Is spread betting for fools?

[LeoTrader]

I'm a little confused by your reasoning on the count of the contradictory statements in your post. 

On 22/09/2019 at 11:39, DSchenk said:

90% of retail traders lose money, so easy money to bet against them. They say brokers usually rate their clients into two buckets (with an algorithm), where 90% are in bucket A, where trades are un-hedged and the broker takes the other side of the trade.

With the above being the case, by what mechanism does the following scenario work?

On 22/09/2019 at 11:39, DSchenk said:

Once an organisation is found who is willing to do the attack on the oil facilities, the professional traders take their positions, long Crude Oil. Now they just need to wait until the attack happens. News are being released. Retail traders around the world jump on the news. Oil price spikes up. Professional Traders use the volume provided by retail traders to get out of their positions. Job done.

If the counterparty of retail traders is their broker then their trades are settled in a pool not connected (and of no influence) to the underlying market. So how then, do retail traders drive the price of oil up and provide volume to professional traders?

[nit2wynit]

43 minutes ago, DSchenk said:

So far, I think, the Ross Cameron /  Warrior Trading approach won't work with a UK spread betting account, because of too many restrictions applied and too large spreads.

I'm still convinced you need to take another look at your scanner settings and your Choice of Shares.  Like I've said, you're not limited like he is.  We can trade from £0.24ppp to as much as our Margin Limit allows.

You seem to be good with Math so let me say this;

With only £1000 as Margin, you can only trade about £2pp comfortably on the FTSE.  Figures vary on avg. points moves per day (per Day = 24hrs) from 50 -100 as you've stated.  What this translates to is Cost per Point vs Points Moves vs Account Size.  So, Using the FTSE as a base, £2pp is the max.  In one hour averaging 5-10pts of movement,  in Half hour 2.5-5pt and in 15 mins 1.75-2.5; minumum.  let's just say 2-3 points in 15 mins.  Of course it can be more. 

So, trading FTSE for 15 mins with only 1K (it's important to note that the larger account size represents exponential rise in PPP) can make you anything from say £5 for 15 mins of risk/effort.  Here's the big tell though.  Every single day, shares go Up or Down.  All of them. (mostly all of them).  Trading with only 1k on the FTSE limits what you can make over points moved on average compared to trading Shares and Breakouts.

With 1k, anything from £0.24 to £20k (guess).  Sure the risk is bigger paying more ppp, sure the Spread is larger, but it's important to find a spread that is less than 5 and more like 2 or 3 pts.  It's As important to find Shares that move a lot more than the Spread to get in.  There's little point in trading an asset that has 3pt spread but only moves 3 pts.  Several of them yesterday were 3pts, but they moved about 20pts.

Anyway, lets' see what today brings.
 

[DSchenk]

42 minutes ago, LeoTrader said:

If the counterparty of retail traders is their broker then their trades are settled in a pool not connected (and of no influence) to the underlying market. So how then, do retail traders drive the price of oil up and provide volume to professional traders?

Interesting point, that's why I like to discuss these things here.

So, if retail traders trade primarily (90%) against their brokers, then they can't even influence the market price of an instrument? Is this what you are saying?
So Anton Kreil's statement that retail traders provide volume for institutional traders to get out of their trades is completely BS?

If I had let's say £1,000,000 in my spread bet account and take a very heavy position on an underlying asset with little volume compared to my big account - would this cause the asset price to move at all or not? If I merely bet against the broker it wouldn't right? If I would take the position on the real market it certainly would.

Very interesting point indeed, @LeoTrader. I might email this to one of the Anton Kreil dudes to explain if I find a contact form somewhere

[BigDeal]

It is the market which influences the price offered by the SB companies, not the other way round. The thing to remember is that SBs are bookmakers - they will reference the underlying prices, but will set their prices as they wish.  Actually they don't move very far from the underlying most of the time but there are times when they do - if they anticipate a strong move in either direction their quote will be ahead of the market. If any of you have accounts with different brokers you will sometimes see a difference in price because they use slightly different algorithms (which you could theoretically arb if you had the speed of execution - although this is almost impossible).  Your bet with the SB has no influence on the underlying. You would almost certainly be prevented from placing a very large bet anyway.

[DSchenk]

31 minutes ago, nit2wynit said:

It's As important to find Shares that move a lot more than the Spread to get in

Yes, I think this might be the most important equation in the entire trading industry.

The KPI to look at is something like average true range / spread.

FTSE average true range is ranging between 50-100, so let's calculate with 75. Spread is constant 1 (during market hours).

KPI would be 75. (average move 75 x spread)

Stock xyz which gaps up 5%, typically makes (in the UK market) according to my statistics about 2%-5% afterwards.
Let's calculate with 5%. Spread is typically 1%-2%, in the morning hours straight after the GAP also sometimes 2%-4%. Let's take 2% for our calculation.
Meaning, the KPI would only be 2.5 (average move 2.5 x spread)

Thereby I conclude it is better for me to trade the FTSE index and try to capitalise on movements 75x spread size than on gappers where I need to manage to squeeze the most out of the 2.5 x spread range. The first one leaves much more room for error. Even if I'm wrong I can get out break-even cause all I need is a small move in my direction to get out. Where as with equities I need solid moves to even get to break-even.

What do you think @nit2wynit ?

[DSchenk]

19 minutes ago, BigDeal said:

It is the market which influences the price offered by the SB companies, not the other way round. The thing to remember is that SBs are bookmakers - they will reference the underlying prices, but will set their prices as they wish.  Actually they don't move very far from the underlying most of the time but there are times when they do - if they anticipate a strong move in either direction their quote will be ahead of the market. If any of you have accounts with different brokers you will sometimes see a difference in price because they use slightly different algorithms (which you could theoretically arb if you had the speed of execution - although this is almost impossible).  Your bet with the SB has no influence on the underlying. You would almost certainly be prevented from placing a very large bet anyway.

Like that concept.

What you explain wouldn't be the case though if the SB provider had to go out to the market every time you place a trade and hedge your position. Aka you go long on your SB account and IG goes to the market and goes long on the actual asset.

A few people have mentioned before though, that all positions are indeed hedged. Meaning your SB positions should influence the market.

Guess, we'll never know for sure.

[BigDeal]

5 minutes ago, DSchenk said:

Like that concept.

What you explain wouldn't be the case though if the SB provider had to go out to the market every time you place a trade and hedge your position. Aka you go long on your SB account and IG goes to the market and goes long on the actual asset.

A few people have mentioned before though, that all positions are indeed hedged. Meaning your SB positions should influence the market.

Guess, we'll never know for sure.

Yes, in theory your point is correct but in reality the SB company only needs to go the market if there is a mismatch - and in truth I would suggest there often isn't - eg you (and hundreds of other traders) are long, I (and hundreds of other traders) are short on the same market, and when these match, the SB can make profit on the full spread of everyone and doesn't need to hedge anyway. If they traded in the main market, the trade they place would therefore be inconsequential in the grand scheme of things, and if they couldn't hedge for some reason they would not allow you to place your bet.

[DSchenk]

Makes a lot of sense to me as you say it @BigDeal

Who wants to start a spread bet company with me? Sounds like easy money   

[nit2wynit]

21 minutes ago, DSchenk said:

What do you think @nit2wynit ?

I think you're still confusing the Game plan.   If you still belive trading breakouts with SB doesn't work, we can leave it here and I'll prove it to you.....In time :D.  What you're stating re; FTSE is not Trading breakouts.  If you're not looking for that anymore and want a Long Game, then of course, go for Small over Longer hours.  Again 50-100pts in a DAY = 12am-12am-those points are avg for 24hrs.   Action happens at anytime through that day, so when you use 50-100 reference points a Avg. pt moves, you're not considering the trading hours which you'll be present. i.e 8am-?  For instance I'm sure you're aware that go up 10 come back 8 go up ten come back 8 so on etc throughout the day. 

Every equation for me takes into account risk vs reward vs Time, as Time for me is my most important asset.  I want to see return or even Loss; meaning Result, as soon as possible so I can get on with my life.  Providing i can find a decent Screener, i'll only be trading maybe 2-3 times per day win or lose within 1 hr.

So basically, i could place a trade on FTSE and go back to it 8 hours later to see it's gone up 50 points come down 30.  That's not the kind of game that suits me.  

What we have in common is Warrior Trading.  Trading Indicies is an entirely different set of rules and goals.

[LeoTrader]

46 minutes ago, DSchenk said:

So, if retail traders trade primarily (90%) against their brokers, then they can't even influence the market price of an instrument? Is this what you are saying?
So Anton Kreil's statement that retail traders provide volume for institutional traders to get out of their trades is completely BS?

Exactly. I recall an explanation from IG on how they operate; whereby long positions are matched with clients' short positions, thereby 'hedging' internally without needing to go to the underlying. When clients' positions in aggregate are mismatched by a certain threshold, it exposes them to risk, which they then hedge in the underlying market to cover their own risk. I doubt that happens every day though. 

1 hour ago, DSchenk said:

If I had let's say £1,000,000 in my spread bet account...

Stop right there. If you had £1,000,000 in your account you'd be on the B list, so definitely hedged! 

[LeoTrader]

18 minutes ago, BigDeal said:

Yes, in theory your point is correct but in reality the SB company only needs to go the market if there is a mismatch - and in truth I would suggest there often isn't - eg you (and hundreds of other traders) are long, I (and hundreds of other traders) are short on the same market, and when these match, the SB can make profit on the full spread of everyone and doesn't need to hedge anyway. If they traded in the main market, the trade they place would therefore be inconsequential in the grand scheme of things, and if they couldn't hedge for some reason they would not allow you to place your bet.

All these replies only showed after I just posted. What @BigDeal said!

Edited September 24, 2019 by LeoTrader

[nit2wynit]

Well....I've disabled PRT for the Demo.......................................................................!

No Balance.  No Idea what the Spread it on the chart.  No Idea what the trade is going to cost to place until I try to place it.  Can't figure out how to place a stop on the chart Before I place the trade.  User Error?  Probably.  Back to page one.  I need a Pre-Market Scanner and I'll keep using the Web Platform.  Odds against you you say?  Pffft.

Edited September 26, 2019 by nit2wynit

[DSchenk]

2 hours ago, nit2wynit said:

I need a Pre-Market Scanner

Give https://www.trade-ideas.com/ a go. Only US though. This is what Ross from Warrior Trading uses.

Demo account seems sufficient to me. Data is 20min delayed, but if you scan pre-market anyway shouldn't be a biggie

[dmedin]

Wheeeeeeeeeeeeee!  Lots of money lost today.  Day trading is so much fun

[dmedin]

Well, I have been trying many things out and I'm totally out of ideas.  About the only possibility I can see is very short-term trading on the back of breakouts, but this involves winning peanuts and risking your crown jewels.

The only reasonable chance I have seems to be to take long-term positions.  And in that case, it might just be better to buy shares, to avoid being 'stopped out' and getting your money stolen. 

[dmedin]

Yes, everything is a risk and a gamble.  Most small businesses fail within a few years, but no one would discourage people to try and start successful small businesses. 

Yes, getting a law degree is boring as hell and costs a bomb - and you might not even get a job as a lawyer at the end of it.  But people's livelihoods depends on you going to university and paying for it. 

Everything is uncertain, the need to work is incessant, and nothing is 'real' except the force of gravity, ageing and death.

Isn't life in this godless universe a paradise?

Edited September 27, 2019 by dmedin

[dmedin]

This:

 

Should be replaced by this:

 

 

[nit2wynit]

7 hours ago, dmedin said:

but this involves winning peanuts and risking your crown jewels.

Duuuudeeee WTF aRE you talking about?????  It's the Complete Opposite!!!!!  The point is to be consistent in your trades........Christ man.....The 1st thing i learned about Day Trading Trading was breakouts.......and you're telling me you haven't even tried it???????????????????

WTF have we been conversing about??  I've been asking abuot Platforms and Screeners.............and NOW you're talking about POSSIBLY Trading breakouts?? lol  You **** kidding me?

How Else did you think SB was going to Work?  It can Literally ONLY work SHORT Term OR Large ACCOUNT.

[dmedin]

16 hours ago, nit2wynit said:

Duuuudeeee WTF aRE you talking about?????  It's the Complete Opposite!!!!!  The point is to be consistent in your trades........Christ man.....The 1st thing i learned about Day Trading Trading was breakouts.......and you're telling me you haven't even tried it???????????????????

WTF have we been conversing about??  I've been asking abuot Platforms and Screeners.............and NOW you're talking about POSSIBLY Trading breakouts?? lol  You **** kidding me?

How Else did you think SB was going to Work?  It can Literally ONLY work SHORT Term OR Large ACCOUNT.

lol yes indeed

[nit2wynit]

8 hours ago, dmedin said:

lol yes indeed

We can crack this

[DSchenk]

Anyone cracked it yet?  

[nit2wynit]

1 hour ago, DSchenk said:

Anyone cracked it yet?  

Cracked open the Piggy Bank for more pennies? ha.

Hope your hols were productive.

I wanted to quickly point something out to you re; your Scanner and settings etc.  

Take a look at Apple today.  Only moved 1%, but that equates to about 250 points from 9am with half of that in the 1st few mins. @ £0.50pp minimum.   You see the same rules don't apply with SB, so your search criteria is limiting your potential.  Do you see what I'm getting at? 

[dmedin]

2 hours ago, DSchenk said:

Anyone cracked it yet?  

There's nothing to crack ... it's just gambling

[DSchenk]

2 hours ago, nit2wynit said:

Take a look at Apple today.  Only moved 1%, but that equates to about 250 points from 9am with half of that in the 1st few mins. @ £0.50pp minimum.   You see the same rules don't apply with SB, so your search criteria is limiting your potential.  Do you see what I'm getting at? 

AAPL impressive, but still not as good as an index.

Quantity of 0.06 for £272 margin. Move from 9 am to 10 am was 200 points. That's £12.

FTSE 100. Qty of 0.7 for £250 margin. Move from 8am to 9 am was 32 points. That's £22.

Whereas with AAPL you have the problem to find out in advance that such a move happens and with the index it happens every day.

I guess you want to say, you don't need to limit to stocks below $10.

But I get why Ross Cameron doesn't trade those stocks, cause on a move like this he would've only made £100 with £10k worth of shares.

[DSchenk]

2 hours ago, nit2wynit said:

Cracked open the Piggy Bank for more pennies? ha.

Needed to do that as well

[nit2wynit]

1 hour ago, DSchenk said:

But I get why Ross Cameron doesn't trade those stocks, cause on a move like this he would've only made £100 with £10k worth of shares.

Yes, thhis is my point, not compared to the FTSE, but compared to your Search Criteria.  There are many many other stocks available to trade. 

I missed today and yesterday.  Had Flu for 2 weeks i think.  Foggy.

Back to it tomorrow.

[DSchenk]

Yeah, I was mirroring Ross search criteria. Appreciate can be optimised.

Pretty stuck at the moment here - might switch to Demo account for a while...

[nit2wynit]

@DSchenk i figured i'd put share ideas on here instead of your FTSE thread.

Bed Bath and Beyond just keeps giving today.   Another £40 bagged


so far today up £273 with 1k account.  My total now is + £520 since I've tried to grow from 1k using Breakouts on the Demo.  All in 3 days trading or more specifically, 3 hours.  Not bad so far

 

 

Edited October 10, 2019 by nit2wynit

[nit2wynit]

23 hours ago, DSchenk said:

Yeah, I was mirroring Ross search criteria. Appreciate can be optimised.

Pretty stuck at the moment here - might switch to Demo account for a while...

Why not meet me on the Demo if you have the time?  What I mean is, do what I am doing.  2.30 each day.  Rattle down the US list and find say 5 that look decent.  Gotta be quick and have it done within 5 mins or you'll miss it.  It would be interesting to see what we each find and how we trade it.  1k account size, but can have 5 trades running if you wish.  Personally I stick to 3.  No harm in it.  Make a note of Stop distance  and P/L ratio.  Cool if not.  Asked @dmedin too but not his bag unless you'd like to give it ago too?

[nit2wynit]

The trade I showed earlier is still running.  I'd have got out at £40 as my STOP at the time was only -£20 for a  1:2 P/L.  But for the exercise and the previous wins, I left it.  At one point it was back down to only +£5 and thought it was going to hit the Stop Loss at Zero, but it's gone back down to +£65 or so now.  I think at this point again i would Get Out but I'll leave it and see where it goes.  I'm expecting it to hit 1150.

 

Edited October 10, 2019 by nit2wynit