Spread Betting

[evilsatan]

I have read some threads in here and looked at some intro vids Spence posted from Tradefair. I was wondering how many people use SB and what methods they use i.e. is it a long term or short term investment, what kind of returns do you seek before closing the bet, do you usually long or short a specific share or a market?

I have signed up for a TD Waterhouse account and placed my first long on a share at £1/point as a taster. What I would like to do is aim to make a consistent £50 or so a day which can pay for living expenses which leaves any money I make through my self employment for reinvestment and luxuries. Obviously my stake would increase to achieve this which increases risk but good research can provide me with an upper hand.

Every morning there are articles posted which signal whether various markets such as the FTSE will open up or not and they also give a good indication of how many points up or down the markets will open. These predictions are announced prior to market open so I was wondering if you can open a SB before the market opens to make some money then close the SB?

I am completely new to SB so know almost nothing, I have watched all of the intro vids from Tradefair but they leave a lot of questions unanswered.

[raelmadrid]

mugs game, just my opinion

*excpects a post saying someones mates mate does it and makes a living from it*

[evilsatan]

From my research it would appear you can use SB as an alternative method of holding shares, same risk, same reward (not using any leverage) with the benefit of zero Capital Gains Tax and zero commission (other than the original spread differing from the real SP). To do so you would divide your investment cash by the SP and use this as your per point bet. So only when the shares crash to 0p have you lost all of your money, exactly the same as if you held the shares.

Obviously most people use leverage as it can increase returns (and losses!), but if done sensibly i.e. twice the per point bet as above then you effectively double your gains than if using the same stake and purchasing shares at the risk of losing all the money if the SP halved. Good research can limit your losses as long as something unexpected (BP fiasco is a good example) doesn't happen.

All the above may be completely wrong but I have been spending a lot of time researching how it works and the above is just my understanding.

[rusty]

i'd like to watch how u get on
in the old days, i kept looking at getting into options, but in them days it was almost impossible to watch the prices

[supraman54]

Tried it for a bit with IG INDEX but found that the supposed early indicators (just as the FTSE opens) are not that good a guide as it can signal an early rise/fall and then reverse with a massive swing.. that's why it's a a gamble.
You stop your position out at 15 point as a rule so if you are placing £2 a point that could mean a loss of £30 ..
I had some exciting moments (the IGINDEX iPhone app is quite good) but didn't continue for too many weeks.
Some traders I know told me that it's often better to watch for the FTSE to steady and look for signals os a significant movement later in the morning.
Also keep abreast of the news so that you can anticipate rise/falls in the index when statements are made by the BOE or the government.
Lastly, if you decide to go with it, utilise the tuorials and training that's offered to let you do very small bets ie 10p a point while you get a feel for it and then they increment your level..

good luck

[evilsatan]

The idea was rather than risk the rest of the day, setup a SB, wait for the FTSE to open, then close it. Small reward but consistent.

I thought there must be something preventing such trading as there is setting up SB on the day of ex-Div.

[honestDave]

Most sb firms trade outside the Market hours so you won't be able to take advantage of movements outside those hours.

Firms will also charge you an overnight fee to allow you to hold any positions.

The no commission thing is a scam for idiots. Every trade whether you win or lose, the sb firm is making profit from you... It's built into the spread.

That said you can make large profits from this very quickly (thanks cityindex ).

[Fresh]

mugs game, just my opinion

*excpects a post saying someones mates mate does it and makes a living from it*

Very shallow view... my mate's mate's mate's friend of a dog...

No seriously, it totally depends what you're doing and what your knowledge is. Without being too specific, we use spreads to maximise our profits. We know where certain indicators are moving and what the consequences are and are confident when to hold positions. That said, we benefit from a risk management system which might allow a proxy hedge, but then individuals wouldn't have access this kind of system. Personally without it, especially using my own money, I wouldn't touch it.

[evilsatan]

Having the SB firm taking their cut from an artificial spread is beneficial to me, gives you a what you see is what you get POV whereas if a commission was charged you see the spread you are getting but have to factor in a charge on top of that. I know the change of spread would be equivalent to a commission but it simplifies the trade.

[Fear345]

Buy low sell high then you cant fail

[Undertaker]

stick to simple investment.... put some in take some out.. Patience is key here

oil and miners is where you want to be


Do let us know how you get on though, all the best