Spread Betting Investment

P

pennypincher

Registered User
Messages
396
I've been playing with the spread betting simulator tool from delta index,to see if it's possible to make money.So I watched bloomberg and a few other financials and based on their "analysis" over the last few days I bought into the Dow indices because if the US interest rates were paused the dow would rise as money would flow into shares.What a joke it took a nose dive today and thankfully I lost none of my own money...but it does make me think that economists are only correct inretrospect.How can you make money at this other than an oil pipeline bursting...all the information in the media isn't being followed by the investors so what are they basing their investments on?
 
pennypincher said:
..over the last few days I bought into the Dow indices because if the US interest rates were paused the dow would rise as money would flow into shares.What a joke it took a nose dive today...
Click to expand...

"Buy on the rumour, sell on the news". People bought shares in advance of todays news, expecting a pause in interest rates. If we knew rates weren't going to change today then so did everyone else. So no bumper profits to be made on the official announcement.

Not to mention other factors also affect share prices, such as war, oil, and even (shock, horror!) company performance!
 
Hi Pennypincher

I think it's important to understand that spread betting is gambling and not investing. Investing is something which has a expected postive outcome on average. So buying a portfolio of stocks should result in a postive outcome over a period of time. Spread betting is short term betting against an institution who will, on average, make the margin in the spread. So you will lose the margin on average.

Brendan
 
Hi Pennypincher,

Funnily enough I actually made money on yesterday's pause, having anticipated just such a reaction - an initial jump followed by a fall in price. However, it is important to realise that spreadbetting is speculation rather than an actual investment.

Keep working on the simulator and try to develop a strategy that suits you (and makes you money) and stick with it for a prolonged period of time - say, several months - before putting actual money on the line.
 
On the subject on economists, I am reminded about that saying:



The First Law of Economists: For every economist, there exists an equal and opposite economist. The Second Law of Economists: They're both wrong.
 
Note

Although most upcoming events are already factored into the prices, Not everything is "expected". E.g. The UK raised their interest rates, causing Sterling to go off the scale.

Again this is gambling, although in the same way as day trading is. Following the markets and upcoming events can help to create a strategy, but one off events can wipe you out in seconds (or make you a fortune).

Anyone here made it onto the competition leaderboard?
 
pennypincher said:
I've been playing with the spread betting simulator tool from delta index,to see if it's possible to make money.So I watched bloomberg and a few other financials and based on their "analysis" over the last few days I bought into the Dow indices because if the US interest rates were paused the dow would rise as money would flow into shares.What a joke it took a nose dive today and thankfully I lost none of my own money...but it does make me think that economists are only correct inretrospect.How can you make money at this other than an oil pipeline bursting...all the information in the media isn't being followed by the investors so what are they basing their investments on?
Click to expand...

1 Don't spread bet because as Brendan says the spread will get you. Trade a liquid market using a direct access broker. As a practical example Delta quote the FTSE futures with a 4 point spread whereas it is a half to one point in the actual market. I had three different FTSE futures trades earlier this morning ( using a direct access futures broker) resulting in +4, -5 and +12 points. Trading 10 lots at a commission of £ 1.28 per lot per side thats ok - using Delta I would have been doing well to net 2 points !
2 As a trader don't try and rationalise the market like you did - the market can stay irrational longer than you can stay solvent. Trade what you see not what you think. Last Thursday I waited until after the BOE decision to enter a trade to the short side - even though I am an economist by profession and know what a hike in rates should mean, I am not arrogant enough to say I can judge short term sentiment .
3 Use stop losses. The one crucial factor that you can control are your losses - so what if you got it wrong and the market tanked last night , you can exit the trade with the click of a button. The most rudimentary of techinical analyses would have had you on the short side with another click of a button - cut your losses and run your profits. This business is about money management and discipline - the best traders have losing trades , not much point in winning on 8 out of 10 trades if you make on average 5 points on your winners and lose 20 on the losers!. Call only half your trades right and you can still make money!
 
demoivre said:
1 Don't spread bet because as Brendan says the spread will get you. Trade a liquid market using a direct access broker. As a practical example Delta quote the FTSE futures with a 4 point spread whereas it is a half to one point in the actual market.
Click to expand...

Hi, thanks for the advice here, was also going to open a spreadbetting account at some stage, having played with the simulator for last 2 years. Is there any sense in spreadbetting if you can find someone who gives a much tightter spread? Or are you saying that a direct broker will give you access to leverage instruments too? Is the entry level as low as spreadbetting? thnx
 
Is there any sense in spreadbetting if you can find someone who gives a much tightter spread.

It is not the only reason I dont spread bet. You won't get quoted the exact underlying market price and spread bet co's. usually insist on a minimum stop loss. I have read about people not being able to execute trades at certain prices and / or being requoted.

Or are you saying that a direct broker will give you access to leverage instruments too.

Yes. Futures contracts are leveraged instruments as are options.


Is the entry level as low as spreadbetting.

The entry level with a direct access broker depends on the contract specifications so, for example, FTSE futures have a £10 multiple, mini Dow $5 multiple, emini S&P $50. Therefore to trade one mini Dow contract, for ex., will mean trading $5 per point . There are also margin requirements and generally account minimums that most be complied with. My own personal opinion is that if you have to worry about these then you have to ask whether trading is right for you at all.
 
N.b. it might be worth looking at intrade.com

I looked at them ages ago as they are an online exchange - therefore tighter spreads assuming the market is liquid - in theory this is trading, as opposed to spreadbetting.

Cant access this one in work unfortunately - although I can get into delta - not sure why the difference?

I am also still only at the stage of toying with notional amounts in fantasy land, so defer to the obvious superior knowledge of Demoivre on this - which was very helpful.

Out of interest when you say direct access - does this mean you can purchase on line rather than having to call to execute?
Also would you mind naming a few of the direct access brokers you mention?
 
Out of interest when you say direct access - does this mean you can purchase on line rather than having to call to execute.

Correct - calling a broker is far too slow particularly if you are a short term trader, and inevitably far more expensive commission wise.


Also would you mind naming a few of the direct access brokers you mention.

http://www.manfinancial.com/home.cfm have several different trading platforms but my preferred option ( to put it in the correct vernacular :D) is http://www.interactivebrokers.co.uk/en/main.php who I have used for several years.
 
Hi, I just made my first profit on delta. I made €150 on the price of gold rising. Great kick, however I have put 5k aside in this a/c because I can afford to lose this amount. Delta offer a course on spread betting which I will attend asap. This is gambling, no doubt but I fancy my chances here rather than on a horse.
 
bobsoap05 said:
Hi, I just made my first profit on delta. I made €150 on the price of gold rising. Great kick, however I have put 5k aside in this a/c because I can afford to lose this amount. Delta offer a course on spread betting which I will attend asap. This is gambling, no doubt but I fancy my chances here rather than on a horse.
Click to expand...

Trading is all about averages over a peiod of time. Come back and post the results of the next 100 trades. To draw an analogy - little point in a golfer telling everyone about his great birdie on the first .............if his card records an overall score of 90 net :D. Trading is substantially different to gambling on horses - stick €100 on your favourite nag in the 2.30 at Doncaster and there is nothing you can do after the off if your horse is falling behind badly - you can't get back 80 or 90 euro because you're not happy with the likely outcome. On the other hand if you are unhappy with , for example , a futures trade you can close out immediately with minimal lose. If you don't understand this crucial difference then there is little chance of you making consistant money - you are already facing an uphill struggle using a spread bet co. - it is not a level playing field.
 
[broken link removed]

yea i made it on to the leader board. i was first for a while but Ms Mary Currie beat me on the last day for some reason. it gets me thinking that the competition could be rigged by delta index. because now she is nearly off the leader board. i will try for the end of the month prize again and see if someone beats me on the last day.

my name is martin naughton by the way. i am fourth at the moment because i have not done any trades in a week
 
Evoke

You were not beat on the last day as you state.

I was also on the leaderboard and have each days update printed out. There were as follows:

28th Jul
1 M Currie €63647
2 P Lynch €51,488.3
3 M Naughton €39,007

31st Jul
1 M Currie €62,227
2 P Lynch €53,688
3 M Casey €53,325
4 M Naughton €42707

01Aug
1 M Currie €61,267
2 P Lynch €54,498
3 M Naughton €47387


From my printouts there have been a few large changes in the leaderboard but in the main the leader was there all month. I have also since had a big wipeout, but hopefully I will still yet make another appearance on the leaderboard.

Paddy
 
demoivre said:
Out of interest when you say direct access - does this mean you can purchase on line rather than having to call to execute.

Correct - calling a broker is far too slow particularly if you are a short term trader, and inevitably far more expensive commission wise.


Also would you mind naming a few of the direct access brokers you mention.

http://www.manfinancial.com/home.cfm have several different trading platforms but my preferred option ( to put it in the correct vernacular :D) is http://www.interactivebrokers.co.uk/en/main.php who I have used for several years.
Click to expand...

Demoivre I've been checking out IB and trying to understand benefits etc.Am I right in thinking I need a min $5000 to open,then I can pay per trade or pay for a batch of trades,but each month I have to pay a minimum trade whether I trade or not(Not bad as it's only $10!).It doesn't look as easy a site to use as the Deltaindex,but the spreads are better so it's worth investing the time to understand it better.Last question Is this not spread betting but at better spread prices etc?Hence no taxes to pay?
 
pennypincher said:
Demoivre I've been checking out IB and trying to understand benefits etc.Am I right in thinking I need a min $5000 to open,then I can pay per trade or pay for a batch of trades,but each month I have to pay a minimum trade whether I trade or not(Not bad as it's only $10!).It doesn't look as easy a site to use as the Deltaindex,but the spreads are better so it's worth investing the time to understand it better.Last question Is this not spread betting but at better spread prices etc?Hence no taxes to pay?
Click to expand...

1. $5K needed but $25k if you want to daytrade stocks or options ( or euro equivalent)
2.You pay per trade thereafter but you have a choice of opting for bundled or unbundled fees. In a nutshell unbundled commissions are cheaper if you trade intraday eg a FTSE futures trade will cost you £1.70 per lot per side if you hold overnight - it will cost you £1.28 per lot per side if you close out intraday. Both of this fees reduce as you increase the volume of your trades. Note also that overnight margins are typically double intraday margins.
3 There is an inactivity fee of 10 bucks per month plus any realtime market data fees that you subscribe to.
4 No it is definitely not spread betting and you will pay tax on earnings. If you can find a spread bet co. that will let you spread bet ( and I'm not talking about cfd's ) on the basis of being quoted the precise underlying market price , no requotes, no minimum stop losses and instant execution then go for it !
5 There is a lot of info. on the IB website but it covers everything and numerous markets. They make no bones about the fact that they are only interested in serious traders/investors ( they say that on the site.) In fact there is a short exam ( used to be anyway ) about futures contracts as part of the application process.
 
You must log in or register to reply here.
Back
Top