Spread betting as a full time occupation...

[R11ysf]

DonkeyApple said:

Blown2CV said:

surely if there are such things as spreadbetting companies then there is money to be made... and being a privateer just means smaller bets. I know I am being dumb, I just want to know why I am wrong!

Because on many occasions they are taking the other side of your bet so when you win they lose. They control the price and so can ensure that they don't lose.

The larger the firm the bigger their book of business and the less it matters when clients win as they become a requirement to produce volume to hedge against other client trades. The better you can match your book the less you have to run as exposure and the less you have to pay to hedge externally in the markets.

The smallest firms probably do the least hedging as thier book simply lacks critical mass for winning clients to be of positive value.

I'll give you an idea, there is a broker who is currently promoting spread free trading for some accounts. This means that they are making nothing unless the client loses. You can bet your bottom dollar that anyclient winning more than a couple of hundred quid under such a deal will be switched to manual quoting and if that doesn't reverse their luck then scewed closing prices should do the trick.

Not sure about this to be honest. I think a lot of smaller companies hedge to minimise their exposure and just take profits on the spread. The larger the firm then the larger the book they have and so have more long / shorts to balance the book. Most spread betting firms are not in the habit of "betting against you" but rather they treat it like casino and constantly take the spread. Let's face it that's the business to be in - no risk, no being right or wrong, just cash for essentially nothing.

Offering free trading is just a loss leader to get business in. If a company was waiting for you put on a losing trade to make money then that is a very poor business model and would not last long.

matsmith said:

Blown2CV said:

I fronted up 200 and made 800 in a few weeks... although I currently now stuck in a measly £2/pt short bet i placed against UK100 in sept

In addition to what ShadowNinja and Noel have said, assuming you have not increased the funds in your account I would say that your biggest problem is right there on the first line

Your inexperienced and used £1000 to open an £11,000 short, and you describe it as measly! 11x leverage has the potential to wipe you out easily with just one bad trade, and it doesnt have to be that bad a trade to do it

With regards to spending cuts, thats old news already and with the potential of further QE bad news is being taken as good news and good news is being taken as good news.

That said, if its getting to a point where shorters are nearing margin calls we cant be too far away from a top. For what its worth I am getting bearish at this level, but I also remember the wise words I once heard- the markets can stay irrational for longer than you can stay solvent

is there another area of life that has as many wise sayings as the stock market?!

This is good advice. Whatever you think about the market is priced in. Always. ALWAYS! If you think something then someone else has thought it before. Someone else had that idea and put the trade on. When you think a non-farm figure was bad then 200,000 people sitting in front of a screen thought the same before you even knew the figure was out. And traded it accordingly. If you have a view and the market doesn't agree then you are wrong. Even if you are right, you are wrong.

The key to this game and making money from it is not marrying yourself to a view, but getting a feeling for the market and the communal thoughts and going with it. There a very few people in this world who outsmart the market and they have amazing stories. It would be great to be Soros and take on the Bank of England, but for every 1 of him there are thousands who went bust. To actually trade you reassess your view all the time, constantly changing your opinion as the market dynamically evolves.

You can make a lot of money just being one of the crowd. Just remember in this game you pay to learn but if you make it out the other side there is no job/career/side hobby in the world like it

[DonkeyApple]

R11ysf said:

DonkeyApple said:

Blown2CV said:

surely if there are such things as spreadbetting companies then there is money to be made... and being a privateer just means smaller bets. I know I am being dumb, I just want to know why I am wrong!

Because on many occasions they are taking the other side of your bet so when you win they lose. They control the price and so can ensure that they don't lose.

The larger the firm the bigger their book of business and the less it matters when clients win as they become a requirement to produce volume to hedge against other client trades. The better you can match your book the less you have to run as exposure and the less you have to pay to hedge externally in the markets.

The smallest firms probably do the least hedging as thier book simply lacks critical mass for winning clients to be of positive value.

I'll give you an idea, there is a broker who is currently promoting spread free trading for some accounts. This means that they are making nothing unless the client loses. You can bet your bottom dollar that anyclient winning more than a couple of hundred quid under such a deal will be switched to manual quoting and if that doesn't reverse their luck then scewed closing prices should do the trick.

Not sure about this to be honest. I think a lot of smaller companies hedge to minimise their exposure and just take profits on the spread. The larger the firm then the larger the book they have and so have more long / shorts to balance the book. Most spread betting firms are not in the habit of "betting against you" but rather they treat it like casino and constantly take the spread. Let's face it that's the business to be in - no risk, no being right or wrong, just cash for essentially nothing.

Offering free trading is just a loss leader to get business in. If a company was waiting for you put on a losing trade to make money then that is a very poor business model and would not last long.

matsmith said:

Blown2CV said:

I fronted up 200 and made 800 in a few weeks... although I currently now stuck in a measly £2/pt short bet i placed against UK100 in sept

In addition to what ShadowNinja and Noel have said, assuming you have not increased the funds in your account I would say that your biggest problem is right there on the first line

Your inexperienced and used £1000 to open an £11,000 short, and you describe it as measly! 11x leverage has the potential to wipe you out easily with just one bad trade, and it doesnt have to be that bad a trade to do it

With regards to spending cuts, thats old news already and with the potential of further QE bad news is being taken as good news and good news is being taken as good news.

That said, if its getting to a point where shorters are nearing margin calls we cant be too far away from a top. For what its worth I am getting bearish at this level, but I also remember the wise words I once heard- the markets can stay irrational for longer than you can stay solvent

is there another area of life that has as many wise sayings as the stock market?!

This is good advice. Whatever you think about the market is priced in. Always. ALWAYS! If you think something then someone else has thought it before. Someone else had that idea and put the trade on. When you think a non-farm figure was bad then 200,000 people sitting in front of a screen thought the same before you even knew the figure was out. And traded it accordingly. If you have a view and the market doesn't agree then you are wrong. Even if you are right, you are wrong.

The key to this game and making money from it is not marrying yourself to a view, but getting a feeling for the market and the communal thoughts and going with it. There a very few people in this world who outsmart the market and they have amazing stories. It would be great to be Soros and take on the Bank of England, but for every 1 of him there are thousands who went bust. To actually trade you reassess your view all the time, constantly changing your opinion as the market dynamically evolves.

You can make a lot of money just being one of the crowd. Just remember in this game you pay to learn but if you make it out the other side there is no job/career/side hobby in the world like it

Oh, I'm 100% sure.

As for hedging, you can only hedge if you have the money on your balance sheet to do so. Margins at the prime brokers for clearing has been substantially increased to small firms since GT's collapse. Often higher than the end retail client is putting down. Look at the standard margin for a FTSE fut v the margin of a FTSE spread bet to see a real differential. If most people are trading FTSE then you are going to use up your balance sheet very quickly indeed. And that's just one instrument.

Post the FSA's clarification on non segging of client funds and that coming to an end, the book of clients' positions exceeds balance sheet capabilities. Combine this with not having enough flow to lay off sufficient risk internally and you are looking at firms running much bigger books.

[ringram]

Always priced in eh. Rubbish.
EMH is history dude, get with the program.
Animal Spirits is where its at.

[DonkeyApple]

ringram said:

Always priced in eh. Rubbish.
EMH is history dude, get with the program.
Animal Spirits is where its at.

http://www.animalspirits.com/ ?

I thought Mystec was bonkers.

[R11ysf]

DonkeyApple said:

Oh, I'm 100% sure.

As for hedging, you can only hedge if you have the money on your balance sheet to do so. Margins at the prime brokers for clearing has been substantially increased to small firms since GT's collapse. Often higher than the end retail client is putting down. Look at the standard margin for a FTSE fut v the margin of a FTSE spread bet to see a real differential. If most people are trading FTSE then you are going to use up your balance sheet very quickly indeed. And that's just one instrument.

Post the FSA's clarification on non segging of client funds and that coming to an end, the book of clients' positions exceeds balance sheet capabilities. Combine this with not having enough flow to lay off sufficient risk internally and you are looking at firms running much bigger books.

Fair enough mate, that all makes sense, I guess you're in the industry. I had a mate who used to work for one of the biggest spread betting companies and he used to manage the book as I said. Though he was only doing Ftse binary bets and often they would offset. He would just take the spread and if he leveraged up massively one way then he would hedge in the futures. I guess all firms are different.

ringram said:

Always priced in eh. Rubbish.
EMH is history dude, get with the program.
Animal Spirits is where its at.

If you think so mate. My simple point is if you think the ftse is too high and sell it, and it goes up then you can sell more. If it keeps going, then sell some more. Eventually you are "right" or bust, but you are only "right" because the market's opinion changed. When you put it on you were wrong. As was written above the market can stay irrational (to your way of thinking) much longer than you can stay in the game.


There is a lot of idolisation in trading about being "right". It's utter ste. A lot of people made a fortune buying CDO's for years before they went pop. You'd have lost a fortune if you started shorting them in 2003 because you thought sub-prime was worthless.

Being right and wrong means nothing, it's about making money. I'm wrong hundreds of times a day and I'm right hundreds of times a day. How many hands does a casino lose each day? Do they care? The only "right" is the market wherever it goes.

If you stick to that view you'll make money, of that I'm certain.

[DonkeyApple]

R11ysf said:

DonkeyApple said:

Oh, I'm 100% sure.

As for hedging, you can only hedge if you have the money on your balance sheet to do so. Margins at the prime brokers for clearing has been substantially increased to small firms since GT's collapse. Often higher than the end retail client is putting down. Look at the standard margin for a FTSE fut v the margin of a FTSE spread bet to see a real differential. If most people are trading FTSE then you are going to use up your balance sheet very quickly indeed. And that's just one instrument.

Post the FSA's clarification on non segging of client funds and that coming to an end, the book of clients' positions exceeds balance sheet capabilities. Combine this with not having enough flow to lay off sufficient risk internally and you are looking at firms running much bigger books.

Fair enough mate, that all makes sense, I guess you're in the industry. I had a mate who used to work for one of the biggest spread betting companies and he used to manage the book as I said. Though he was only doing Ftse binary bets and often they would offset. He would just take the spread and if he leveraged up massively one way then he would hedge in the futures. I guess all firms are different.

ringram said:

Always priced in eh. Rubbish.
EMH is history dude, get with the program.
Animal Spirits is where its at.

If you think so mate. My simple point is if you think the ftse is too high and sell it, and it goes up then you can sell more. If it keeps going, then sell some more. Eventually you are "right" or bust, but you are only "right" because the market's opinion changed. When you put it on you were wrong. As was written above the market can stay irrational (to your way of thinking) much longer than you can stay in the game.


There is a lot of idolisation in trading about being "right". It's utter ste. A lot of people made a fortune buying CDO's for years before they went pop. You'd have lost a fortune if you started shorting them in 2003 because you thought sub-prime was worthless.

Being right and wrong means nothing, it's about making money. I'm wrong hundreds of times a day and I'm right hundreds of times a day. How many hands does a casino lose each day? Do they care? The only "right" is the market wherever it goes.

If you stick to that view you'll make money, of that I'm certain.

If he was running a book on binaries then he would have been at IG.

They are the only firm with large enough internal flows to lay a lot off internal, can run larger exposures with much less risk and clear hedging trades at superior cost and margin.

Since 2008 it has become a two tier market and the vast majority of firms have restricted balance sheets, hence they were non segging margin funds so as to use clients' money at the clearer.

[g4ry13]

ringram said:

Always priced in eh. Rubbish.
EMH is history dude, get with the program.
Animal Spirits is where its at.

In the words of someone who's made a lot from investing in stock market.

"I'd be a bum on the street with a tin cup if the markets were always efficient." (Mr W Buffett)

[NoelWatson]

g4ry13 said:

ringram said:

Always priced in eh. Rubbish.
EMH is history dude, get with the program.
Animal Spirits is where its at.

In the words of someone who's made a lot from investing in stock market.

"I'd be a bum on the street with a tin cup if the markets were always efficient." (Mr W Buffett)

How is he disproving EMH?

[g4ry13]

NoelWatson said:

g4ry13 said:

ringram said:

Always priced in eh. Rubbish.
EMH is history dude, get with the program.
Animal Spirits is where its at.

In the words of someone who's made a lot from investing in stock market.

"I'd be a bum on the street with a tin cup if the markets were always efficient." (Mr W Buffett)

How is he disproving EMH?

It was actually aimed at R11ysf but I was too lazy to edit the quote.

[anonymous-user]

IMO £2k is way too small a pot to hope to make £1.5k a month from (and I mean hope, because that is what you will need to have a lot of).

It is possible to turn consistent profits but real discipline is needed.

I can tell you that however strong your belief in your system is and whoever's money is on the line, its a whole different ball game to push the button on a 10p per point bet than it is to do the same trade at £1k a point. Many traders underestimate this ime

I would recommend that anyone considering trading read some of the stuff by van tharp and also Adventures of a Currency Trader

For me, moving to trading was more about not having to have a full time occupation: I wanted to set up a system that enabled me to trade on about 1.5 hours work per day and enjoy the more important things in life.

[marky1]

Wasn't sure whether to post, but here I am.
I've been trading futures for 10 years. Have many thoughts and opinions that I'll add to this thread with time but for now, just wanted to say there is a lot of money to be made in the market and it's not as complex as people make out.
Here's a story for you, a few years back I was trying to get out of some FTSE100 futures. I went bid on 120 lots to try and get a small offer filled (just to spoof the market - back then 120 FTSE was quite big) BANG - filled straight away on the offer. It happens sometimes but it caught my eye, was just so quick. So I put a small bid in and went offered on 120 lots - BANG, filled on the bid. So, someone had a black box programmed that lifted a bid or hit an offer if some size came into the market.

So what did I do. Well I sat there for two month triggering this black box dozens of times a day - was doing about 15000 lots a day on the FTSE and was told by LIFFE I was the second largest volume trader in the world at the time (one of the banks was top) Took a high six figure sum out of it - never made money so easily but just want you all to know sometimes it IS easy - not everyone is as smart as you think! (After about 2 months someone must have decided to check how their black box was doing and realised I had cleaned it out - they turned it off)

Edited by marky1 on Friday 22 October 21:59

[ShadownINja]

If that is true, then brilliant.

I was chatting to some sports traders saying how the bots had really tightened up the market so crazy odds were hard to get but then someone suggested that the bots might not necessarily be profitable even if they are putting up £4k routinely as the markets changed.

[Dan_1981]

If I wanted to learn more about spread betting, both from a theoretical (ie the market & terminology etc) point of view but also from a "how to do it" point of view can anyone reccomend primarily any books or if not then a couple of good websites?

I don't have any spare cash lasying around to have a go but things like this interest me would like to have something interesting to read in the bath!

[marky1]

It's 100% true.

This is just one thing I have written about to give people an idea of what can be done. I have seen other things similar to this over the years I have traded (although the one I mentioned above was particularly easy). When I say similar I mean edges one can find that will give you the closest thing to risk free profit. If you look at the market for long enough you start to find these things. Obviously I can't talk about current ones as they will stop working, but things do exist, especially in futures.

Someone spoke above about auto trading for 1.5 hours a day or something. Now I don't think you can make money doing that. To make money trading and the markets have to be your life. It can't be a part time job. (in my opinion)

Edited by marky1 on Friday 22 October 22:56

[ShadownINja]

Seems to be the case in my experience, too. I've missed out on some great euro moves due to having to go to the dentist or whatever.

I guess if you can identify a pattern at the start or end of the day, you could do something... but I don't hold much in that... that's not to say it's impossible... many ways of skinning a cat etc.

As for spotting things, I can appreciate what you're saying. I don't have access to ladders so can't see what's going on but I do have access to ladders in the sports markets and you do pick up on interesting things. It's... ahem... upside down, though.

Edited by ShadownINja on Friday 22 October 23:16

[ShadownINja]

Dan_1981 said:

If I wanted to learn more about spread betting, both from a theoretical (ie the market & terminology etc) point of view but also from a "how to do it" point of view can anyone reccomend primarily any books or if not then a couple of good websites?

I don't have any spare cash lasying around to have a go but things like this interest me would like to have something interesting to read in the bath!

It's all online. http://www.trade2win.com/boards/trading-journals/7...

[DonkeyApple]

Dan_1981 said:

If I wanted to learn more about spread betting, both from a theoretical (ie the market & terminology etc) point of view but also from a "how to do it" point of view can anyone reccomend primarily any books or if not then a couple of good websites?

I don't have any spare cash lasying around to have a go but things like this interest me would like to have something interesting to read in the bath!

I would focus on learning about the market first. A spread bet is simply a wrapper around a market instrument.

[DonkeyApple]

marky1 said:

Wasn't sure whether to post, but here I am.
I've been trading futures for 10 years. Have many thoughts and opinions that I'll add to this thread with time but for now, just wanted to say there is a lot of money to be made in the market and it's not as complex as people make out.
Here's a story for you, a few years back I was trying to get out of some FTSE100 futures. I went bid on 120 lots to try and get a small offer filled (just to spoof the market - back then 120 FTSE was quite big) BANG - filled straight away on the offer. It happens sometimes but it caught my eye, was just so quick. So I put a small bid in and went offered on 120 lots - BANG, filled on the bid. So, someone had a black box programmed that lifted a bid or hit an offer if some size came into the market.

So what did I do. Well I sat there for two month triggering this black box dozens of times a day - was doing about 15000 lots a day on the FTSE and was told by LIFFE I was the second largest volume trader in the world at the time (one of the banks was top) Took a high six figure sum out of it - never made money so easily but just want you all to know sometimes it IS easy - not everyone is as smart as you think! (After about 2 months someone must have decided to check how their black box was doing and realised I had cleaned it out - they turned it off)

Edited by marky1 on Friday 22 October 21:59

Indeed, you can find events like this in the underlying market. You can't access them via spreads as you are hitting the broker's book, not the market.

One of two firms offer DMA spreads but there is a reason they run this out of Gib and that is because if a broker isn't technically taking on the other side then it isn't a bet and so the end user would be liable for CGT. It's a very dubious area.

Betfair's Elmec when it launches might be an interesting product but it's a gamble as to whether they will have sufficient liquidity.

[ShadownINja]

DonkeyApple said:

Betfair's Elmec when it launches might be an interesting product but it's a gamble as to whether they will have sufficient liquidity.

What's this?

[marky1]

DonkeyApple said:

marky1 said:

Wasn't sure whether to post, but here I am.
I've been trading futures for 10 years. Have many thoughts and opinions that I'll add to this thread with time but for now, just wanted to say there is a lot of money to be made in the market and it's not as complex as people make out.
Here's a story for you, a few years back I was trying to get out of some FTSE100 futures. I went bid on 120 lots to try and get a small offer filled (just to spoof the market - back then 120 FTSE was quite big) BANG - filled straight away on the offer. It happens sometimes but it caught my eye, was just so quick. So I put a small bid in and went offered on 120 lots - BANG, filled on the bid. So, someone had a black box programmed that lifted a bid or hit an offer if some size came into the market.

So what did I do. Well I sat there for two month triggering this black box dozens of times a day - was doing about 15000 lots a day on the FTSE and was told by LIFFE I was the second largest volume trader in the world at the time (one of the banks was top) Took a high six figure sum out of it - never made money so easily but just want you all to know sometimes it IS easy - not everyone is as smart as you think! (After about 2 months someone must have decided to check how their black box was doing and realised I had cleaned it out - they turned it off)

Edited by marky1 on Friday 22 October 21:59

Indeed, you can find events like this in the underlying market. You can't access them via spreads as you are hitting the broker's book, not the market.

Yeah very true, wasn't implying it was like this on spread betting sites just to clarify to all. If someone wants a full time occupation trading I think they need to be moving away from spread betting and towards futures with DMA.