Is spread betting for fools?

[nit2wynit]

@Caseynotes by far a great example of what is needed.

Ironically, this is my Page 1.  However, the Psych is still in development.

[Caseynotes]

5 hours ago, nit2wynit said:

@Caseynotes by far a great example of what is needed.

Ironically, this is my Page 1.  However, the Psych is still in development.

But this @nit2wynit is how you bring it full circle. You can't know the outcome of any single trade when you enter, you know that every trade won't be profitable but because you have tested your strategy and know that over 50 trades the strategy is profitable, the fear factor disappears. The only problem left then is making sure you always stick to the rules.

[nit2wynit]

Yes, Indeed, and I'm sure i will lose more to come.

However, this is this morning. :D  The sun is shining so I'll go play in the garden.

@dmedin  Check this setup.  News yesterday about Airlines being affected by Brexit.  Check Also RyanAir and EasyJet!  I got 3 drops on this yesterday and this big one this morning.  2k account.  Maximum Margin.  It can be done, 



 

[nit2wynit]

Sorry got my Instruments wrong.  Lost £41 on this yesterday.
 

[nit2wynit]

Check this out.  Perfect setup.  Waited for the drop to go past support.  Stop loss at resistance.  This baby dropped for a quick £40.  I've not had breakfast yet and usually only start after US open, but if it's there, it's there.

[nit2wynit]

This is the same chart setup @dmedin but look where it is now, between support and resistance.  In the past I'd anticipate the drop or rise only for it to reverse.  FOMO would get me.

I'll not touch this now till it's either at the top or bottom of my lines, then wait for a new line to be created.  It could still take my profit back though.


 

[nit2wynit]

Dammit.  Another immediate stop out because of the large spread on this.  I placed an Order at 8730, but it activated 15pts away so immediately stopped me out for -£40.  

[nit2wynit]

Well...................Somehow on this stock the Spread changed from 15pt to 25!!!!!!!!!!!!!!!!!!!!!!!!

Anyone shed any light on this???  Down £120 on my profits today.

[nit2wynit]

Right folks, probably close to my Posting Limit for today.

Her'es an update I wasn't aware of.

The Spread can change by the Tick at anytime without notice.

Trading the Instrument above.  I'm pretty certain I started with a 5pt spread.  then it went to £15, then to £25.  I didn't even notice till it went to £25 and got stopped out twice..........

What a **** joke and a con this platform is.  How can you justify going from £5 to £25 without notice??


Jeeeeez.  Still learning.

[Caseynotes]

4 minutes ago, nit2wynit said:

Right folks, probably close to my Posting Limit for today.

Her'es an update I wasn't aware of.

The Spread can change by the Tick at anytime without notice.

Trading the Instrument above.  I'm pretty certain I started with a 5pt spread.  then it went to £15, then to £25.  I didn't even notice till it went to £25 and got stopped out twice..........

What a **** joke and a con this platform is.  How can you justify going from £5 to £25 without notice??


Jeeeeez.  Still learning.

The spreads have always been variable and depend on current market volatility and liquidity which are reflected in the prices available to IG. That's the price of  having a continuous market to trade as opposed to getting 'stuck' with an asset.  

[nit2wynit]

Yeah fair enough.  It's in the Small Print, maybe it's not even that small, but to go on the fly from 5 to 25.......Dangerous.  I'll need to go back to March to see if I had changing Spread then too.  Been using this platform since then and had No Idea the Spread could change so dramatically.

Each day I see more and more reason to stay Clear of SB and simply go to Share dealing directly.

However, all that said, I've learned a very important lesson today.

 

[JamesIG]

2 hours ago, nit2wynit said:

Right folks, probably close to my Posting Limit for today.

Her'es an update I wasn't aware of.

The Spread can change by the Tick at anytime without notice.

Trading the Instrument above.  I'm pretty certain I started with a 5pt spread.  then it went to £15, then to £25.  I didn't even notice till it went to £25 and got stopped out twice..........

What a **** joke and a con this platform is.  How can you justify going from £5 to £25 without notice??

When you are trading on shares there is a chance of a variable spread. Any IG spread is a fixed percentage wrapped around this underlying market. Spreads are variable because this is a free and open market where buy and sell prices are dictated by those who are willing to buy and sell at that specific value. This is not a feature of IG or our platform, but rather the underlying global market. If you're a mulit-million dollar hedge fund manager in the US or a retail trader buying shares via IG in the UK, both would be subject to such an event. 

We have a wealth of information and education on trading available on IG. Please make sure you are fully aware of how the underlying market works and any risk/reward which comes with leveraged trading. It may be worth checking out our Academy area here (and on mobile) https://www.ig.com/uk/learn-to-trade/ig-academy

[nit2wynit]

@JamesIG I'll simply need to make sure the Spread hasn't changed between each trade on the same Instrument.  Today could have been very costly if I were Live and Not Demo'ing.

 

Thanks.

[nit2wynit]

While you're here @JamesIG can you tell me why some of the Auto Stop Loses are so massive?

[JamesIG]

38 minutes ago, nit2wynit said:

@JamesIG I'll simply need to make sure the Spread hasn't changed between each trade on the same Instrument.  Today could have been very costly if I were Live and Not Demo'ing.

There is no way to make sure the spread doesn't change. It's important to note that spreads can widen at any point, especially over market swings or high volatility events. I'ts important to take this into consideration when trading.

37 minutes ago, nit2wynit said:

While you're here @JamesIG can you tell me why some of the Auto Stop Loses are so massive?

Are you referring to 'Guaranteed Stops' or something else? 

[Caseynotes]

41 minutes ago, nit2wynit said:

While you're here @JamesIG can you tell me why some of the Auto Stop Loses are so massive?

The minimum stop level changes for the same reason as the spread, sudden increase in volatility. Don't forget you are looking at the spread when you hit the buy or sell tab though it would be more clear if the ticket format was the same as on mt4 for example where the spread is in a separate box. This was recently highlighted in another thread and was passed on to the platform developers.

[JamesIG]

Also note the spread is within the deal ticket (example below) 

[nit2wynit]

@JamesIG Of late, on the Demo there has been No Spread Info like that above, at the point of placing the trade.  Maybe something is up on the platform or the Demo?

The only way for me to see the size of the spread if by counting the difference between the Buy and Sell price.

I'm referring to the 'Minimum Stop' that is applied that I cannot change.  It's either Zero or something huge.  I should have made a note of it last week.  It meant I couldn't walk away from the trade.  I limited my stop to 20pts, but on this occasion the minimum was about 150pts! so I need to wait to see if it went the wrong way to Stop it manually.

There's little point in me referencing it now without the evidence so forget about that for now.  Thanks.

But the Spread info is definitely missing from my trades over the last week.  I'll see if I have any evidence of screen shots to prove it, in the meantime this is from right now.

 

[Caseynotes]

13 minutes ago, nit2wynit said:

But the Spread info is definitely missing from my trades over the last week.  I'll see if I have any evidence of screen shots to prove it, in the meantime this is from right now.

It's a new feature that hasn't been completely rolled out on the demo platform, it's there for indices and fx but not on stocks just yet.

[nit2wynit]

Ah, Cheers Casey.

Handy but quite essential thing to have one thinks.

Market close is also inside the ticket info.  I've been left with an open trade again.  Luckily I have a stop in place.  I've no Idea what market it's on but closed at 3.55pm!!

[dmedin]

20 hours ago, nit2wynit said:

Well...................Somehow on this stock the Spread changed from 15pt to 25!!!!!!!!!!!!!!!!!!!!!!!!

Anyone shed any light on this???  Down £120 on my profits today.

 

That's something I noticed when I was trying to trade on 5 - 15 min charts on stocks, using the 'Day trading for a living' approach.  The spread can become enormous, meaning that you cannot make a profit this way.

I believe that that approach (i.e. making money on individual stocks in short time frames) is only viable for people using a U.S.-type system where they are actually buying and selling shares, even though temporarily.

With spread betting you can make money, just not enough money to replace the 'day job'.

[nit2wynit]

@dmedinI know where you're coming from, and I agree.  But you can make a living from it.  My main problem (regardless of my lack of knowledge about the Spreads growing exponentially) Is the Risk vs Reward as I've mentioned.

There are 2 scenario's that I need to work out in detail.  These being the Capital needed, vs the Stake placed to make the same profit or more either using SB OR Buying Selling Shares (which we can do here also by the way!)

For Instance, to Buy shares here with IG cost anything from £5 to £15 I think depending on the Market.  



Let's assume we know a share is going up for the purpose of this exercise.

With 1k, If I want to Buy shares i'll need to literally put up 1k, but the cost to buy the shares in UK is only about £5.  So although I have used my entire Capital of 1k + £5 to buy them, at this point I am down £1005.  If i was to Sell Immediately at the same price, i would get the full 1k back so only be down £5.

If I use Spreadbetting, Although i wouldn't need to put down the 1k, i would need to use the 1k Margin.  However, depending on what stock I'm Trading, the Spread could be anything from 1-200?????  So as shown last week in my screen shot, the stock I had at the time put me under 2pts, but at £170 pp i started £340 under.  If i got out right away i would be down £340.

This scenario alone tells me to Stay Away, but I'm still trying to work out the Price per point ratio, vs Margin vs Profit etc. 


But I think it goes like this.

1k will buy me 1000 shares @ £1 +£5 to Buy the shares.  If they go up to £2 I make 1k?  Seems right?

If i want to SB the same stock, i'll need that stock to move more than 1pt or 100% because of the Spread of 1pt. (assuming in this case 1pt =£1)  Regardless, to make 1k on SB i'll need to stake £1000 ppp and need it to move more than 100%.  (1 for the Spread 1 for the profit) I'm guessing here but I'll be under by £500 just to place the trade. 

But......If my bought shares Dip 50p,  I'll be down £500 if I sell.

If they Dip on SB I'll be down 1k.  

Can anyone confirm this about about right?

 

Edited June 19, 2019 by nit2wynit

[JamesIG]

@nit2wynit - check out the following for an overview of SB Vs Share dealing: https://www.ig.com/uk/spread-betting/spread-betting-vs-share-dealing There is an example of Barclays which I've included below which you may find interesting and a little clearer. The share dealing fee of £16 is a round trade of £8 in and £8 out. 

The Spread Betting cost is incorporated into spread price. 

 

You can also check out the 'Spread betting examples and calculator' section for more examples on this page: https://www.ig.com/uk/spread-betting/how-to-spread-bet

[nit2wynit]

@TrendFollower @JamesIG Thanks for the input here.

James I appreciate the info above, but what would you start under by using SB vs Share Dealing?

There's obviously a sweet Spot Re; Price of a Stock vs Price per point vs Commision Price.

Is there a way to determine which stock's provide similar returns using sharedealing?

My own example is of a £1 stock.  By your example against mine it appears that the smaller the stock price, the more Initial Price per point must increase?  Therefore a higher priced stock may be more akin to Buying and Selling shares.

For me to make this work, i need the Price per point to Equal the Commission cost of Buying the shares, plus make the same or more per point move.

 

Thanks

 

[nit2wynit]

 @JamesIG Of course, we know that IG makes money from the Spread.  It's better to make more on the spread than only the Commision, right?

Comparing an outlay of over 4k to that of a Margin of £800 isn't the same really is it.  That price is specific to that stock at those amounts.  What about having only a 2k account?  The equation must work backwards now.

What about a £1 share price?  Can you do the same equation to make the same profit, including the Spread?

@TrendFollower as above, yes, this is what I've come to understand.  Large point moves vs Price per point etc.  Trying to find the Balance between the two is proving tricky.


However, I've put this question down many times now, and no-one thus far has been able to give a definitive answer to Stock Price Vs Margin, vs Account Size, vs Profit in relation to Share Dealing Directly.

Maybe it's so obvious I'm missing it?


£1 share price x 1000 shares = £1000 + 1point move @ £1pp = £1000 profit.

What is the equivalent in Spread betting?

Thanks

 

[nit2wynit]

On another note previously mentioned, why is the Minimum Stop on this over 7pts?

It's only gone up about 4.3% or 15pts on the day in 6hrs?

 

 

[nit2wynit]

Thanks, but how do i know if i'm dealing in Pounds or Pence?

For instance Greatland Gold UK Small Caps.  it's GBX.  it's showing 1.47.  

Is this £0.147 pence, or £1.47p?
I'm assuming it's £0.14p?

[JamesIG]

I'm not entirely sure what you're asking. 

£1 a point (where a point is anything to the left of the decimal place) = 100 shares on a UK listed equity.

With DS Smith at 360p right now, if you traded £1 a point on SB you'd make or lose £1 if it went to either 359p (down) or 361p (up). This would have a notional value of £360, which is the same notional value if you bought 100 shares via a share dealing account. 

If the stock went up 10% on both the share account or the SB account, you share dealing position would be £36 in profit, whilst the SB would be 36 points up, at £1 a point is also £36. 

The difference is to open the share position would require £360 of cash, whilst the SB would only require £72 (assuming a 20% margin requirement). 

Furthermore

• SB is tax efficient 
• Share dealing commission is £8 in and £8 out, whilst SB would be incorporated into the spread. Looking at this example right now, the spread is 0.36 points in and out, so 72p around trade as a 'cost'. 
• SB has overnight funding costs to maintain the leverage trade.

[nit2wynit]

Right, Greatland Gold is £0.0147pence right now.  So about 1.5p per share.  1 point is 1pence?  If i buy £1000 worth of Greatland Gold shares the cost is =£1000.  This equates to 66,045 shares.  If it goes up 1point to say 2.5p per share, I get 66,045x£0.01p=£66.045

Spread Betting the same Stock.

To gain £66 from £0.01p move, the Stake must be £66 per point.  Margin of £25.  This puts me under £1.82


But to be honest, I'm really REALLY struggling with this pence and Pound equation lol.


 

[nit2wynit]

I think I'm not being clear and you're all missing the point.

Over ANY Trade with only 1K to use to either BUY shares, or Spread Bet, which Platform can make the most money over the same point moves, with the least risk? lol.  This is the Cost of the Commision vs the Spread.  So if the Commision is £10, then the Spread must also be £10.  If it moves in the Wrong Direction, which Platform will reduce my Losses?  The account size is 1k, regardless. 

The Same Stock.  Not different stocks.  Side by Side.  Buying and Selling vs Spread betting. 


Is there a Formula that suits Spread Betting, that does not suit Share Dealing and Vice Versa?