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Is spread betting for fools?

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@dmedin,

Nobody forces anyone in the UK to spread bet. Spread betting is merely betting on price movement and the direction of the price for a particular asset. It is not for everyone and it certainly is not for anyone who does not have a trading plan which articulates why they will be spread betting the price movement for a specific asset.

Of course it is merely one option and it has its advantages and disadvantages just like futures and options.

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1 hour ago, TrendFollower said:

@dmedin,

Nobody forces anyone in the UK to spread bet

 

 

I'd love to see the ability to trade options on stocks  added to the online platform then.

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@dmedin,

Yes I agree with you. It would be good.

IG are there to make as much money as they can. They will have a reason or two as to why they are not offering Options on stocks. They will never admit the specific reasons to us but for example trading Options in the US is pretty much available on major broker platforms.

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8 minutes ago, TrendFollower said:

@dmedin,

Yes I agree with you. It would be good.

IG are there to make as much money as they can. They will have a reason or two as to why they are not offering Options on stocks. They will never admit the specific reasons to us but for example trading Options in the US is pretty much available on major broker platforms.

Sure I understand ...

Just means that I would have to spend money on a U.S. broker rather than on IG, if they do not wish to allow this.

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yes cme have just introduced micro lots trading but the problem you will face is that the US currently require initial deposits of min 10,000usd - 15,000 usd to open an account. The US used to do cfd's (sb's) which were the most popular way to trade till they banned them, now the 80% just lose their money on options and futures trading instead.

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@dmedin,

One of the things people are blaming for say 80% losing money is Spread Betting. It is the traders fault not the Spread Betting platforms fault when a trader loses on a trade. The Spread Betting platform is merely a mechanism which can be used to trade. That is all.

Everyone can see the spreads available, the margin requirements and understand how Spread Betting works. People can then make a decision on whether they want to use Spread Betting, CFD's, Futures, normal brokerage account, etc.

It is the lack of a trading plan, trading strategy and a trading system that is the real problem rather than using Spread Betting. One must look and understand the Spread Betting environment and then devise a plan which allows it the best possible chance of success using that mechanism. One must devise and trading strategy and trading system that give it a higher probability of success whilst operating using a Spread Betting account. 

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I've learned so much simply from reading thru this thread, and the biggest learn was about myself.

Sure, we all need a Trading Plan; a Strategy, but before all that we need to understand what this is.  How it works.  The most important tool to have going into ANYTHING, is knowledge and a plan.  Fail to Plan, Plan to Fail.

I lost £400 on a £1400 starting account, over 2 weeks.  The more I lost, the more fear I gained, and the more mistakes I continued to make.  However, I got to a point where it all clicked, but then Pinterest happened.  I took the £1000 I had left and bought about 45 shares at £24.  I watched it go up and make £350 profit in 2 weeks.  This would have put me almost back to where I started, which is what i wanted to do as the loss has become a psychological barrier to moving forward.

On paper, it's easy.  In hindsight it's easy, but moving from the Demo to Live is the worst.  The Demo, it's not real money, you can Place a Bet as high as you like because at the back of your mind, it's not real.

Maybe we could set up a Demo Thread as an exercise?  Using £1000.  Pick a stock UK and see where it goes.  We can talk about the ideas the day before.  What News did we watch, what research etc.  What we expect and where we ended up at the end of the day.
 

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@nit2wynit,

This is the mistake being made. Say if we all have $1,000 then some traders will feel obliged to place a trade on the day they receive it (gambling instincts kick in).

Myself and other trend followers would wait until a strong trend has been identified which has the potential to be a large trend and that trade based on signals being confirmed by certain indicators.  This may entail patiently waiting for a few days, weeks or months.

Others may split the £1000 and trade say five different stocks or even five different assets so they could trade two commodities, one or two indices and a Cryptocurrencies (either long or short) depending on the opportunity. Others will merely value invest it on a stock they 'hope' will perform as per their expectations.

There is no right or wrong but your trading plan will articulate what your trading methodology is. So which assets you are going to trade and why? Are you going to buy shares from a broker or trade them using CFD's or Spread Betting and why? Are you going to go 'Long' only, 'Short' only or both? Are you going to be a 'Momentum' trader, 'Swing' trader, 'Day' trader or even a 'Trend' trader?

Your trading strategy will go into the details and mechanics of how you aim to achieve your trading goals which are detailed in your trading plan. Your trading system will be the 'execution' part.

If one fails to plan then they are planning to fail. There are no shortcuts to making profitable trades. There are no easy trading systems that can execute successful trades consistently without putting in the hard work. It really does require first and foremost:

  • Passion/Enthusiasm for trading
  • Hard work and discipline
  • Effort in researching and acquiring knowledge
  • Application of learnt knowledge and ability to understand new theories and techniques
  • Learning new trading skills
  • A good amount of capital to trade

Once you have the above then you can start finalising your Trading Plan, Trading Strategy and Trading System.

Until your Trading System is finalised one should not really be trading real capital and instead should be testing it using demo accounts in my personal opinion. 

One must accept losses, learn from them and move on. Losses are part of trading and if one cannot accept losses then one should not trade. 

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@trendfollower I think you have missed my point entirely.

This relates to Day Trading.  My Plan, my strategy is to Day Trade.  to turn a profit on a daily or weekly basis to provide an income.

there are thousands of Instruments available.  If you (not you personally) can't find a stock to trade within the day that returns a profit, then I don't think you know what you're doing or how to find profitable stock at least.

I lost £400 over 2 week thru poor execution and close Stop Losses.  Most of my trades worked, but stopped me out too early.

I could almost guarantee i could find a US stock when the market opens and make a profit today, though I'll hold off on the Guarantee haha.

You're correct though, you could go so many ways with £1000.  the point is to make a decision for the sake of 'The Exercise' to find a suitable stock to trade within the Day and turn a profit.  Then highlight why you picked it, what you expected etc.

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'Gun to your head' stock picks for day trading would actually be a good practice exercise, certainly sharpen up your selection and execution skills.

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erm...:D @Caseynotes That's a bit extreme.  lol.  there's no pressure at all in Picking Daily stock to trade.  It's simply a case of watching for movers, volume, News and and anticipating the breakout either Pre-market or at open.  The research can be done the night before then fine tuned into a selection half hour before.  All of this is a measured exercise that involves a prerequisite checklist.  If the checklist fails on a given stock then it's on to the next one.

What i lack at the moment is a source for News.  I currently use Trading View and Market Watch but not sure it's giving me what I need.

Either way, I'm not currently trading as my finds are tied up with Pinterest.  I don't have a Weekly income, so until i have funds free again I'll be using the Demo.

 

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Here's an example of my successes when i started.  Of course this is the Demo and using a larger account, but the Picking of the Stock was still a measured activity.  I had research to do and a checklist.  Ironically it's when I went Live i started failing as the account size was lower and I didn't adjust my Stop Losses and my Stake to match the account size.
 

 

Decent day.jpg

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Yes but it is fine if no trading stocks are suitable on the day then not to trade that day and select a stock. 

It is perfectly fine as a day trader to have many days when you are not trading if your selection criteria is not met.

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13 minutes ago, nit2wynit said:

erm...:D @Caseynotes That's a bit extreme. 

Not extreme in the slightest, you can pick up a perfectly serviceable colt 45 from your friendly neighbourhood gangsta for next to nothing these days and it won't half concentrate the mind a treat. Quick decision making needs practice.

Probably what you really need is a screener, so see to which requirements you are looking for in a stock. I posted a link to one just recent that had a very long list of possible inputs, you should find by putting 'screener' in the forum search bar.

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Yes, it is indeed possible, though I find it hard to believe that one could not find a stock to trade for the purpose of an exercise out of many thousands of available options.

Maybe you are focussing on a psychological barrier?  It's possible you play Long most of the time and it does not suit how you relate to the market and how you normally trade?

I have a short attention span and i am impatient.  For this reason i understand how i must trade.  I need quick answers to most things.  My impatience is not a limitation, only the solution to it is.

I can work quick and make direct decisions.  I live with the result either way.  I am spontaneous.  This is why Day Trading suits me.

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@caseynotes I'll check it out though TradingView has a screener too.  They are available to find if you look hard enough. 

I prefer a Beretta :D

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1 hour ago, nit2wynit said:

I've learned so much simply from reading thru this thread, and the biggest learn was about myself.

Sure, we all need a Trading Plan; a Strategy, but before all that we need to understand what this is.  How it works.  The most important tool to have going into ANYTHING, is knowledge and a plan.  Fail to Plan, Plan to Fail.

I lost £400 on a £1400 starting account, over 2 weeks.  The more I lost, the more fear I gained, and the more mistakes I continued to make.  However, I got to a point where it all clicked, but then Pinterest happened.  I took the £1000 I had left and bought about 45 shares at £24.  I watched it go up and make £350 profit in 2 weeks.  This would have put me almost back to where I started, which is what i wanted to do as the loss has become a psychological barrier to moving forward.

On paper, it's easy.  In hindsight it's easy, but moving from the Demo to Live is the worst.  The Demo, it's not real money, you can Place a Bet as high as you like because at the back of your mind, it's not real.

Maybe we could set up a Demo Thread as an exercise?  Using £1000.  Pick a stock UK and see where it goes.  We can talk about the ideas the day before.  What News did we watch, what research etc.  What we expect and where we ended up at the end of the day.
 

I would love to share trading ideas and graphs, although I find that with graphs everyone has their own way of doing it and it's difficult to understand other people's lol

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@dmedin What is your plan?  where are you country wise?  What is your account size? 

What are your Credit card details? lol

 

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lol, well I would like to start with a stock that I've had my eyes on for a while (I'm in the UK). 

Ocado has posted incredibly strong gains over a long time, but it recently seems to have topped out at around 1437p, and I'm happy to go short at this point because the stochs have fallen below 80%. 

The weekly chart shows three evening stars followed by a weekly reversal, however, the stochs are not as strong on the weekly chart and the MAs are still up.  So ... not guaranteed.  But I put skin in the game at £1 per point and I'm hoping for a 50% pullback.

 

ocado.jpg

ocadoweekly.jpg

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10 hours ago, nit2wynit said:

 What is your account size? 


 

 

Put it this way: it used to be a lot bigger.

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I've also had my eyes on TUI.  It seems to have rock bottomed and is starting to climb again.  Weekly stoch has crossed above 20.  Looking for a convincing breakout above the range 738 - 867p on high volume before going long.  Else, if it shows signs of being range bound it might be good to short it as it's currently at the very top of the range.

 

tui.jpg

tuiweekly.jpg

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@dmedin,

Do not set targets. You state you hope for a 50% pullback. When you are trading there is no room for 'hope'. This is steering more towards gambling.

You stay in the position until an indicator/signal based on your trading strategy tells you otherwise and your stop loss is executed. If that means it goes down 60%, 70%, 80%, etc. you merely hold until your trading system executes your trading strategy.

 

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Posted (edited)
On 01/05/2019 at 21:31, Caseynotes said:

yes cme have just introduced micro lots trading but the problem you will face is that the US currently require initial deposits of min 10,000usd - 15,000 usd to open an account. The US used to do cfd's (sb's) which were the most popular way to trade till they banned them, now the 80% just lose their money on options and futures trading instead.

$10000? 

See AMP Futures for example - much lower or else I got it wrong Casey?https://www.ampfutures.com/trading-info/margins/

Edited by Turnip230248
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48 minutes ago, Turnip230248 said:

$10000? 

See AMP Futures for example - much lower or else I got it wrong Casey?https://www.ampfutures.com/trading-info/margins/

The 10,000 refers to the minimum deposit to open an account in the US not the margin, and different account types require even more. I think the answer on the other thread covers this but sing out if not.

 

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Hi, all sorry I went quiet mid discussion.  Bank holiday weekend and house renovations etc.

Anyway, something revealing has just occurred to me.  I've mentioned before how i got interested in Share Dealing/Day Trading after watching Warrior Trading.  I have assumed thus far, you all know what I'm talking about.

Spread betting is not available in the US so it's a unique thing here; and some other countries.

But here's the revealing part that was so obvious I missed it; i knew i was missing a huge piece of the puzzle and I just couldn't make the figures work.

CFD's vs Spread Betting vs Share Dealing.  £1000.  Motif Bio Instrument.

SB.  £1000 Margin.  £8.70 share price.  If it moves £0.50 I stand to profit roughly £240, No Tax.

CFD roughly the same, but losses offset.

Share Dealing.  £1000 down buys roughly 11,500 shares. (sure it's all capital tied up in shares, but they go up or down)  However, a £0.50 rise means a profit of £5750!!!!!


I've been doing it all wrong and couldn't make what I'd learned match what i was hoping to do with Spread Betting.

I want to Buy and sell shares quickly!  Eureka.  

 

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£0.087p  Sorry. lol.  my figures are way off.  I didn't realise this was a Pence dealing.

I'd make at least double on a £0.05p rise :D  So £575.

No wonder I'm losing. hahahah

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I just checked and Motif Bio is not available to Spread Bet right now and the market is not currently available to trade message is appearing. 

The minimum bet is £1.00 per point and the margin is unclear as the above message is getting in the way. So with a £1000.00 margin what is the £ per point? That is the key question and surely the whole point of margin trading using leverage is that the gains are far greater than acquiring the shares physically?

What value is the position worth when you stake £1000? £10000, £20000, £50000? You need to know this and then only can you compare it with acquiring the shares worth that value. 

 

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@trendfollower Motif Bio is UK shares so only available during UK hours.

When I try to place a bid to Buy Shares i can buy around 11,500 for £1000.  So this makes me think it's obviously 8.7p per share. with 1pt being 1 whole pence.

My point being that If I only have £1000, to make the most from my stake I use the full £1000 to cover my margin in Spread Betting (or CFD's) ; The Price per Point is £500.  This gives me 2 stops of movement and requires all of my Margin to cover.

To cover my stop losses would require around £350 of movement down, minimum.  Of course to play the same game with Spread Betting I would need to risk the entire £1000 Margin as a stop loss to take full advantage of the deal.  

So, here are the facts of it so far:

If i buy 11,500 shares it will cost me all £1000 plus the commission cost.  If the price rises 0.05pence or Half a Penny, It will generate 0.5x11,500 which is £575.

Using Spread Betting would require a stop loss at a minimum of 0.5pt or £250 seeing as I'm going for £500 per point.  However, the Spread to place the bet is already 0.5 either way so I'm already £250 under when I place the bet. (figures are now a guess).

The final point being that unless i am absolutely certain the chart will move the way i want it, (there is No Certaintly) I must risk my entire £1000 as a stop loss.  If the chart moves only 0.05pence I will make around £220 using Spread Betting, but also risk losing it all because of the large stop loss needed to secure future movement.  if It moves only 2 whole pence I'm out and down £1000!

On paper, Buying Shares is Safer than Spread Betting, but it requires the entire Capital to buy.

In short once again, SB can work with a small account but you must play long and with little risk.




 

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