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Why oh why did we have to have this extra margin? why not just have guaranteed stops (which we pay a little bit more for) and these limits cannot exceed how much money is available in the spread betting a/c. No leverage allowed (funding of account via credit card has never been allowed, has it?) and no financial risk greater than the funds available to bet with. Seriously though. I would appreciate comments from experienced people as to why this was not an option.

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it's a joke. Fixed odds betting terminals, lottery scratchcards  online bingo & casino etc. -  nothing   ..   but leveraged trading gets hit.

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Isn't that the whole point, Retail losing more and more money, the 10% have too live from somebody, the more they loose the better for them.

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27 minutes ago, wizard1971 said:

Isn't that the whole point, Retail losing more and more money, the 10% have too live from somebody, the more they loose the better for them.

Expand on that? Interested.

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Just to play '****'s advocate' for a moment, what say ESMA are looking forward to the failure of their new regulations in order to use it as an excuse to ban CFD's/SB's outright such as is the case in the USA and Hong Kong. Wouldn't put it passed them.  

 

 

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@Caseynotes,

I hope not. I mainly use 'Spread Betting' on IG's UK platform for the ability to use 'leverage' and 'tax free' element from profits. 

I am aware that 'Spread Betting' is not available in the US which does kind of surprise me as usually the UK and US go down similar paths but not on this. 

I can see where you are coming from. Interesting perspective. 

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@TrendFollower,  the US regulators used exactly the same arguments currently being used by ESMA, that too many retail clients lose too much money ergo they can't know what they are doing and so must be protected for there own good.

The resultant move by US retail clients after the cfd ban into futures and options with much lower available leverage resulted, as expected, in stripping out all the small and many of the medium sized account holders by having a much higher threshold for account size.

The way the EU likes to constantly push new regulations and considering the info in the article in the first post in this thread and remembering esma's complete disregard for the views of retail clients the long term future of cfd's and sb's would seem far from certain. 

 

 

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@Caseynotes,

I do agree with the view that too many retail clients lose money. I mean 81% of IG's retail clients using CFD / Spread Betting accounts lose money. That is shocking but that does not mean that CFD's or Spread Betting are the problem. It is the acceptance of retail clients from IG and allowing them to trade such products which is the issue.

Maybe based on checks conducted by IG they should provide each retail client its own personalised leverage ability, sort of like how credit card companies operate. We could all have the same credit card but different credit limits based on our own risk levels, our income, assets, credit risk, etc.

The use of leverage with IG should not just be based on the clients income, risk, assets, etc. It should be based on knowledge and experience of the markets they are looking to trade. The use of leverage would only go up based on the percentage of successful/profitable trades. That would be far better. The more losses you make then the less leverage you are able to use. This would make IG possibly less money if they have more bad traders than good but it would be a nice balance.

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@TrendFollower,

Doubt if many would agree with the need for more regulation as you suggest, that would be going down the esma pathway. No one starting up is not aware of the risk to their capital and most are aware that most new traders will blow one or two accounts on the way to profitability (the cost of learning). 

According to IG they only make on the spread and don't make like a bookmaker, taking the other side of the trade and hoping the punter will be the loser, so it's in their best interest that clients stay afloat and keep trading.

Something like 70% of new business startups fail, banks don't demand proof of success and experience before lending for a startup, if they did there wouldn't be any new business startups.

Available leverage has already come down substantially and this is the problem sighted in the article above. You can no longer start trading with an account of just a couple of hundred quid, you now need a couple of thousand but the new business startup failure rate remains the same at 70 - 80%, so in affect new traders are losing more money due to the regulations implemented in the name of client protection. 

 

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One big difference with trading in the USA is the use of options, which I guess make share trading more accessible  I have seen, through watching webinars, how widely these are used

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@Caseynotes,

It is actually reported that 90% of start ups fail rather than 70%. As some who has an equity stake in many start ups over the years, banks will not just lend capital to any start up. They look at the risk, business plans, potential markets, other avenues the business is looking to raise capital, background of founders and major shareholders, etc. Being a shareholder in many start up growth businesses I can tell you that the banks absolutely look at experience of the founders. More and more companies are starting to raise via equity crowdfunding but banks are still one of the first places they go to. Banks charge interest which the start up must pay so is a cost related to that particular method of financing. Where as equity crowdfunding allows them more cheaper access to capital with the added bonus of marketing and awareness thrown into the mix. 

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@TrendFollower,

Actually many businesses start up with nothing more than a business plan and a bank loan, experience is not an excluding factor but I see you have lost interest in esma which is the topic of this thread. If you wish to solely discuss business startups why not start a new thread on that subject.

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@Caseynotes,

I only commented as you originally mentioned it and I did not agree. Had you not mentioned it then I would not have responded as such. End of. 

No, you make an assumption about my interest in ESMA. I have not lost interest. I can see both sides of the argument. 

No, I do not wish to solely discuss business start ups but I agree with you if I did then I would start a new thread. I have a fair amount of experience in start up investing and have been involved for many years. I do not wish to get into a debate on that matter as it is not for this thread, I agree.

In terms of ESMA I can totally understand why it was implemented but @Caseynotes you make an interesting point regarding the future potential removal of CFD / Spread Betting products. I think the UK would fight hard to keep them but food for thought. 

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@Kodiak, interesting article on hedging and interesting points in that article concerning tax implications. Eg not selling as shares pullback so don't pay capital gains/stamp tax but hedging with a cfd instead and if the cfd backfired can offset loss on any other gains.

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Quite right. That is a strategy can be quite effective. Cannot offset losses on spreadbetting but profits free from CGT. Have to pay tax on profits from CFD but can offset losses.

Posting using mobile is not the same for me as using my desktop as some familiar with posts will be able to tell😀

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