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Is spread betting for fools?

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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 ...)

 

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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. 

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@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. 

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@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 :)

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@Excel09,

Thank you. 

I remember many years ago trading Natural Gas without a robust exit plan and without an effective trading strategy. I made some big losses and I learnt a very valuable lesson back then. Never trade against the trend. Never think you are getting a good 'bargain' price. Always trade in the direction of the trend, never against it. Always be prepared to pay a higher price (good sign) rather than look for lower price as value style does not work in trading unless you are extremely lucky and are gambling and I do not want to rely on luck or gamble. 

If markets behaved like we expect them to based on technical analysis or historical patterns then this would be easy to apply in our trading decisions and the majority of us would be extremely successful and profitable at trading. It does not work like that. It is not as easy or simple as that. 

Successful traders will make 'assumptions' on price direction for the future and if the price reacts like they think it is then to trade at the earliest opportunity. They will not always be right and there will be losses but without 'assumptions' being made and tested it becomes very difficult to trade as historical data alone cannot create a robust system. One needs to 'forward test' too. This is extremely important but how many traders understand this or actually 'forward test' their trading system?

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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

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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.

 

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@Excel09,

Yes, one must not get emotional to any particular stock, commodity or asset. 

Hope and Luck are words that have no place in successful and profitable trading over a period of years on a consistent basis. 

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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

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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. 

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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

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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.

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@Dunn,

I have another thread - Trend Following by Trend Follower. Maybe we can continue this conversation there as it would more appropriate? 

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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.

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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.    ****



65587211_toshortornottoshort.thumb.jpg.45d0edb4f0555682608f3a0ccbe93364.jpg
 

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Clearly Failing............

Over £60 down over 2 days with a £550 account limit.

Staggering losses.

 

 

I said this back in March, but Live, I'm consistently right, in getting it wrong.  If anyone can point out what I must be reading, doing, guessing correctly each time, I can reverse this.

I'll go back to the Demo tomorrow with the Same account size and see what I can achieve.

I don't think it was fear today.  Maybe just distracted and made bad choices.

 

Failing.jpg.6c711e65fe833d98e8aed29d6caf4903.jpg


 

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1 hour ago, nit2wynit said:

Clearly Failing............

Over £60 down over 2 days with a £550 account limit.

Staggering losses.

 

 

I said this back in March, but Live, I'm consistently right, in getting it wrong.  If anyone can point out what I must be reading, doing, guessing correctly each time, I can reverse this.

I'll go back to the Demo tomorrow with the Same account size and see what I can achieve.

I don't think it was fear today.  Maybe just distracted and made bad choices.

 

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a number of problems really but the main one is that you've convinced yourself your plan works on demo so it must work on live, probably most think that to begin with but it's usually not the case, mainly because you can't be the same person pulling the levers. You find yourself getting in too late then getting out too early then the opposite until you've lost so much money you just don't know what to do. At some point it will be realised the plan just doesn't work in the real world and will need to be rebuilt incorporating basic precautions such as not trading against the trend and all the other basic safety principles that the demo platform showed you you didn't really need, but the live platform showed you you do.

What you are trying to achieve is not really suited to trying to pick reversals anyway, the short hold time is better suited to dip buying and breakouts with trend where you've got some momentum to carry you through.

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Clearly.  I'm still trying to beat the Reversal............Not sure where I picked that habit up from.  Obviously simple Fomo.

 

I need a fresh education.
 

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1 minute ago, nit2wynit said:

Clearly.  I'm still trying to beat the Reversal............Not sure where I picked that habit up from.  Obviously simple Fomo.

 

I need a fresh education.
 

Reversal points are so obvious on the chart after the fact it's a natural draw to try and pick them in advance but it nearly always ends badly for the inexperienced (years).

There was a good pullback with a strong move to reverse the pullback and go long with trend, your target could have been the prior high. If that entry was missed could have tried the breakout though in this case it didn't run far but there was time to get out before the structure collapsed.

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19 minutes ago, nit2wynit said:

Any Statistics for the Cons?  Percentage wise? :D

 

Not really, just based on the natural zig-zag pattern of every trend ever;

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5 minutes ago, Caseynotes said:

Not really, just based on the natural zig-zag pattern of every trend ever;

I would call, 'Every trend Ever' a pretty decent statistic.

So the odds are good then :D haha.

If you'd be so kind to direct me to info of what I'm actually seeing, that'd be great; Candle Stick wise. :D

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1 minute ago, nit2wynit said:

I would call, 'Every trend Ever' a pretty decent statistic.

So the odds are good then :D haha.

If you'd be so kind to direct me to info of what I'm actually seeing, that'd be great; Candle Stick wise. :D

Chart structure wise, ok give me a sec.

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Chart structure basics and swing moves. I have tried to zero in on the main points with these few vids but you should look at the whole playlist linked further down. Don't worry about the time frame charts used, the same principles work on any time frame.

Have a look at this one;

 

Then this one;

From this list;

https://www.youtube.com/user/tradingwithrayner/playlists

From this thread;

 

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@Caseynotes I'm certainly going to start my Education again from scratch.  Hypocritically i think i know what I'm doing; Wrong!

Made several tiny wins on this already.

What do you all see here.  it's 12.08 am.

Gold.thumb.jpg.67c9ec0b04db76f440f10a7058c36005.jpg

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I see a triangle (or wedge or asymmetrical if you will) consolidation pattern in an uptrend. 

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On the 6 month review IG's losing retail traders drops from 76% to 74%  but FXCM are claiming 73.62%, perhaps we need an industry standard 😅

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WTF???

Can anyone explain this @JamesIG

Live Trading Deutche Bank.  Shorting.  Profit around +£80, then the screen froze (no movement, not able to Close) and on the ticket it said:

 'If you want to trade this market call this number'.. So i did to get IG Support who had No Idea what i was talking about.  They can't get thru to the Desk? Technical have no issues to report????

Luckily the page unfroze half way thru the call, but then it had reversed and I managed to get out with £27 profit.

 

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Actually i'll start a new thread.  This can't happen again!

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@dmedin  It's gone quiet in here.  Did we exhaust all that could be said?? :O

Down £400 this week.  £300 today alone.  £1000 since March.  I clearly have No Clue.

i thought I'd cracked it.  Thought I knew candles and chart patterns.  Thought i could beat the drop.  Time and time again, I'm losing it all.

Gold today.  News everywhere about it dropping to £1360.  Seems every article and Analyst said the same thing.  I thought it was a ruse.  i anticipated a drop, then a spike, and sure enough it happened.

I was up £80 on a short just before the spike.  I was waiting for the Reversal.  I put a Limit on my profit and got stopped out as it sharply reversed to go up 20 points.  I took £25 profit, and got in on the breakout rocket asap.  Unfortunately a stuttering chart and 1 minute time frame was too close so missed most of it.  Might have pulled £50 from the rise; it was worth about £400!!
 

I then anticipated a sharp sell off.........So I shorted.  It was looking Ok, till I took a closer look at the chart to see an obvious Bull Flag formation.  I quit the trade for -£25 only for it to drop.  I'd have made £100.

To keep a long painful story short, the rest of the day is as above.  -£300 waiting for a Drop.  My biggest loser was £103 where I let it run waiting for it to come back to me.  It didn't.

I have become my own cautionary tale.  A typical story of a Naive Neewbie who thought he had what it takes.

It's taken me 45 years to become a Gambler.  I don't think I'm very good at it.  

Hope you've all had a productive day.

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    • yes @TrendFollower, there are plenty of long term investors with IG and it's right they should take notice and plan well ahead for any eventuality but traders should be thinking differently and look to be responsive to changes in market conditions. As in my previous post the big indices always look a bit toppy and it's too easy to get in short too soon. Back in 2016 there was talk of impending recession for most of the year and many new traders blew their accounts continually shorting the market trying to 'catch the big one', the get rich quick trade. It was depressing to watch.  Here's another interesting chart of S&P seasonal pattern of average return 1990-2018 suggesting uncertainty in the short term before resumption upward.
    • @Caseynotes, One must remember that on average it can take around 18 months from when the treasury yield curve flips or inverts to the start of a recession.  People talk about Dr. Copper but another commodity that it is worth keeping an eye on is Lumber. When housing construction begins to drop then that can be one of many indicators to have a look at. Others are inflation, interest rate direction, wage growth, unemployment, etc. There are many well documents indicators which signal a potential recession is around the corner.  From a trading perspective one should not worry as long as one is comfortable shorting. Those who are not may struggle to consistently make enough profits during a recessionary period. 
    • @Caseynotes, Yes that is right. I have seen some calling the recession for the past two to three years! They have been calling it as if it is around the corner. Then when it does not come they move the goal posts via obscure technical analysis. When one challenges it, one is deemed negative or a naysayer.  Corrections happen large and small. Investors sell investments to take profits. This has been happening since the markets began. Prices go up and down. Prices are bullish and bearish. Of course trading sentiment plays a big part but for me following the price action and letting the price action lead you to a trading decision is key. Trying to wait for the price action to follow your view and then changing the narrative by giving technical reasoning when it does not follow your view in my opinion will lead to missing out on trading opportunities.  For a sound trader, recessions, should not be feared but welcomed. If one understands how prices react during recessions then one can prepare their trading strategy for this outcome but for when it happens and not before.   
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