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Old 10-25-2010, 01:36 PM   #9

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Re: Spread Betting a Scam

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Originally Posted by grantgerber »
Which spread betting companies can any of you recommend?
where do you live?
What instruments do you wish to trade?
Do you require the ability to use custom indicators / charts etc etc?

Personally I like RBSmarketindex.
IGindex are popular.
Tradefair are good in terms of execution but platform is a little basic.
'New kid on the block' is 'smartlive' who use metatrader platform
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Old 12-27-2010, 06:25 AM   #10

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Re: Spread Betting a Scam

If you have the account to trade full size futures contracts or FX lots, have a look at ProSpreads . They operate a different model to most 'spread betters' - it feels like direct access trading (or Currenex for FX) through a glass wall. No requotes, because you're trading either market spread or Currenex spread, and whenever I've needed help it's been right there on the phone. Their interest is similar to direct access shares brokers - they make money from volume, not trading against you. I have an account, which I've only demoed so far, but no other connections with them. They're planning to introduce Mini FX lots in 2011.

'Traditional' model spread betters (ie the other kind, basically bookmakers) can feature wide variable spreads, stop losses way out on a limb (I remember seeing a 75c minimum stop loss on Crude on a demo platform from one of the biggest operators), and stories of mysterious spikes which don't appear on other datafeeds are rife, as are stories of consistent winners' accounts being closed. I think it's as well to remember that this is spread BETTING, which is why it's tax free. Many operators are trading their own 'book' against you. Just like traditional 'turf accountants', the job of the typical spread betting company is to provide facilities to enable clients to consistently lose small to medium amounts of money, which they do very efficientlly.

As a student of trading (rather than an expert tader), my current opinion is that spread betting with most operators has similarities to trading a small retail FX account for real - It's fine if you're happy to lose relatively small amounts of money for the 'fun' of 'trading', with the dice loaded against you - but why would you want to do that?

Max

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Old 12-27-2010, 07:15 AM   #11

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Re: Spread Betting a Scam

For the most part I'd call it a scam in the same sense as a casino. The house has an advantage. They will play lots of games with you if you're successful. They'll lock you out of the platform, quote your stop even if the market didn't, things like that. Firms have even said that if you're winning then they assume you're cheating and that's their excuse for locking you out. It's happened to more people than just me. How would you feel if your broker refused to get you out of a trade?
I've closed all my s/bet accounts and just trade direct access. I would advise against s/betting. But then again most people lose so they won't even notice the tricks.
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Old 12-27-2010, 09:06 AM   #12

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Re: Spread Betting a Scam

I've spread bet profitably (albeit in a small account) for over 6 months now with IG Index. I choose them because they are a FTSE 250 company so "should" be fairly safe and respectable. Their spreads are very similar to most US FX broker who are market markers, 2pips on eurusd and 3 pips on gbp-usd.

So for scalping I think they are a bad choice but for swing trading they are fine. The other point is that the UK government classes SB as gambling so your profits are Tax free but you can't offset your losses against your tax liability.

I'm only guessing here, but I think why they may have a poor reputation is that because you can open an account with a very small deposit. This leads to newbies practicing little or no money management and after a few trades the initial funding is lost. If you had to open an account with say 5000 min you would be inclined to take it more seriously. This is why though I can agree and understand the oft quoted "do not trade with money you can't afford to lose" when its applied to very small accounts this can lead to risk taking, as if you do lose, its no big deal.

Someone else has mentioned prospreads as they hedge all your positions but you need to at this stage trade in standard lots, but no bad thing perhaps in the long run. They have DOM and add a small markup spread to the actual market spread instead of charging a commission.

Personally I have just recently moved away from spread betting and opened a ECN account with mb trading in the US as I felt uneasy with the market making aspect of SB. But horses for courses and all that;-)
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Old 12-31-2010, 02:58 PM   #13

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Re: Spread Betting a Scam

Adding to what Silverpuma said, research (Teweles: The Futures Game) has shown that another major factor for so many losing is transaction costs. Given the wider spreads you will pay with a SB, AND that any quote is likely to be a few cents/ticks against you as the SB knows your position/next move, SB account holders are on a hiding to nothing. Add up all those extra spreads, slippage, anti-quotes, etc and I bet you will be surprised at how much they add up to over time. They will probably be the difference between a winning and losing month for most newbies even if they are just starting to turn the corner - even if swing trading.

The last thing any new and probably underfunded trader needs to do is handicap him/her self even further with a SB account.

I'd rather make a good profit and pay tax on it, than a loss. Simple!
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Old 01-16-2011, 06:57 AM   #14

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Re: Spread Betting a Scam

Go and read Reminiscences of a Stock Operator - the description of the old bucket shops is exactly what spread betting companies are today. I actually can't believe how same it is and yet it is still allowed. I have had a spread betting account, there is no doubt they can easily manipulate the fills that you get. Even if the wait 2 minutes to fill you they can then essentially give you the worst price the market offered for that 2 minutes to gain an advantage. Then again THEY are the market so they can give you whatever they want. For longer term trades this probably isn't a problem, but in the long term I am sure if you are profitable the will find a reason to terminate your account. Just like in the day's of Reminiscences.
I would now never trade on a market that has no tranparency. Especially as I am day trading where it is impossible not to be highly effected by these guys.

Just my two cents.
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Old 01-16-2011, 05:00 PM   #15

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Re: Spread Betting a Scam

Actually I still have a couple of spreadbetting accounts. Scam is a pejorative and not entirely accurate.

Spreadbetting does these things:
- offers you tax free income in the UK which makes up for a LOT
- charges you in extra spread instead of commission which does reduce confusion
(and reduces comms for small bets but increases them for large)
- lets you use small position sizes

However, they are bucket shops because they take the other side of your trade only offsetting some of their risk, and may indulge in some practices that irritate the punter:
- varying spread at news times (to protect their axxxs, as do the market makers on ecns)
- holding that spread too long (compared with the market makers)
- shading the spread to one side or another by a few ticks.
- doing their own stop hunting (as opposed to every other intelligent person joining in taking a bit from the most obvious positions for overly nervous stops to be placed).

If I was in the UK then the first point would overwhelm the advantages of the others but I'm not and my size is reasonable so I use interactive brokers even for my forex.

Note that most of the forex brokers are also "spread betters" although lacking the UK tax free status: oanda, fxcm, etc etc all hide the commission in the spread and take the other side of your bet.

Note also that you can overcome the effect of the second group of practices by trading longer term with holds in the swing trading range rather than day trading.

Last edited by Kiwi; 01-16-2011 at 05:05 PM.
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Old 02-01-2011, 09:04 AM   #16

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I have been spreadbetting for over 2 years and for me it works. I use one of the larger brokers and only trade FX where the spreads can be as tight as 1pip. I agree that when you look at anything exotic the spreads can be crazy so it all depends on what you want to trade
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