Spread Betting

[okgo]

Chilli said:

Hmmm....Where do I start.
I took VR from my bank last month. I used to "trade" from the office everyday, and seemed to make good money. I thought I could do it from home. Seemed better than spending 8-10 hours a day in the office, doing a job I hated. After all, I only need say £250 a day to keep myself happy...easy, it seemed.
Roll forward 5 weeks or so, and well, it ain;t THAT easy. Certain markets are easy to trade in. I had a huge scare recently going long on cable. Luckily it came back. However, I'm now in deep with the FTSE & Dow and I need another 150 points (in total) to get back. Other than these two "issues" I've been doing pretty well. Making between £400 and £800 a day. However, I've busted my own rules a few times, meaning if Im losing, I just move my stop. This is a bit dangerous for obvious reasons, but also whilst you haven't actually realised your loss, you ain't made any money.

Tis tough, but I love it!

Why did you stay at the bank so long if you can do it for yourself at home?

[Chilli]

Well, I've only been gambling for a couple of years. Now that the mrs has a very well paid job, I decided to take VR, and give it a go. It's no guarantee you'll be making any money, but it has proved to beat working in an office in town every day.
We intend to emigrate to NZ at some stage, so I was lucky enough to get paid to help us on our way.

[okgo]

Chilli said:

Well, I've only been gambling for a couple of years. Now that the mrs has a very well paid job, I decided to take VR, and give it a go. It's no guarantee you'll be making any money, but it has proved to beat working in an office in town every day.
We intend to emigrate to NZ at some stage, so I was lucky enough to get paid to help us on our way.

Fair enough. Sounds like a wonderful position to be in. Good luck.

[Chilli]

Cheers. Fingers crossed I'm not on the streets in a few months.

[ShadownINja]

In the long run, trading oil is going to ruin your account. It's too volatile to be trading. Newbies love it because it looks like there's lots of opportunities to rake in the money but I see it as lots of opportunities to buy your brokers champagne lunches...

Find something that has less volatility and more "sense".

PS sort out your self-discipline!!

PPS trading is not fun. It's actually pretty boring. Do extreme sports for fun. Trade for a living.

Edited by ShadownINja on Saturday 27th June 00:29

[Apollo Zensen]

limpsfield said:

Useful stuff

Thanks very much for this, I normally just analyse markets and needed to get my head round the leverage side - something my 300 page "guide to spread betting" somehow fails to get across as he keeps on waffling about mountains!

Oh and best of luck with getting to NZ Chilli! Its like Scotland but further away!

[g4ry13]

Any updates chilli? In this game time is a big equaliser unless you get it horribly wrong.

Edited by g4ry13 on Thursday 2nd July 00:54

[Chilli]

g4ry13 said:

Any updates chilli? In this game time is a big equaliser unless you get it horribly wrong.

Edited by g4ry13 on Thursday 2nd July 00:54

Well, there seems to be a trend developing. I get in, it falls miles, stays there for a while, then spends the best part of a week going back up. Getting a kicking at the mo, but early days! Still ahead of where I started by a reasonable amount.

[ShadownINja]

Chilli said:

g4ry13 said:

Any updates chilli? In this game time is a big equaliser unless you get it horribly wrong.

Edited by g4ry13 on Thursday 2nd July 00:54

Well, there seems to be a trend developing. I get in, it falls miles, stays there for a while, then spends the best part of a week going back up. Getting a kicking at the mo, but early days! Still ahead of where I started by a reasonable amount.

They're watching you.

[limpsfield]

Apollo Zensen said:

limpsfield said:

Useful stuff

Thanks very much for this, I normally just analyse markets and needed to get my head round the leverage side - something my 300 page "guide to spread betting" somehow fails to get across as he keeps on waffling about mountains!

Oh and best of luck with getting to NZ Chilli! Its like Scotland but further away!

I think at first glance the leverage side of things can seem confusing, but I think after a few trades you wondered what confused you. PM me if you have any specific questions.

Edited by limpsfield on Thursday 2nd July 11:06

[g4ry13]

Chilli said:

g4ry13 said:

Any updates chilli? In this game time is a big equaliser unless you get it horribly wrong.

Edited by g4ry13 on Thursday 2nd July 00:54

Well, there seems to be a trend developing. I get in, it falls miles, stays there for a while, then spends the best part of a week going back up. Getting a kicking at the mo, but early days! Still ahead of where I started by a reasonable amount.

So I guess you're holding over today's economic data? I think you and I are looking for slightly different outcomes from it. Wasn't wall st about 8500 last night, you could have got out of that then?

[ShadownINja]

limpsfield said:

Apollo Zensen said:

limpsfield said:

Useful stuff

Thanks very much for this, I normally just analyse markets and needed to get my head round the leverage side - something my 300 page "guide to spread betting" somehow fails to get across as he keeps on waffling about mountains!

Oh and best of luck with getting to NZ Chilli! Its like Scotland but further away!

I think at first glance the leverage side of things can seem confusing, but I think after a few trades you wondered what confused you. PM me if you have any specific questions.

Edited by limpsfield on Thursday 2nd July 11:06

Funny you say that. I think I understand it and then I hear someone saying be careful of it and I have self-doubt, get nervous and start re-reading stuff about it.

[The Contrarian]

Well, I am tempted to allocate £5k cross some now low price stock adn give it unitl March 2010 to see if some of them do a 'pendragon'

[limpsfield]

ShadownINja said:

Funny you say that. I think I understand it and then I hear someone saying be careful of it and I have self-doubt, get nervous and start re-reading stuff about it.

I am never sure why people get confused on it, but I can also appreciate why at the beginning all the various jargon can be intimidating.

Leverage is of course all about risk and on things like FX and indices I think this is a straightforward enough thing to calculate when spread betting. If you buy the FTSE a fiver a point at 4,000 with a stop at 3900 then your risk (assuming your stop kicks in at 3900) is £500. Your total position is 5 x 4,000 = £20,000. Your intial margin on this trade would be soemwhere in the region of £500 to £1,000 depending on who you trade with and whether your stop loss is taken into account.

Maybe where people get confused is when they trade shares £x per point. They do, e.g. £10 per point on Vodafone when they are at 120p. The initial margin requirement is e.g. £120, but of course their total position size is £1,200 exposure to Vodafone (£10 per point x 120p). So it is the same as if you had 1,000 shares.

The quick thing I used to always remember in the beginning when I started spread betting was

£1 per point is the equivalent of 100 shares
£10 per equiv 1,000 shares
£100 equiv 10,000 shares etc

Sensible use of margin is not something to be afraid of. Abuse of margin in relation to the size of an individual's account is what can get people into trouble.

Edited by limpsfield on Thursday 2nd July 16:49

[The Contrarian]

so, if I want to do the equivalent of buying £5000 worth of shares that currently trade at 32p (this is 15625 shares), I need to go long at £156.25 per point, yes?

[limpsfield]

The Contrarian said:

so, if I want to do the equivalent of buying £5000 worth of shares that currently trade at 32p (this is 15625 shares), I need to go long at £156.25 per point, yes?

correct

[ShadownINja]

Thanks for the reply, limpsfield. More simply put, as long as I don't use my entire account and place a stop loss (ie such that I am risking no more than 1-2% per trade), I shouldn't get a nasty bill if things go tits up?

[limpsfield]

ShadownINja said:

Thanks for the reply, limpsfield. More simply put, as long as I don't use my entire account and place a stop loss (ie such that I am risking no more than 1-2% per trade), I shouldn't get a nasty bill if things go tits up?

the only thing you have to worry about is slippage - where a market gaps and you end up getting filled at a worse price than expected. This has never been a concern for me and in my own personal experience it is rare but if you wanted to absolutely nail down the risk you can use a guaranteed stop and pay a slightly wider stop.

http://www.igindex.co.uk/spread-betting/superior-r...

[ShadownINja]

limpsfield said:

ShadownINja said:

Thanks for the reply, limpsfield. More simply put, as long as I don't use my entire account and place a stop loss (ie such that I am risking no more than 1-2% per trade), I shouldn't get a nasty bill if things go tits up?

the only thing you have to worry about is slippage - where a market gaps and you end up getting filled at a worse price than expected. This has never been a concern for me and in my own personal experience it is rare but if you wanted to absolutely nail down the risk you can use a guaranteed stop and pay a slightly wider stop.

http://www.igindex.co.uk/spread-betting/superior-r...

Yeah, fully aware of slippage but, as you say, rarely happens. Been hit by it twice in the last year and only lost an extra 20-30 pips.

[Chilli]

Shortsandlongs. Guaranteed stops, but a slightly larger spread.

Can we all pray for a bounce late on....that goes for the crude as well! Bugger.