Spread betting

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samfarrell

Registered User
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There appear to be so many financial spread betting firms out there now. i have not used any of them and would not unless i had a through knowledge of this form of betting
they claim that they only make money from the spread, and dont profit if you lose your bet to them, is this true ?
also how is the spread calculated and how do i know if it is a fair margin to pay ?
 
how is the spread calculated and how do i know if it is a fair margin to pay ?
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The spread for stocks is usually a percentage, say 0.5% or 1%. It decreases as the expiration date of the contract gets nearer, the idea being that the price will move less in a shorter time. For a daily contract there will be a very small spread.
Think of it in terms of how much the price must move before you are in profit, i.e. if the spread is 1% and you Buy, the price must move 1% up before you are break even.
If you are buying a stock that will move 10% in the time you hold it, for example, you might not care if the spread is 0.5% or 1%. If you're doing lots of small trades, getting a few points here and there then every point in the margin could be precious to you. It depends on your trading style i suppose. The main thing people who use it would point out though is that gains are tax free and the margin is a small price for this.
 
Also Delta seem to have wider spreads than the UK based companies. However (and this is only an educated guess as I've rarely looked at their website) I'd hazard a guess that they trade more Irish stocks/indices than UK based operators.
 
so the spread is down to the individual betting company, shop around
is it true that the company hedges any bet you malke, therefore they dont make from your bet losses, just from the spread ?
 
If they don't hedge they will get wiped out some day if everybody buys up and the market goes up...they have to hedge!
 
Jethro Tull said:
Also Delta seem to have wider spreads than the UK based companies.
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Just checked the delta website, their spreads on the markets up on the home page are far narrower than last time I checked (about 2 yrs ago!!). However their ftse 100 spread is 50% wider than IGIndex.
 
ig index have a far greater range of markets than delta index. in particular re irish shares (surprisingly!!!). ig index also have limited risk account which allows small margins but at a cost of additional spread.

i have used both delta and ig and am a lot happier with igindex.
 
ig index have a far greater range of markets than delta index. in particular re irish shares (surprisingly!!!). ig index also have limited risk account which allows small margins but at a cost of additional spread.
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Yes, but we have currency risks with the euro when trading US stocks, and some others. IG index only accepts GBP and USD so they will convert your euros to one of those currencies and back again. With DeltaIndex there is no currency risk, all is in euro.
 
lads who the hell do you make money off spread betting if you have a full time job, where do you get the time? also how do you read the market?

is it safer to stick with betting on the share rather than the indices or currencies?
 
Nick Leeson (yes that Nick Leeson) is doing a few articles on spread betting in the Galway Advertiser. This week's article is [broken link removed]
 
croker said:
Yes, but we have currency risks with the euro when trading US stocks, and some others. IG index only accepts GBP and USD so they will convert your euros to one of those currencies and back again. With DeltaIndex there is no currency risk, all is in euro.
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Not entirely so, IG Index will allow you to make Euro-denominated bets on many of their markets.
 
Brouhahaha said:
Nick Leeson (yes that Nick Leeson) is doing a few articles on spread betting in the Galway Advertiser. This week's article is [broken link removed]
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How is Nick Leeson any kind of expert on any market activity.
In rogue trader he states that he had no idea whether the market would be going up or down
 
Does anyone know how to determine who is offering the most competitive spreads. I see many different spread betting brokders offering and touting for business, some warning against those who "claim" there are no charges for investing - but how do you tell which is the best - given that there are different spread ranges based on the contract duration etc. Also I see some Spread betting brokers adding charges for rolling contracts - which look quite excessive to me. Also, how do you know if the spread they are quoting is anywhere near the actual market price - the spread could be small but if they are quoting a spread that is not near the market price you reduce the changes of making any profits. I opened a demo account with worldspreads but they don't quote the actual market price for the investments.
 
Quickest way is to use the firm's simulator (most have one). This will shows you real quotes and the spread will be transparent. It allows you to conduct a like for like comparison between firms. Beware of loss leaders though where a tight spread on a high profile instrument such as oil is offset by poor spreads on many other instruments.
 
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