Is spread betting for fools?

[nit2wynit]

Sorry if I've not been clear again.

Found this set up at 4pm when it had already happened.  Based upon it's previous moves since the beginning of May and news last month, I figured a long down trend that may actually be reversing.  However, my point about anticipating a drop was from 4pm; the point when I discovered the chart.  I hesitated as it reached the top of the previous resistance level, and as it turned slightly, I waited further.  Then I simply decided to let it prove itself and took my finger off the button.  At this point it was around 4.15.  I went outside and come back in at 4.32 (market close) to see it had indeed dropped, and calculated a potential return of £70 @ £2 per point if I had the **** to place it.

[nit2wynit]

5 minutes ago, TrendFollower said:

Sideways markets are the ones to avoid as they tie up your capital and you are not making much returns during this period. 

I lost a lot of hours when I first started doing this.  I'd be stuck for hours so I didn't lose £5 only to lose it anyway. lol

[nit2wynit]

@dmedin I'm not giving up.  I'm just not using 2k.  £550 is now my limit till I double it.  If I double it I'll add more to the account.

Come on....We can crack this

[Caseynotes]

3 minutes ago, nit2wynit said:

I simply look down the shares list for anything under £20, has moved 5% and has a minimum of 50pts moved, then look to the chart, notice the volume and whatever the red green histogram is.......I only saw that at 4pm, literally at the point I posted it and anticipated the drop, which it did, but I lost my nerve even after it turned.

Ok, but do you know how to play reversals though as that was what you were looking to do. And if you are looking for a less stressful way to trade you're going in the wrong direction.

Once fear gets you just can't pull the trigger, that's what you need to be looking at, not all the could haves, should haves.

Sure reversals tend to happen around S/R zones but even so the strategy has a low strike rate, that tends to be made up for by the relatively small stop loss position and the potential for a big move if you can get it right enough times which is hard to do without a great deal of experience.

The better setup to look for is the weak pullback in an impulse move up or down, better odds, less stress.

 

 

[WallStFoxy]

8 minutes ago, TrendFollower said:

@Foxy

When you are spread betting for example then shorting is no different to going long as you are betting on the price movements in either direction up or down. Now if you apply for example trend following principles to any trading decision then it really should not matter. 

I agree that traders should be very careful when thinking about shorting as it is high risk and if they cannot make money on the 'long' side then do they have the right strategy to make money on the short side? The article is just an opinion of the writer but I would encourage anyone trading to consider going both long or short depending on the price action and trend. 

A trader wants to make money regardless of how the general market or asset they are following is trending. They want to profit from markets trending up and down. Sideways markets are the ones to avoid as they tie up your capital and you are not making much returns during this period. 

@TrendFollower

In many ways I agree and I do use both longs and shorts, however there is a time to trade long and a time to trade short. With equities they are bullish most of the time and inexperienced trader short a share just because it is high, this is very dangerous and they are well advised to look for a low to buy as apposed to looking for a high to sell. I posted that link because I feel several new traders here are loosing money because they don't realise how dangerous it is to short a share compared to being long on quality stock.

[nit2wynit]

2 minutes ago, Caseynotes said:

Ok, but do you know how to play reversals though as that was what you were looking to do. And if you are looking for a less stressful way to trade you're going in the wrong direction.

Once fear gets you just can't pull the trigger, that's what you need to be looking at, not all the could haves, should haves.

Sure reversals tend to happen around S/R zones but even so the strategy has a low strike rate, that tends to be made up for by the relatively small stop loss position and the potential for a big move if you can get it right enough times which is hard to do without a great deal of experience.

The better setup to look for is the weak pullback in an impulse move up or down, better odds, less stress.

 

 

I see.....Reversal?  Change of direction?

My knowledge is literally Candles up and down lol.  But maybe you have revealed something in my strategy that i was or wasn't aware of.  Yes, i always look for these turns either up or down.  I always anticipate it.  Yes, you're right, this is why I have a tight Stop Loss at the Top or Bottom of the' Reversal'.  Makes sense even to me now.  I'm not a Trend Follower.  I literally look for opportunities for Reversals.  Now I know what it's called   S/R zones?? Don't know lol :O

But like I've proven on the Demo (Fear aside) I can make this work, very easily, 80% of the time.

What I can't do is handle the real world potential for huge losses.  hence, smaller account size.

I'll keep going.  still got the Academy to get thru.

[dmedin]

@nit2wynit

My one humble bit of advice, would be to turn off the MACD as it's not always very clear - the RSI is the easiest to understand and use.  Stochastics are also good but you have more variables to fiddle with there. 

[nit2wynit]

58 minutes ago, Caseynotes said:

Sure reversals tend to happen around S/R

support resistance.  Got it

[nit2wynit]

22 minutes ago, dmedin said:

@nit2wynit

My one humble bit of advice, would be to turn off the MACD as it's not always very clear - the RSI is the easiest to understand and use.  Stochastics are also good but you have more variables to fiddle with there. 

I'll check em out.but to be honest...........I win a lot....On the Demo

[Caseynotes]

 

[nit2wynit]

Hunting Stops.  Yeah, I've witnessed that a few times   There's my first -£200 back in march lol.

[Caseynotes]

4 minutes ago, nit2wynit said:

Hunting Stops.  Yeah, I've witnessed that a few times   There's my first -£200 back in march lol.

Makes sense though doesn't it, you only have to look at a chart to guess where the stops are, if you are big enough and you want those contracts it's just a matter of taking one step backwards before taking 5 steps forwards, you rarely need to go back further than 20 ticks.

[nit2wynit]

42 minutes ago, Caseynotes said:

Makes sense though doesn't it, you only have to look at a chart to guess where the stops are, if you are big enough and you want those contracts it's just a matter of taking one step backwards before taking 5 steps forwards, you rarely need to go back further than 20 ticks.

Yeah, it was a slow process for me.  I obviously placed my Stops at the Obvious places with not enough room to stay out of reach of the Hunters.  But In hindsight it was always my problem as we've discussed; Anticipating the Breakout or Reversal, Instead of making sure and placing afterwards.  This meant my Stop were always further away than I wanted so the Risk Reward was large.  Only £600 down.  Lesson learned on that one.

Is anyone watching RPS Group?  I've only noticed it at 12pm

Edited June 26, 2019 by nit2wynit

[Guest davidbrister]

@nit2wynit, MACd is 1 of the easiest indicators to use i found, but i think you need to play around with all the indicators in the demo to see how they work, and find 2-3 good ones that work for u, or you feel real comfortable using/reading. You can google search an explanation of them all, when i first started i played with a lot of them, i then tried a few together to see which ones worked better with each other, that gave me a clear picture in an instance glance

Finding the right indicators as suggested by somebody else is the key to making it work for you, rather than making you work for it. 

The other thing as a day trader to make it work in my opinion is focus on an Index like the FTSE since your in the UK, theres enough waves to ride in the 1st couple hours to make your desired goal and then get off the markets for the rest of the day, which u have said you wanted to do.

If you were setting up to follow trends and take the long positions, then you could study more share charts to find the right ones.

[Guest davidbrister]

@nit2wynit heres the FTSE graph for today, should be more than enough waves to ride and scalp the market mate, some nice big ups and downs.

The Macd has a normal set of numbers 12, 26, 9, but i use 6, 13, 8 as it makes the cross over happen approx 4 mins earlier letting me on, before it moves too far away.  just my preference.

[Guest Marcus]

Is Spread Betting for fools?

Well everything is for fools.

I introduced specialty breads to London in 1980. Never made any real money. Got out totally exhausted in 2003 and the market took off. Would a safe investment strategy be to buy and hold blue chip stocks? So what went wrong with Marconi, Woolworths and so on. When was the right time to get out on a buy and hold strategy?

I started trading on a spread betting platform in 2000. I was short the market into the 07/08 crash. Yes, I went short in 2005 and chucked it in just before it came to pass.

Started again in 2016 and holding steady after initial heavy losses. Up 30% so far this year on a small account. I consider that to be chicken feed.

I have signed up to Trading College run by Lee Sandford. I need help to push on. A mentor. An edge. So far I am very happy at College. Real people taking real trades and teaching the how and why in real time. Nothing to hide. I don't necessarily take the same trades but apply the mechanics to the trades I want to do.

It has been a long journey but I think the odds are finally turning in my favour. 

It isn't magic. Just dogged determination not to give up. The best thing I have done is to ask for help.

[dmedin]

On 27/06/2019 at 09:18, davidbrister said:

@nit2wynit heres the FTSE graph for today, should be more than enough waves to ride and scalp the market mate, some nice big ups and downs.

The Macd has a normal set of numbers 12, 26, 9, but i use 6, 13, 8 as it makes the cross over happen approx 4 mins earlier letting me on, before it moves too far away.  just my preference.

 

 

Jeez man 🙈  You're brave if you trade that ... a lot braver than me anyway.  I'm just dumb and would lose lots of money

[Guest davidbrister]

On 28/06/2019 at 21:04, dmedin said:

 

 

Jeez man 🙈  You're brave if you trade that ... a lot braver than me anyway.  I'm just dumb and would lose lots of money

@dmedin, lol. if you want dumb, take a look at the asian markets- Hang Seng and Niki, it jumps up and down so bad in big numbers, that 1 is easy to lose cash on.

 

[Guest Dunn]

On 14/06/2019 at 03:13, TrendFollower said:

@Dr_FX,

First of all it is the trader who is at fault, not IG. They merely offer the platform and services to allow their clients to Spread Bet.

I use IG's UK Spread Betting account. I feel like a parrot repeating the same message but to achieve consistent profits the only way you can do it is to trade the strongest trending assets and trade them in the direction of the trend and not against it. It is about holding on to your winners and if you do that then your position may be for days, weeks or months but the initial spread will not even be an issue. If it is the strongest trending asset then the daily charges will not be an issue. These factors only become an issue if you day trade or hold a position for only a few days or so. Overtrading and trying to be too clever is what gets you into trouble. 

Being able to conduct Technical Analysis does not mean you are going to be a successful and profitable trader. Being able to study and understand complex Technical Analysis does not mean you are going to be a successful and profitable trader. You need capital. You need to be able to take losses and accept them and embrace them. I remember sharing a live trade which was a losing trade on IG and the belittling I got was ridiculous. It was like OMG TrendFollower made a loss. He is gambling and he does not know what he is doing, etc. It is the trading strategy and the trading system that can effectively deliver the strategy that is important. Of course this is not possible without a trading plan. There are far too many traders on IG Community that simply do not have a trading plan, trading strategy and a trading system to deliver and execute effectively all this. That is where one of the problem lies. For them it is borderline gambling. 

Traders will make losses. Those who do not are lying. By trading less frequently and holding on to you winning trades for longer gives you the best chance to succeed when using Spread Betting. That is what my experience tells me. You can still lose if you trading a strong trending asset when you get in late and most of the move has come and gone. So then it is all about identifying the trends as early as possible. Trend Identification becomes key. 

This is my first time on the IG community and reading a thread. I find this hilarious, and more importantly for the first time have seen some insight in how other traders think.

Don't worry, i know what you mean. The word spreadbetting sounds like gambling because it has the word betting in it. But we're not betting on the spread, we're betting on the movement of price, and i think the reason they call it spreadbetting is simply to give it a gambling legal status to get the tax breaks.

If you buy $1,000 worth of shares and pay $10 commission through a broker, or buy $1,000 worth of shares and pay $1,010 for then through spread differences then what's the difference? I don't see this as spread betting, i see it as trading normally and paying a spread fee.

Spreadbetting offers leverage which is a great thing, as long as you trade with a plan and know exactly how much you're risking then there shouldn't be any surprises. I've never understood when people say leverage is risky, on the platform before you put on a trade you can clearly see the monetary value of your loss should your stop be hit, if you think it's too high, make your position size smaller.

Out of interest do you use the guaranteed stops? The insurance of having it is great, but the premium is pretty high. 99.9% of the time it's not needed, but for occurrences like what happened to the Swiss Franc it would save my esra

[dmedin]

I'm glad I wasn't short on Red Hat when IBM made an out-of-hours announcement that they were going to buy them ...

I'm also glad I wasn't a 'professional' client of IG's, as I would be in a lot of debt to them.  (Seems like a high price to pay for a small reduction in margin requirement ...)

 

[Caseynotes]

52 minutes ago, Dunn said:

This is my first time on the IG community and reading a thread. I find this hilarious, and more importantly for the first time have seen some insight in how other traders think.

Don't worry, i know what you mean. The word spreadbetting sounds like gambling because it has the word betting in it. But we're not betting on the spread, we're betting on the movement of price, and i think the reason they call it spreadbetting is simply to give it a gambling legal status to get the tax breaks.

If you buy $1,000 worth of shares and pay $10 commission through a broker, or buy $1,000 worth of shares and pay $1,010 for then through spread differences then what's the difference? I don't see this as spread betting, i see it as trading normally and paying a spread fee.

Spreadbetting offers leverage which is a great thing, as long as you trade with a plan and know exactly how much you're risking then there shouldn't be any surprises. I've never understood when people say leverage is risky, on the platform before you put on a trade you can clearly see the monetary value of your loss should your stop be hit, if you think it's too high, make your position size smaller.

Out of interest do you use the guaranteed stops? The insurance of having it is great, but the premium is pretty high. 99.9% of the time it's not needed, but for occurrences like what happened to the Swiss Franc it would save my esra

Hi Dunn, you are correct with regards the name spread betting. The guaranteed stops are probably a good idea if you know there is likely going to be turmoil but no one saw the SNB pulling the peg, I watched that as it happened, so quick and deadly, even out did bitcoin for excitement, so long as you were sitting on the sidelines as I was thank goodness. 

[Guest Excel09]

@TrendFollower I totally agree with you. If you haven't got the following you are 100% gambling :

 

• Trading Plan
• Trading Strategy
• Trading System
• Exit Plan

Lastly you have to be comfortable when you place your money on a trade or buying stocks is to be prepared to loose it if it goes against you (Your exit strategy/plan should cut losses/minimize losses). If you cant accept that loss then spreading betting/ trading is not for you.

I have lost more then $10k because of the lack of discipline of not following my exit strategy.  I am recovering it back gradually through discipline/ a strong mindset and learning from top level traders through books,videos,podcasts/audio books, one on one mentor ship and repetitive revision on these learning mediums.

Psychology is the top most important aspect in trading/spread betting or any type of activity with the financial market. Even if you are on a loosing streak of trades, a strong psychology will enable you to put on trades on new opportunities without fear of loosing money.

"The greatest lessons are learnt in difficult times not in perfect conditions" - This quote is my personal testimony

[Guest skinner]

for  what it's  worth.  market   can be  amazing.   forcasts doing well  markets on the up,,   but  it  can  take  one tweet  from  someone !   to bring  markets crashing down,,  then  sell  at  a loss..  but  within  2  hours  all forgotten  and markets  rise  again,,  watching markets   to  much   can  pull  the  trigger to sell..  best    advice  i say  set  stop loss  on what  you  want to accept  as  a loss, then  walk away   few  hours,  you  be  amazed   that  you took the  loss  in the first  place.. and   at least  if  hits your  stop loss  you  can  get  back  in  at  cheaper  to make up  your loss,, unless   recession, but then  no one can predict  that

[Guest Excel09]

2 hours ago, TrendFollower said:

@TrendFollower True, I do my best to learn from mistakes made by most traders and ensure that I am not doing the same as them. I do this through books,audio books,podcasts,videos etc.

I follow my trading plan and cut losses without falling in love with a stock 😂

A good friend told me " Do not marry the stock" Some people think just because a particular stock has made money for them it will continue to do so if they held on or keep trading it. Even if their exit plan is triggered for them to exit, they ignore their exit plan and hope it goes the way they think it should. "Hope" is not a strategy in trading the financial market as the same friend told me again. They miss other big opportunities by focusing on a single stock and their losses are big because they hoped that it would go their way.

 

[Guest Dunn]

13 hours ago, Caseynotes said:

Hi Dunn, you are correct with regards the name spread betting. The guaranteed stops are probably a good idea if you know there is likely going to be turmoil but no one saw the SNB pulling the peg, I watched that as it happened, so quick and deadly, even out did bitcoin for excitement, so long as you were sitting on the sidelines as I was thank goodness. 

Thanks for your reply, see you and trendfollower are very active helping people. I saw the advice you gave earlier in this thread about the post-mortem analysis where you saw that his long trades were on the whole profitable, and his short trades were not due to the trend/momentum on the longer time frames. That's good advice, it took me almost a year to work that out myself! 

I also saw you talking about break outs from the consolidation rectangle, you said you should treat sharp explosive breakouts differently from gradual breakouts. Can you expand on that please? My trading strategy is a breakout/trend following strategy so this is important for me. I can see sometimes it pulls back early, in which case waiting for the pullback would be good, but other times it just shoots up and the pull back happens much later, in which case it would've been better off not waiting for the pullback

[Caseynotes]

5 minutes ago, Dunn said:

Thanks for your reply, see you and trendfollower are very active helping people. I saw the advice you gave earlier in this thread about the post-mortem analysis where you saw that his long trades were on the whole profitable, and his short trades were not due to the trend/momentum on the longer time frames. That's good advice, it took me almost a year to work that out myself! 

I also saw you talking about break outs from the consolidation rectangle, you said you should treat sharp explosive breakouts differently from gradual breakouts. Can you expand on that please? My trading strategy is a breakout/trend following strategy so this is important for me. I can see sometimes it pulls back early, in which case waiting for the pullback would be good, but other times it just shoots up and the pull back happens much later, in which case it would've been better off not waiting for the pullback

Hi, I can expand but could you just quote the bit about the breakouts you are referring back to me, just so I don't trip myself up over the context. 

[Guest Dunn]

13 hours ago, TrendFollower said:

@Dunn,

Welcome to the IG Community. A lot of traders think spread betting is pure gambling. It is just a mechanism that can be used to trade. Yes spread betting offers leverage but leverage can be managed according to your risk management strategy. 

In terms of guaranteed stops I tend to always have a stop loss when I enter the trade. When it turns into profit then I change to a trailing stop. My stop loss distances are very wide as if I am trading in the direction of the trend on a volatile asset then I do not want to get stopped out based on the volatility. Therefore my stop loss distances would be far larger than other traders. Also my risk tolerance is pretty high hence I trade Cryptocurrencies and Commodities. I tend to hold positions longer than most traders that I have come across on the IG Community. My positions could be for days, weeks or even months. I have no time limit on my trades apart from when there is a clear trend reversal. 

I use IG's Spread Betting account and I appreciate the facility and benefits they provide me. I have no issues with Spread Betting. When you trade a share using the share broking account then you are in fact betting on the price moving in your direction. It really is no different. Traders are betting on price movements in their favoured direction of trade.

The skill is in the execution of your trading plan and trading strategy via your trading system. 

From reading your earlier threads I can see we're pretty similar in our trading. I focus on mainly commodities too, you know what they say "great minds think alike"

For trend following systems I just find commodities seem to work better, the trends are long, well-defined, and through my eyes just easier to spot. So for my strategy it's the least risky, because they fit my system better than other instruments. I've added bitcoin to my watch list, I got sick of seeing beautiful trends from the sidelines that my system would've caught.

I also like the longer term trading, I also hold my positions on average between 1 week to 1 month, I'll use a wide stop placed at a significant recent swing low, after the first pull back in the trend I'll move the stop to the swing low of the pullback, and rinse and repeat until I'm stopped out. I use no indicators, just pure price action, I find indicators are an annoyance that limit me and prevent me from making good trades

[Guest Dunn]

17 minutes ago, Caseynotes said:

Hi, I can expand but could you just quote the bit about the breakouts you are referring back to me, just so I don't trip myself up over the context. 

Sorry I can't find it, I must be going crazy. However I did find you replied to someone "I gave up on breakouts a long time ago, i got trapped too many times"

So are there any exceptions to your rule of always wait for the first pullback?

Currently what I do is buy the breakout, but set my stop loss wide enough not to be caught out by any traps. That way I don't miss the initial beginning of the trend in the case of a late pull back, but of course the downside to that is I get a worse entry price.

[Caseynotes]

58 minutes ago, Dunn said:

Sorry I can't find it, I must be going crazy. However I did find you replied to someone "I gave up on breakouts a long time ago, i got trapped too many times"

So are there any exceptions to your rule of always wait for the first pullback?

Currently what I do is buy the breakout, but set my stop loss wide enough not to be caught out by any traps. That way I don't miss the initial beginning of the trend in the case of a late pull back, but of course the downside to that is I get a worse entry price.

I see a difference between patterns and S/R, PP levels, patterns are less trustworthy and I would normally wait for a pullback/retest, there will always be a pullback sometime. Levels I am more confident with, pivot levels especially if the asset has a history of recognising them, straight S/R levels need more consideration because they are not as easy to draw as many think and are more a zone than a level, and same as patterns there will always be a pullback at sometime.

I prefer to see an explosive type break out which usually signals increased volume rather than gradual because it's another sign the level has been recognised and the PA is not just wandering in a zone. The more energetic the breakout also signals to the opposition that if they are going to try to defend they had better use large size.

Take a look at the Wyckoff diagrams in this thread and the difference between low and high volume breakouts plus see the first retests post breakout.

In the end it comes down to the probabilities of the particular way you play it, if someone is routinely getting trapped trying to catch breakouts the fallback is to wait for the inevitable pullback instead.

[nit2wynit]

I have clearly lost any kind of ability I had on the Demo regardless of FEAR.  4 trades.  All wrong way.

This made me lol.  No doubt to some of you, some very obvious reasons for me failing.  I'd love to hear them.

Reading from left to right.  Short, then Stopped out, Short then stopped out, (OK, I've got it wrong) Long, then Reversed.....Looks like the drop is coming and about to be stopped out 3rd time.    ****