Wasp,
It is clear that you are a well respected member of the T2W community, who has undoubtedly contributed far more than many. However, it seems to me that your original post is full of subjectivity and personal prejudice. Yes, people have asked you for your opinion - but:
strikes me as unabashed arrogance. Anyone who is not prepared to consider that their opinion of fact could be misguided - heaven forbid, wrong - should bear in mind that humility is probably the best tool of learning there is.
Furthermore, there are a few comments in particular you have made that I find difficult to accept in the context you have set them.
Specifically:
Besides arbitrage, you will find that every "trade" is infact the acceptance of a payout, for a specified risk, determined by the value of an asset under certain conditions. Be it buying /ES8M, or AAPL, or a $10pp Spreadbet on EUR/USD - My payout is largely determined by the value of said asset at the time T I close the position. You go on to say that:
Well I might be an options geek, and I might be in the market for buying and selling volatility in the wholesale OTC market. This is just as much an asset as a spread bet, but you don't consider me a trader???
Moving on...
Call up the dealing desk of Killik & Co. or Brewin Dolphin, and ask for the price of BP shares. They will quote you a Bid and an Offer, which may well be different to the
best Bid/Offer currently available in the market. But because I am dealing with a counterparty who is making a profit from the difference between the Bid and the Ask, I am not considered a trader??? Would you consider the counterparty, the MM in BP at Killik a trader???
Next;
I've already covered the speculation aspect of this sentence, so I will focus on the first part "own the underlying stock". You are right, a spread better does not recieve the packet of rights associated with an ordinary share. However, what about CFD's? Increasingly these are being used to gain an influence over the management of a company; so much so that the FSA have launched investigations into abuse of these instruments, with disclosure of an interest > 3% in any listed company through a CFD likely to emerge in the future. But as CFD's dont mean you
own the underlying stock, you cant be a trader???
These things were
invented by the City!
You then move on to describe your definition of trading:
and
Do you not understand the concept of risk? Traders trade RISK, nevermind the wrapper it comes in. I can receive risk by buying or selling an asset with the intention of completing the reverse transaction in the future for a profit, and I can receive risk by entering into an agreement where the payout is determined by the underlying assets' price at some time in the future. Pot
aeto, Pot
arto.
__________________________________________________________________________
In this first part of your post, these are the only serious arguments - most of the rest is just "filler", and pretty contentious at that (e.g. "Trade is the voluntary exchange of goods, services, or both." - absolutely. I pay my SB firm a commission, in the form of a spread, for the provision of RISK).
You then go on to list the - in your opinion - pro's and con's of spread-betting. Of all the "cons", only 2) and 6) aren't misleading.
And this is perhaps the only valuable point you make. Yes it is true that, in dealing with an SB firm, you are accepting a payout determined by the value of an instrument at time T, where the SB firm itself provides the value of said instrument. Conflict of interest? Of course! Does this mean I can't trade it? Bullsh!t.
There is a difference between buying a payout in acceptance for risk from an
exchange, and buying a payout in accpetance for risk from a
counterparty. But to say that one is trading and the other isn't is just plain ignorant. Each have their benefits - through an exchange I eliminate the conflict of interest (to the best degree possible), and through an SB firm I can tailor the size of the payout to suit my own particular propensity for risk. These are significant differences, but they share exactly the same principals of RISK and PAYOUT. Trading, or betting, is about finding opportunities, whereby one considers the PAYOUT and the RISK to be mis-matched, and acting to profit.
As an aside, some members do seem to exhibit a genuine "class divide" attitude here on T2W - there are those who trade mostly via exchanges (or ECN's), and those who trade via spreadbetting. In general, it seems that a few of the "exchange traders" consider themselves to be better traders than "SpreadBetters" - perhaps because of the bigger cash requirements (a point you elude to in your post), and I won't disagree that there are different skill sets for each. However the reality is that we are all just different shades of grey; there are good traders, bad traders, full-time traders, part-time traders, prop traders, hobbyists and teenagers (Spanish89 is my fav :cheesy
. Instead of arguing about who is the most "trader-like", we could all just lay our d!cks out on the table and see who's got the biggest (I will sell the risk that you have the biggest
- friendly banter
).
This is
my opinion, and if anyone can convince me that I am wrong I will change it.