Spread Betting

[_V_]

You are wrong AtW.

There is no win limit and the stop limit protects you.

The only limit on what you can make is based on the fact that the trade has an expiry (either the end of the trading day or a date a few weeks in the future for longer trades).

You are not "winning" what others lose, but taking a gamble on the price change against the trading company.

[triboix]

To invest in securities is quite dangerous. Esp. trying to time the market for quick profit is the best way to lose money.

I recommend the Motley Fool guide about that. They also have a website:
http://www.fool.co.uk/ (most of you probably already know it).

I learnt the value of index tracker unit trust, and I decided to invest some spare money from time to time in it. It is long term investment, though (min 10 years).

Hope this helps!

[AtW]

There is no win limit and the stop limit protects you.

Whose money would you be winning in your opinion? Money don't come from nowhere! Betting firms leverage odds between bets made effectively against each other so that the house gets profit regardless of the outcome. Therefore the money that you will make will be the money someone else will lose, less whatever the house wants to keep to itself.

Thus, if someone stops their loss it means it will automatically stop the amount of money you will get, ie what you can win.

It's been a while since Games Theory lectures in Uni, but I think I understand it reasonably well for a non-gambler.

[_V_]

I am not talking about investing, I'm talking about trading.

Trading is short term gain (if you are knowledgable and/or lucky). Investing is actually buying a stock, commodity or bond and is usually long term.

Traders make money by knowing which way a financial instrument is going to go in the next few hours or days. Buy and sell.

HTH

[AtW]

We are talking about spread betting here.

[_V_]

Whose money would you be winning in your opinion? Money don't come from nowhere! Betting firms leverage odds between bets made effectively against each other so that the house gets profit regardless of the outcome. Therefore the money that you will make will be the money someone else will lose, less whatever the house wants to keep to itself.

Thus, if someone stops their loss it means it will automatically stop the amount of money you will get, ie what you can win.

It's been a while since Games Theory lectures in Uni, but I think I understand it reasonably well for a non-gambler.

You have absolutely no idea what you are talking about AtW. I believe this is not the 1st time this has been demonstrated here.

Financial Spread Betting is not the same as playing a game of cards for a pot.

It is more like sticking money on horses. You win the odds x your bet and the bookie pays.

[ChimpMaster]

Actually you don't bet against the spread betting organisation. That would be too high risk for them. They take on your position and reflect a trade using instruments in the markets, hence effectively hedging their position.

Most of the profits these organisations make are from :-
a) dealing fees
b) spreads (esp. where dealing fees are free)

They do not make money if you lose - that's not the way it's done.

[AtW]

Yes I indeed have no clue.

It is more like sticking money on horses. You win the odds x your bet and the bookie pays.

How do bookies earn their money, where actual cash comes from, do they print it? No.

It is a (almost) zero sum game - you win money from other punters who are losers, very rarely from the house itself but even when it happens so you have just won money from older losers part of whose loss was paid to the house as their cut.

This means that fundamentally your wins are limited by whoever everyone else loses, less houses' cut, and maybe at times it could be higher when you can hit the house for some of the cut they had in the past.

So, in principle if losers can limit their loss, this automatically limits your wins - there can be no doubt about it.

[_V_]

There are no dealing fees.

I think you are wrong. There is no actual buy of sell made on your behalf because they would have to pay a large amount of stamp duty on the trades and there is none.

PS. I am a big boy AtW. I can handle the risk. If I lose a few grand I can earn it in a couple of days.

Thanks for the concern.

[oraclesmith]

As far as I understand it (from about 2 minutes on this thread), the spread betting company is the focus of the bet. The behaviour of the other participants only affects the behaviour of the sbc (their spread) in that the sbc will automatically factor in the potential scale of their win/loss into the spread. The sbc will aim to make an average profit over a number of spreads, so that the behaviour of a particular participant does not affect that spread as such and only has a marginal affect on future spreads. Each spread is a seperate gamble and the sbc is like the banker in blackjack. Or am I completely off course ?