Spread-betting

Daragh101

I no alot of people have started to use spread betting as a cheaper way of trading...............

what are the pros/cons of spread betting in general and with paddypower trader.??????

How can a company consistantly make profits from providing this service???

what is the best way to learn about spread betting.



the reason i ask these questions is because ive wanted to trade irish bank shares as there is always a rally then a slump in there share price.
eg.. good news, shares rise in value for a couple of days...............rally ends and the share price falls to original levels.

nesf

Pros:
Cheapest way of doing very short term (read daily) trading. (the spread is smaller than the commission would be for most private clients working with "small" bankrolls)
Doesn't have to be leveraged so you can put a hard limit on potential losses.
Can work with very tiny to very large bets depending on your bankroll.

Cons:
Very expensive if you're going to be holding a position for more than a couple of days (i.e. every night your positions will be "rolled over" and the bookie will take his spread again).
Potentially enormous losses if you use leverage.

rugbyman

to nesf

nice ,easy to read explanation
Rugbyman

could you explain the spreads a bit more.

thanks

daveirl

This post has been deleted.

eire2009

http://www.paddypowertrader.com/

look at the tutorials

PullOutMethod

Cons:
> Very expensive if you're going to be holding a position for more than a couple of days (i.e. every night your positions will be "rolled over" and the bookie will take his spread again).

wtf are you talking about ?
One pays the spread once and once only on the 3 month, 6 month and 9 month quarterly bets.
Who in their right minds would roll-over a daily bet every day - that is like changing your currency every day and back.


Guys as a seasoned spread bettor, the best place to bet and learn is IGIndex.
Their policy is no tutorial mode, but you can bet tiny amounts (e.g. lose a max of 35 euro or whatever)
Best way to learn.

In general I am very disappointed in this forum.
The level of knowledge is poor and too many guys just wanting to punt on the banks.

nesf

PullOutMethod wrote: »

Who in their right minds would roll-over a daily bet every day - that is like changing your currency every day and back.

People who don't understand how spread betting works, which is why I mentioned it.

eire2009

PullOutMethod wrote: »

Cons:
>

In general I am very disappointed in this forum.
The level of knowledge is poor and too many guys just wanting to punt on the banks.

Got any better ones??
And whats wrong with gambling a bit of money on the banks

mickman

a post here states that the company takes its spread every night and your bet is rolled over. this is only true if you take a daily bet.

with IG index (who i use and would recommend, the irish ones are crap) then you can take a position that wont expire for 3 ,6 or 9 months. the spread is obviously wider (not much) but there is no roll over every night

nesf

mickman wrote: »

a post here states that the company takes its spread every night and your bet is rolled over. this is only true if you take a daily bet.

with IG index (who i use and would recommend, the irish ones are crap) then you can take a position that wont expire for 3 ,6 or 9 months. the spread is obviously wider (not much) but there is no roll over every night

You are correct, I should have clarified that I was talking about daily bets.

b1gbaddom

I started off as a complete newbie with paddypowertrader because of their demo platform - it's free, and once you know the basic concepts of spread betting (which you can learn from their online tutorials), it's an ideal way of testing your knowledge. It's free too.

I've been trading small amounts for the last few months, up and down as you'd expect, but have basically borken even.

If you're thinking about trading news like you describe Daragh101, then the overnight charges won't matter too much to you, as you'll probably be in and out quite quickly

Keano30

I've being trading a good few yrs now, trade most days.

I make my decision on whether to go for the Daily / Rolling contract or the quarterly one based on a number of factors:
- Obviously the spread, sometimes there can be a massive difference between the daily and qtrly spreads which might sway me towards Daily, but other times there is very little difference so in these cases might as well go for the qtrly contract expiry, so at least if you want to keep your position open for a few days you can without getting hit for the nightly rollover charges.

- My time frame, if I am trading a slow burner then obviously the qtrly contract is the way to go, you'll have covered the extra spread within a week or so. If I am trading a more volitile stock (e.g. Apple, GS, RIM, Google, etc), then the tighter spread on the rolling contracts is usally the way to go, assuming you call it right you can be in profit quickly enough and then either move your stop up if you want to leave it open or just close it out the same day and take your profits.

As for where to learn for newbies, Paddypowertrader and Delta Index websites have some good tutorial / learning center sections. Delta's weekly wrap is decent too.

luckystrike23

hi all,

detailed summary explaining advantages and disadvantages here

http://www.financial-spread-betting.com/Advantages-and-disadvantages-of-financial-spread-betting.html

any question about spread betting here

http://www.financial-spread-betting.com/Spread-trading-faqs.html

be careful using paddy - although they seem to be run by LCG they seem to add an extra point to some buy orders...

guess that should help

Roonbox

I use worldspreads and have been doing so for the last year. Its ok but IGindex seems to cover a lot more markets.
I havent lodged any money into IGindex yet.

Does anyone know what kind of red tape there is to get through to withdraw funds from them since their based in the UK?? Or does it matter??

Anyone here trade commodities or am I the only one??

bosra

daveirl wrote: »

This post has been deleted.

I think this is the most important point for any trader to consider. Newbies tend to get sucked in by spreadbetting companies offering 'commission free' trading which it is not. 1. Know what your broker is charging you in the spread ..some companies may have a 5 point spread on the FTSE..others only two ... secondly, know what they are charging you in financing..might seem irrelevant..but if ur doing any decent size, its gonna add up..personally, i prefer to use DMA CFDs and futures

gman100

bosra wrote: »

I think this is the most important point for any trader to consider. Newbies tend to get sucked in by spreadbetting companies offering 'commission free' trading which it is not. 1. Know what your broker is charging you in the spread ..some companies may have a 5 point spread on the FTSE..others only two ... secondly, know what they are charging you in financing..might seem irrelevant..but if ur doing any decent size, its gonna add up..personally, i prefer to use DMA CFDs and futures

Can you explain what CFDs are and the primary advantages in using CFDs over spread-betting? Thanks.

bosra

heres a piece on DMA CFDs and after it a link comparing SB and CFDs..i can see the appeal of SB for trading indexes like FTSE if spreads are tight..but as a personal pref, i just rather DMA cfd for share based trading..

Arguably the best way to exploit the power of the Level 2 screen is to sign up with one of the companies offering online direct market access CFD trading. Clients can use this technology to enter orders directly on to the LSE's electronic order book. Whenever they enter an equity CFD ticket the provider will automatically create the equivalently priced order in the underlying share and it is this 'shadow' instruction that appears on the order book.
Direct market access or DMA traders can either deal immediately at the true bid and offer or they can enter an order within the spread to actually improve on the market price. If a share were trading at 150-151 in the underlying cash market then someone using a quote-driven CFD service would have to pay the full offer of 151. A trader with access to DMA could, for example, put an order on the bid at say 150.5 so that he becomes the best bidder in the market with a good chance of getting a favourable fill.
Even in a liquid market there are times when the spread can widen and anyone with access to DMA has the scope to take advantage of this. With a share quoted at 200-210 a DMA trader could put on a bid at 202 and an offer at 208, both being on the yellow touch strip. If each of these orders gets filled then the result would be a 6p risk-free profit from the spread, while if only one side goes through it would still represent an improvement on the market price. The instantaneous order execution available with DMA also makes it feasible to trade breaking news, since those who are watching the screen and quick enough to respond stand a good chance of getting their orders filled before the market has fully digested the new information.
Another advantage of DMA is that it is the only way that private traders can enter orders directly during the opening and closing auctions on the London Stock Exchange. There are currently more than 650 UK stocks that start every trading day with a pre-market auction between 7.50am and 8.00am and end it with a post-market auction from 4.30pm to 4.35pm. From a trading perspective, the auction is very often the time when a stock records its high or low of the day, and it is only by actively taking part that the best prices and hence the biggest possible moves become available. Direct market access CFD providers typically charge a headline commission rate in the order of 20 or 25 basis points although active traders will normally be able to negotiate more favourable terms.
http://www.contracts-for-difference.com/cfds-vs-spread-betting.html

mickman

roon - no problem at all with taking out funds. they have accounst based in dublin . i find them great to be honest and yes i trade commodities

Roonbox

Cheers Mick - Im lodging this week -

Their software is much better than worldspreads aswell -

RockCastle

I set up an account with IG as well about 2 weeks ago and found them to be extremely professional and Fast and there platform is excellent. I funded my account with my Laser card in a flash. I couldn't believe how easy it was!! Hopefully not to easy and I loose it all!!:D

Roonbox

Does anyone follow Ira Epstein's daily video updates on metals and stock index's??
Been following him for about one yr now. He just follows chart trends. Very interesting stuff..

studdlymurphy

Just quick question. All the spread betting companies say that you can lose more than your initial deposit. Does this mean that if I was to deposit 100euro in the account make a bet and the bet runs to lose more than the 100euro I have to come up with more money to account for the bigger loss or does the trade automatically close when my credit is gone?

mono627

studdlymurphy wrote: »

Just quick question. All the spread betting companies say that you can lose more than your initial deposit. Does this mean that if I was to deposit 100euro in the account make a bet and the bet runs to lose more than the 100euro I have to come up with more money to account for the bigger loss or does the trade automatically close when my credit is gone?

No, you could conceivably have to pay more than your initial deposit. You can of course use a stop loss that minimizes your downside risk.

Highly Salami

mono627 wrote: »

You can of course use a stop loss that minimizes your downside risk.

and stop losses aren't guaranteed, if the price of spreadbet drops very fast or goes below stop loss outside hours of operation of the spread betting company for example.

mono627

Highly Salami wrote: »

and stop losses aren't guaranteed, if the price of spreadbet drops very fast or goes below stop loss outside hours of operation of the spread betting company for example.

I could be wrong on this, but is there not some way of guaranteeing you get stopped out a particluar price with (some) spread betting companies?

arrowloopboy

Highly Salami wrote: »

and stop losses aren't guaranteed, if the price of spreadbet drops very fast or goes below stop loss outside hours of operation of the spread betting company for example.

WRONG.

You can buy guarnteed stops,with IG Index the spread on eur/usd is 2 points,with a guarnteed stop costing 5 point spread.
I dont bodder with the G/S,its not really necessary unless you trying to trade news.

mono627

arrowloopboy wrote: »

WRONG.

You can buy guarnteed stops,with IG Index the spread on eur/usd is 2 points,with a guarnteed stop costing 5 point spread.
I dont bodder with the G/S,its not really necessary unless you trying to trade news.

No need to shout.

arrowloopboy

mono627 wrote: »

No need to shout.

Sorry mono,i didn't realise that capitals equaited to shouting,i used capitals because its a very important point,eur/usd could move 100 points/pips in a couple of minutes on NFP Friday,this could be disasterous if you hadn't a G/S.

Regards.....

Highly Salami

maybe I should have said that stop losses aren't always guaranteed.

arrowloopboy

Highly Salami wrote: »

maybe I should have said that stop losses aren't always guaranteed.

And my point was,that they can be with a G/S.

zig

just wondering how do spread betting firms make their profit, is it only losers that they profit from, or winners as well. I know they basically take the spread , so if the eurusd was 1.3556 for example,and I could only buy at 1.3558 thats 2 points for them if the price goes down, but what happens if it goes up and im in the green, how can they profit from that one? Do they hedge all bets , both winners and losers accounts?

Would it even matter to them if all their customers were winners?

zig

The reason I ask is because i was at a seminar yesterday hosted by a SB company, and I was shocked the amount they thought you (pretty much standard stuff you'd learn online), but they thought you about money management, how not to blow your account,risk management, stop losses, psychology. Obviously the whole idea of the seminar is to get customers but I couldnt help but think they wanted me to win.

Highly Salami

afaik they make profit on the initial bet you make, so it doesn't matter to them if you win or lose, except that if customers lose more often then they would likely give up spread betting.

Arcadiaz

zig wrote: »

The reason I ask is because i was at a seminar yesterday hosted by a SB company, and I was shocked the amount they thought you (pretty much standard stuff you'd learn online), but they thought you about money management, how not to blow your account,risk management, stop losses, psychology. Obviously the whole idea of the seminar is to get customers but I couldnt help but think they wanted me to win.

Even with the above, risk management, stop losses etc, most people still end up loosing money, and of the few people that do consistently make money, a good few move on to real trading, where they tend to invest more capital, which means the broker costs represent a smaller % of the trade.

Put in simple terms, speadbetting appeals to newbies because its so easy to get setup and trading with a small capital, and a very % of newbies don't make money.

zig

Arcadiaz wrote: »

Even with the above, risk management, stop losses etc, most people still end up loosing money, and of the few people that do consistently make money, a good few move on to real trading, where they tend to invest more capital, which means the broker costs represent a smaller % of the trade.

Put in simple terms, speadbetting appeals to newbies because its so easy to get setup and trading with a small capital, and a very % of newbies don't make money.

thats fair enough, ive no issue with being one of them people, because the truth is I dont have the capital, and I really want to be trading live as opposed to demo, for psychological purposes, even if its just with 100euro or something,and using 10c/pip stakes . Im just sick of using demos anyway, because the strategy im using is making a profit over many trades, (albeit tiny, but still ive a long way to go, just learning)

But that doesnt really answer the question, can they benefit from me being a winner as well as a loser? Like Highly Salami said , do they make profit even if I am winning?

arrowloopboy

zig wrote: »

thats fair enough, ive no issue with being one of them people, because the truth is I dont have the capital, and I really want to be trading live as opposed to demo, for psychological purposes, even if its just with 100euro or something,and using 10c/pip stakes . Im just sick of using demos anyway, because the strategy im using is making a profit over many trades, (albeit tiny, but still ive a long way to go, just learning)

But that doesnt really answer the question, can they benefit from me being a winner as well as a loser? Like Highly Salami said , do they make profit even if I am winning?

Zig,the spread is taken at either the entry or eixt according to weather your a buyer or a seller.

And Yes the firms want you to be successfull,the longer you trade the longer they get their spreads, simples.

Spread betting is more suited to day trading,as apposed to long term trading.With IG Index, spot eur/usd rolls over at 10pm (i.e it costs another spread till 10pm the following evening)

arrowloopboy

f