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Old 09-22-2010, 03:53 PM   #1

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Spread Betting a Scam

Hi guys, do you consider spread betting a scam, i have been thinking about it since it could be a solution for those who want to day trade shares with low capital no?

thanks a lot
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Old 09-22-2010, 05:22 PM   #2

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Re: Spread Betting a Scam

Its great for swing trading.
Intraday trading, the spreads can make turning a profit too hard, but people make money of they are good at trading, and can trade something like GBPUSD which generally has only a 2pip spread on spreadbet platforms.

As for daytrading shares, unfortunately not!
Id LOVE to daytrade stocks, as when I demo trade them using direct access platfroms I make 'money' nearly everyday for months at a time.
Unfortunately, the spreads on stocks at spreadbet firms just aren't acceptable.
Sometimes the spread of a stock can be 1c trading direct and 12c trading through a spreadbet firm.

Fine for swing trading stocks though
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Old 09-23-2010, 06:23 AM   #3

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Re: Spread Betting a Scam

Spread betting is a gift from the Gods,It is Tax free trading,only if you make money.
If you are in that catagory then perfect.
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Old 09-25-2010, 09:45 AM   #4

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Re: Spread Betting a Scam

I disagree.

Trading against a single counter party is inviting that counter party to fleece you.

The tax free argument is null and void as it will be so much harder to make a profit in the first place with such high spreads and a counter party whos interested in your loss only.
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Old 09-27-2010, 04:44 AM   #5
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Re: Spread Betting a Scam

As I understand it spread betting came out of the costs of actually trading the underlying - particularly in the UK where stamp duty for stocks is a killer.
It has grown from there and in the UK is tax free (subject to conditions) and hence a viable option for many.... this is a very valid argument for it success.
Yes - you will also have the counter party risk and the issues of widening spreads. However for the upsides of leverage, low costs and flexibility for variable position sizes and different instruments, there is definitely a good reason to trade via a spread better for some traders.
It is just another speculative instrument.
Now if its a scam or not will depend on the provider.
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Old 09-27-2010, 05:19 AM   #6

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Re: Spread Betting a Scam

Quote:
Originally Posted by TheDude »
I disagree.

Trading against a single counter party is inviting that counter party to fleece you.

The tax free argument is null and void as it will be so much harder to make a profit in the first place with such high spreads and a counter party whos interested in your loss only.
Indeed, However there are a few 'proper' brokerages. The list is growing too which is kind of refreshing. The only trouble is that there tend to be more restrictions in sizeing with some (e.g. the ones that hedge every single position).

I generally agree with Lazarus (which is why I didn't post originally). There was handy link someone posted a while back that listed 'proper' DMA brokers. Broadly speaking there are two types of broker that are pretty different in many aspects.
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Old 10-20-2010, 01:34 AM   #7

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Re: Spread Betting a Scam

I hate Spread Betting. They make up their own rates after market hours. They act as broker and act as an exchange. I dont think they hedge all their trades. Since many end up on loosing side, they earn not only commissions but the money which a trader has lost as well.

I love when my bid/ask order goes directly to exchange floor and i am trading among real human beings.

I will never ever open a spread betting account.
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Old 10-24-2010, 04:21 PM   #8

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Re: Spread Betting a Scam

Which spread betting companies can any of you recommend?
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