB contracts are value for money when trading through the SB as opposed to trading through, say, direct access and pay a commission, fee, etc.

??

reason #1 why sb is for 'non-professionals' ie those who cant treat speculation as a business

1 tick spread betting = $10 (eg)

1 tick in futures = $10 (eg)

you pay $5 r/t in futures = $5 costs (eg ib)

sb you pay an extra tick on the spread = $10.

reason #2....

i trade on an exchange. this is transparent. ie the other side of my trade does not know who i am or what my position is. (did i buy to go long or cover?)

in sb you are dealing otc - over the counter. ie sb KNOWS your position. this is like playing poker with your opponent knowing your hand.


reason #3....

on the exchange i can see the order flow coming in and actual levels the market has traded. this cant be used as a proxy for otc because the sb can and often does make prices up 1-3 ticks either side of the REAL market to clip stops (why GJ wisely eludes to using wider time frames when playing this 'game')

reason #4.....

exchanges are regulated. funds should be kept in segregated accounts. i dont know how funds are kept in sb accounts, but i know no one regulates them other than the fsa. in my experience, the fsa are about as useful as a hole in the head. they wont give a damn if the individual gets shafted, only act on behalf of all the clients should something happen. they always tend to lean in favour of the company though, rarely the customers.

reason #5....

there is no reason #5, other than reasons 1...4, meaning if you are still reading this and havent realised the truth, then sb truly is the place for your time & effort as there is no hope for you.


most of what i say is especially applicable to short term traders. longer term traders who have their outs placed further away from the market may negate some of the tricks, but not all.



.

 

[charliechan]

Why bother?

Because a trader handles risks everyday, that's what a trader does. One of the ways to handle risk is: diversify, including don't put all your baskets on one egg. SBs are a good way to diversify the funds, for one thing they are regulated and most (maybe not all) don't charge account maintenance fees.

If you know a platform is unsuitable for speedy trades don't use it for fast trades. They are suitable for slow, directional, predictable trades, those which you can use the lowest risk possible and hold your position overnight for days or weeks without having to worry about margin call.

para 2 is ok

para 1 is wrong. (imo)

yes a trader handles risk - so why increase the risk with sb? (see my post above)

diversification does not reduce risk as much as some believe (especially 'the industry') diversification does 3 things....

1/ creates more transaction costs (just what 'the industry' ie insiders want - more commish for them, more liquidity for their big customers too)

2/ to diversify is to admit that you are putting funds into a 'second best' asset. ie something you dont think will have the returns of your first choice. this is ok if you are a hedge fund and has other people money under responsibility, but my guess is that you are neither of these. it is also ok to do this if your orders for your first choice will move the market too much, so its better to spread the orders out to absorb liquidity

3/ makes you think your being responsible cos your doing what the 'pros' do. this keeps you coming back for more of the same.

 

[Pringle]

IMHO spreadbetting is fantastic and it has served me well for 4 years trading full time. I understand and respect the arguments against but they don't apply in my case.
I trade currencies and commodites and swing trade for between 50 to 200 pips. Therefore I don't really give a toss if the spread is slightly in the SB firms favour for a while, but I can understand how it would be frustrating if I were trading tighter positions. With respect CharleChan it makes no difference if the SB firms 'know my hand' because when then market moves in my favour by more than a few ticks they have no choice but to go with it as others may be taking the opposite side of the trade.
I have visited a few SB firms and beleive that they make their money via the spread by matching clients of opposing views against each other and making on the spread each time. When they are clearly at risk (set by their own criteria) they simply hedge in the 'real' market to reach a neutral position. If they are doing their job correctly they do not care whether a customer wins or loses as they make their money in the spread each time when the client opens or closes a trade.
The fact that the winnings are CGT and income tax free makes it a no brainer for me.
Horses for courses - all I am doing is trying to make money from changes in prices of the underlying market. I prefer it tax free.
Regards
Pringle

 

[Anonymous]

Quote charliechan

"reason #4 exchanges are regulated" - what is jurisdiction clause, if any professional knows what that is and how that is applicable?

"i dont know how funds are kept in sb accounts" - so how do you know they are not segregated in SB's? A regulated SB which is a member of the major exchanges may have more memberships of more exchanges than a self-professed "professional".

I doubt that person knows what is trading.

 

[Anonymous]

Quote charliechan

"para 1 is wrong" ? - ever heard of mareva injunction?

 

[Anonymous]

If a business can be done in the following way:

Individual
Joint Tenant
Company & Incorporated Body
Investment Club

Taking into consideration a person's individual circumstances, if done as an Individual he is non-taxable, if done the Corporate way he is tax-liable, would a reasonable man with business sense not conduct the business the Individual way?

A company can be set up even with something like $2 paid up capital, what good is that?

Why would a reasonable man with business sense want to increase his tax liability? If he do that, when the tax rules are if he do it the Individual-way he is tax free instead he do it the taxable-way would the tax-man not think he is trying to cook up paperwork to cheat the banks? Or to get a residence permit to live off social security?

 

[Stockjunkie]

pringle is right . SBs have their uses .

My wins normally run in the range of 250 pts , I too don't give a toss about a few pips here and there for the spread .

they can know my position all they want but it ain't gonna change the market , if it's with me and they go against me as they have done a few times they will get firestormed ! then they start to follow me .

are also additional benefits , someitmes you bogus trades in your favour !

BUT that said there are disadvantages as well documented.

 

[Stockjunkie]

I must add something not known to 90% to SB users out there : there is a way to leverage your bets more that the published amount to the effect your could be levered something like 1000 : $ 1 / pt.

 

[Splitlink]

it makes no difference if the SB firms 'know my hand' because when then market moves in my favour by more than a few ticks they have no choice but to go with it as others may be taking the opposite side of the trade.
Regards
Pringle

I, too, have made money spreadbetting and when I've lost it has been because I got the market wrong.

Nevertheless, I have aways wondered whether they "spike" the stops out against certain players
and are we all treated the same or can traders be given separate quotes from others? Unethical, I know, but can they?

I, personally, have had my stops triggered right on my price , even on July 7th, so have no unpleasant experiences.

Split

 

[charliechan]

IMHO spreadbetting is fantastic and it has served me well for 4 years trading full time. I understand and respect the arguments against but they don't apply in my case.
I trade currencies and commodites and swing trade for between 50 to 200 pips. Therefore I don't really give a toss if the spread is slightly in the SB firms favour for a while, but I can understand how it would be frustrating if I were trading tighter positions. With respect CharleChan it makes no difference if the SB firms 'know my hand' because when then market moves in my favour by more than a few ticks they have no choice but to go with it as others may be taking the opposite side of the trade.
I have visited a few SB firms and beleive that they make their money via the spread by matching clients of opposing views against each other and making on the spread each time. When they are clearly at risk (set by their own criteria) they simply hedge in the 'real' market to reach a neutral position. If they are doing their job correctly they do not care whether a customer wins or loses as they make their money in the spread each time when the client opens or closes a trade.
The fact that the winnings are CGT and income tax free makes it a no brainer for me.
Horses for courses - all I am doing is trying to make money from changes in prices of the underlying market. I prefer it tax free.
Regards
Pringle

fine - now add up all the extra ticks that you dont care about that the sb plants on you over a year.

in total it will add up to another winning trade of 50 ticks maybe?

no offence - but i think we should be fighting for every tick in this business, not throwing them away. money is money.

also, if you think of the model sbs operate on, they can ONLY MAKE MONEY FROM CUSTOMER LOSSES. so its in their interest for you to LOSE.

the exchange is indifferent.

 

[the blades]

fine - now add up all the extra ticks that you dont care about that the sb plants on you over a year.

in total it will add up to another winning trade of 50 ticks maybe?

no offence - but i think we should be fighting for every tick in this business, not throwing them away. money is money.

also, if you think of the model sbs operate on, they can ONLY MAKE MONEY FROM CUSTOMER LOSSES. so its in their interest for you to LOSE.

the exchange is indifferent.

I believe it's fairly easy to calculate your tax liability, and easy to estimate probable losses due to "bias".

For some, the (lack of) tax liability greatly outweighs the other "losses".

Why else would they spreadbet? Operating through an exchange is easy to do - why would you choose another path if you were regularly shafted by the SB company?

UTB