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Is spread betting for fools?


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55 minutes ago, dmedin said:

Almost blown through my cash.

Pretty much given up now.  It's pointless.  I'll spend what little I've got left on booze and hookers.  :D

On blowing cash through - I'm just reading The Naked Trader's Guide to Spread Betting by Robbie Burns - there are some good stories in there how (not) to blow it all out :D :D 

Will give my 2 cents on here once finished the book - worth a read if you haven't yet

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I'm beginning to feel depressed (anxious, guilty, hopeless) and also the more I read about investing and trading, the less faith I have in it.  Ignorance is definitely bliss.  Hopefully after Brexit we will go back the glory days of the British Empire when poor people were kept in their place, and not given too much education for their own good (thus giving them unrealistic expectations).

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Just now, dmedin said:

I'm beginning to feel depressed (anxious, guilty, hopeless) and also the more I read about investing and trading, the less faith I have in it.  Ignorance is definitely bliss.  Hopefully after Brexit we will go back the glory days of the British Empire when poor people were kept in their place, and not given too much education for their own good (thus giving them unrealistic expectations).

Do you still believe in any empire? Are you kidding?

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Something to gauge today peeps.  

I have been experimenting with random placing of Trades at 1st Bell 2.30 US.  The results are quite staggering, but I'm not sure how to colate them into something of use.  I shall be searching down the US List for anything within a price range of £100 or less or percentage Up of 1% or more and placing Short Positions with no regard for Chart info.  I shall however, be placing a Stop that is equal to my Limit; 1:1.

So far, each grouping comes out with a 70/30 split of Success or Failure consecutively, meaning that no matter which way I go, the Fails or Successes are uniform.  What I'm assuming so far is that the success or failure is dependent on Timing alone and not chart pattern, in this instance.  While this of course sounds obvious, it's more to do with the statistic of Random Choice and how the rate of Win or Lose is consistent at around 70/30.  If a pattern can be observed regarding Timing After the 2.30 Bell then one might assume that the Time to place Long or Short may play a bigger part than simple Chart Pattern alone.  What I'm suggesting is it might be revealed that at 2.45 for instance, the percentage of Trades are going Long, but at 3pm they are going Short.  I'm hoping to expose or reveal a Timing psychology.

To be more clear, Yesterday I went Long on 8 trades within the 1st half hour after 2.30.  Of the 8, 4 failed one after the other, 2 won one after the other and 2 failed one after the other, but all positions were Long bar the last one which I Shorted.

Today I will be Shorting from the Bell.  I shall find 8 or so trades and do the same, placing a Stop where relevant and equal to my Limit of 1:1.  I anticipate similar results of 70/30 against yesterdays results, but that most positions will Win.  However, this isn't based upon any scientific data, just observation, speculation and the anticipation of Random Success.

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That sounds similar like the strategy I was once trialing, on UK open.

I call it Gap reversal.

Gap up of more than 2%, you go short at the bell. My statistical data of over 3000 data points suggests a 71% win rate. (Seems close to your experience)

The issue I had with this strategy were the spreads. I usually found that the spreads right at the open were so large, that indeed the price went in the right direction, but not enough, so that you take a profit in the end.

Example:
Open at 388. Statistics forecast a drop down to 381. Unfortunately the opening spread is something like buy 392, sell 384. When the price moves down to 381, the spread is still something like buy 384, sell 378. So your profit is 0 points, even though the price moved 7 points.

Edited by DSchenk
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18 minutes ago, DSchenk said:

That sounds similar like the strategy I was once trialing, on UK open.

I call it Gap reversal.

Gap up of more than 2%, you go short at the bell. My statistical data of over 3000 data points suggests a 71% win rate. (Seems close to your experience)

The issue I had with this strategy were the spreads. I usually found that the spreads right at the open were so large, that indeed the price went in the right direction, but not enough, so that you take a profit in the end.

Example:
Open at 388. Statistics forecast a drop down to 381. Unfortunately the opening spread is something like buy 392, sell 384. When the price moves down to 381, the spread is still something like buy 384, sell 378. So your profit is 0 points, even though the price moved 7 points.

Hmmm. I see.  the plot thickens. 

Well, so long as we're ticking boxes, here are the results after 8 minutes going Short at the Bell.  What we can see is 10 random trades with 8 losses and 2 wins.  The Interesting part is when we consider that these were all Gapping UP.  If I'd bet Long they'd all be winners as my Limit and Stop are the same.

 

I have 5 other trades still open so I'll post those results at 3pm.

 

 

results.jpg

Edited by nit2wynit
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22 minutes ago, DSchenk said:

Example:
Open at 388. Statistics forecast a drop down to 381. Unfortunately the opening spread is something like buy 392, sell 384. When the price moves down to 381, the spread is still something like buy 384, sell 378. So your profit is 0 points, even though the price moved 7 points.

This is quite telling and in my early days I lost a lot because I didn't account for Spread.  These days my Stop is either at SR points Plus Spread.  If  Spread is 2 points I will add half then double it, so 6pts to cover.  Some of those examples has a 45pt spread so I covered 100pt Stop Loss.  Realistically as you've pointed out, using Minimum stop that covers Spread only will surely put you in trouble no matter which way it goes.  Further anaylsis is required then.

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Well, here they are to see.   I'll be honest I'm not sure I'm on to something here.  Spread Factor vs Time vs % moved vs £100 or less.  There's more to this Sweet Spot than I can probably fathom.

Is it Safe to assume that If i went Long on these they'd all be winners?  12 trades with 2 still running.  90% success rate (success=analysis points)

 

 

results 2.jpg

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In regards to your trial with gap reversal, would look at historic data.
Get the top 10 gappers for the past 100 days or so and then check if they have moved up or down on market open

As mentioned, I've done this analysis once on UK market and turned out 70/30 towards gap reversal, not gap and go. Might explain why I was always loosing on gap and go in UK.

 

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6 minutes ago, DSchenk said:

In regards to your trial with gap reversal, would look at historic data

:D the Trial Isn't Gap Reversal though.  I'm just changing from Long or Short to see how the results differ in this particular Instance.

Now we just need to find a Pre-Market Screener so our Stock List is already there and Charts open ready to trade.  Waiting fro bell to open then looking is problematic to say the least.

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