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Spreadbetting The Forex

  • #1
  • First Post: Jul 19, 2006 1:20pm Jul 19, 2006 1:20pm
It seems we spreadbetters are a minority in the Forex world and proberbly because not all countries allow it.


I'm sure there are members out there who have views on whether it is a viable method of speculating Forex or are we just throwing our money into a big hole.

I am by no means an expert but what I am trying to do is create a place we we can all meet up, bounce ideas off each other and perhaps get answers to the questions like:

Who gives the best spread

Who offers the most flexible dealing methods (both phone & Online)

Platform stability (especially during news events)

Lyndon
  • #2
  • Jul 19, 2006 1:31pm Jul 19, 2006 1:31pm
Hi Lindon, what exactly do you mean by spredbetting? Are you talking about hedging?
I dream, therefore I become.
  • #3
  • Jul 19, 2006 1:34pm Jul 19, 2006 1:34pm
Quoting Lyndon001
It seems we spreadbetters are a minority in the Forex world and proberbly because not all countries allow it.


I'm sure there are members out there who have views on whether it is a viable method of speculating Forex or are we just throwing our money into a big hole.

I am by no means an expert but what I am trying to do is create a place we we can all meet up, bounce ideas off each other and perhaps get answers to the questions like:

Who gives the best spread

Who offers the most flexible dealing methods (both phone & Online)

Platform stability (especially during news events)

Lyndon
I use Ample over here in the UK. Platform is Java (cr*p) locks up at times and are too keen to close trade input box, stating 'telephone only' especially if there's a sniff of volatilty.
It's not a problem as I'm trying to use trailing entries more than market orders, and at the moment I don't trade the news.
They are just about to switch to a Flash platform, they are linked somehow to Finspreads, so hopefully the platform will be more flexible.
Haven't tried any of the others, only odd paper trades early on, so can't speak about them.
The reason I'm sticking with them at the moment is until I get a proper fund together, I don't fancy paying the sizeable money transfer fees involved with the 'proper' Forex brokers.
Peter
  • #4
  • Jul 19, 2006 1:36pm Jul 19, 2006 1:36pm
Quoting mike w
Hi Lindon, what exactly do you mean by spredbetting? Are you talking about hedging?
Hi Mike
It means you bet on the movement of the currency pair, you don't actually 'buy' or 'sell' real lots.
You make a decision on the price and bet it up or down.
No tax in the UK as it's classed as gambling
Pete
  • #5
  • Jul 19, 2006 1:48pm Jul 19, 2006 1:48pm
Oh I see, thats sounds pretty cool. How would someone get into doing it? Thanx for the reply pete.
I dream, therefore I become.
  • #6
  • Jul 19, 2006 2:18pm Jul 19, 2006 2:18pm
Quoting mike w
Oh I see, thats sounds pretty cool. How would someone get into doing it? Thanx for the reply pete.
I've had a quick look around the broker's site and I can't see anything stating UK residents only, so assume overseas traders can use them. Overseas punters can bet on our bookmakers' sites, and this is no different.
If you 'google' forex spreadbetting you'll get all the hits you need.
If you set up an account, most will give you free demo account, and want some more advice, come back to me.
Pete
  • #7
  • Jul 19, 2006 2:27pm Jul 19, 2006 2:27pm
Hi Peter

Thats about the long and short (excuse the pun) of it, in some ways its quite similar to Forex trading.

There are numerous companies out there that offer this service.

ETrade, Finspreads, Deal4Free, City Index, CMC, and many more.

There are 2 types of spreadbetting, Financial and Sports.

Sports Spreadbetting is the easyest to understand, pick a sports event and speculate the result.

In Financial Spreadbetting, these companies offer a large selection of shares, indices, commodities, futures and there is one other but i cant remember what it is...


Oh yes Forex!!

You choose how much you want to "bet" per smallest increment of your chosen instrument and which way you think its going to go.

For example £1 per pip on GBPUSD to open long at 1.8428, if it moves to 1.8438 then you won £10, or lost £10 if it goes to1.8418. See the mechanics is the same as Forex. You can also use exactly the same stops and limits too.

Pete, im so glad you mentioned the UK tax situation because it leads me nicely into my first question...

Okay, picture the dream scene, you got your account moving on nicely and sure enough Mr Gordon Brown (bless his little cotton socks) cant touch it because its classed as gambling and therefore not subject to Capital Gains Tax.

However i want to give up my day job and live on my gains. Now this becomes my sole income so now i have to pay income tax.

What would happen if you opened a Forex account and traded it the same as your Spread betting account and paid tax on that. Would that count as your primary income so your SB account is safe again?????

Lyndon
  • #8
  • Jul 19, 2006 2:32pm Jul 19, 2006 2:32pm
I was looking at this yesterday and there is not a lot of info on it. It looks like its not allowed in USA.

Sorry i did find some info but i lost it again, as soon as i dig it up ill post it
  • #9
  • Edited 2:59pm Jul 19, 2006 2:45pm | Edited 2:59pm
Quoting Lyndon001
Hi Peter

Thats about the long and short (excuse the pun) of it, in some ways its quite similar to Forex trading.

There are numerous companies out there that offer this service.

ETrade, Finspreads, Deal4Free, City Index, CMC, and many more.

There are 2 types of spreadbetting, Financial and Sports.

Sports Spreadbetting is the easyest to understand, pick a sports event and speculate the result.

In Financial Spreadbetting, these companies offer a large selection of shares, indices, commodities, futures and there is one other but i cant remember what it is...


Oh yes Forex!!

You choose how much you want to "bet" per smallest increment of your chosen instrument and which way you think its going to go.

For example £1 per pip on GBPUSD to open long at 1.8428, if it moves to 1.8438 then you won £10, or lost £10 if it goes to1.8418. See the mechanics is the same as Forex. You can also use exactly the same stops and limits too.

Pete, im so glad you mentioned the UK tax situation because it leads me nicely into my first question...

Okay, picture the dream scene, you got your account moving on nicely and sure enough Mr Gordon Brown (bless his little cotton socks) cant touch it because its classed as gambling and therefore not subject to Capital Gains Tax.

However i want to give up my day job and live on my gains. Now this becomes my sole income so now i have to pay income tax.

What would happen if you opened a Forex account and traded it the same as your Spread betting account and paid tax on that. Would that count as your primary income so your SB account is safe again?????

Lyndon
Hi Lydon
With respect, I think you're wrong there, as far as UK residents are concerned. Check this out
http://www.taxationweb.co.uk/forum/discuss.php?id=5153
and
http://www.taxationweb.co.uk/forum/discuss.php?id=1201

Can't say for non-UK citizens
The other thing you're thinking of are CFDs
Pete
  • #10
  • Edited 3:24pm Jul 19, 2006 3:13pm | Edited 3:24pm
Hi Pete

Thanks for putting me right, on this matter i am happy to be wrong. I checked out your links but that confused me even more.

Tomorrow i am going to phone ETrade Customer Services and see what they have got to say about it.

i look forward to swapping nuggets of information with you, sounds interesting what you said about your broker. i have also had a couple of annoying "glitches" around news time and at certain other times too, ill elaborate another time. I had better go and grab a bit of sleep, i have to be at work at 00:30 and i have been awake all day (again)

Speak soon

Lyndon
  • #11
  • Edited 3:47pm Jul 19, 2006 3:30pm | Edited 3:47pm
Quoting Lyndon001
Hi Pete

Thanks for putting me right, on this matter i am happy to be wrong. I checked out your links but that confused me even more.

Tomorrow i am going to phone ETrade Customer Services and see what they have got to say about it.

i look forward to swapping nuggets of information with you, sounds interesting what you said about your broker. i have also had a couple of annoying "glitches" around news time and at certain other times too, ill elaborate another time. I had better go and grab a bit of sleep, i have to be at work at 00:30 and i have been awake all day (again)

Speak soon

Lyndon
From Government site
http://www.hmrc.gov.uk/manuals/bimmanual/BIM22000.htm

http://www.hmrc.gov.uk/manuals/bimmanual/BIM22017.htm

"The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade"

I know I'm becoming a pain in the *** but here's another outlook on this subject. Why would the tax man take an interest in us? If he classes gambling (non-trade variety) he must allow losses against income.

Quote
A note about tax



Tax is not payable on gambling winnings. Why? Most of this is based on the fact that betting markets are efficient as detailed in this document. At the end of the day if the market is efficient and the provider of the betting service is overround or taking a commision, this effectively pushes the punter into an inevitable loss making situation in aggregate to the benefit of the provider of the gambling service. While there may be pockets of people that have beaten the market these will be small and to the far right of the bell curve, the majority will lose. To only tax the individuals that win is folly. Also to tax individuals for gambling income would mean giving relief for losses and expenses. As we know, the aggregate of gamblers lose in total and this would mean the tax man providing relief for all. This is not a sensible situation at all from a tax collection perspective. Because the provider of the gambling services will almost certainly make a profit at the gamblers expense it makes better sense to enforce tax collection at this point where winning and taxable income is ensured.
COPYRIGHT 1996-2005 Peter Webb / Optic Ltd.

http://www.probabilitytheory.info/to...ing_market.htm
Peter
  • #12
  • Jul 19, 2006 5:17pm Jul 19, 2006 5:17pm
Pete

First of all youre not "becoming a pain in the ****" at all, this is why i started this thread in the first place.There is lots of hearsay and rumours on the net so im sure we can all learn. ive heared in quite a few places that you would have to pay the tax in certain circumstances and up until tonight i had no reason not to believe otherwise.

You have obvoiusly done your home work and tonight i learnt something new and to be quite honest this is the first time i have spoken to another spreadbetter, all i know is what i have picked up my self over these last few months.

Hopefully we should get a few more people dropping by over the next couple of days and get a few more points of view on a few more subjects. Anyway thats definitly all from me now cos im going to work, back in 12 hours or so...

Lyndon
  • #13
  • Jul 20, 2006 11:52am Jul 20, 2006 11:52am
Well i contacted E*Trade this afternoon and asked them about this tax issue and they assured me that in the UK any spreadbetting winnings are totally tax free. They also pointed out that the same works the other way, no spreadbetting losses can be used to offset tax.

Id like to thank PeteFM for pointing this out to me regarding an error i made in post #7 of my earlier posts, please check out the links he posted in the following messages. Im not going to edit out my origional "error" as i believe there are a lot of people out there who believe as i did and i believe it draws attention to the subject.

I also spoke to E*Trade about where in the world you are allowed to spreadbet. i was informed that as far as they knew the only place where it was not allowed was United States. Please, if you know different or think different or would like to elaborate on this i would welcome your input, i am going to follow this up over the next few days and see what i can uncover.
  • #14
  • Jul 20, 2006 2:42pm Jul 20, 2006 2:42pm
Sounds like Betonmarkets.com is better. You only lose what you bet but you can double your bet money if you win.
  • #15
  • Jul 20, 2006 2:50pm Jul 20, 2006 2:50pm
If you're subject to US Tax Laws and aren't sure of your situation check this out

http://www.mbtrading.com/fx/tax.asp

Enjoy

Peter
  • #16
  • Jul 27, 2006 12:08pm Jul 27, 2006 12:08pm
One thing I was hoping to achieve on this thread was the sharing of information on the suitability of particular Spread-betting brokers for Forex trading. Whilst the mechanics of the placing of trades and stops is very similar you must remember that these brokers are not primarily set up to trade Forex they will have limitations. In most cases this will just a minor annoyance and with a little ingenuity and planning this can usually be overcome. I will start the ball rolling with a report on E*Trade you I have used for a little over a year now, I will be trying to keep to facts and not my opinions as it seems to me that “One size does not fit all”.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>
  • #17
  • Edited 4:13pm Jul 27, 2006 3:50pm | Edited 4:13pm
Company
E*TRADE Spread-betting<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>

Minimum Initial Deposit
None, you can open an account with no funds and add as you need it, you can bet on some USD & EUR pairs with only £40 in your account.(See IMR in table bellow)<o></o>

Minimum Account size<o></o>
See above
<o></o>

Minimum Bet Size <o></o>
£1 per smallest increment<o></o>

Maximum Bet Size
see table attached

CGSL – Computer generated Stop Loss<o></o>

IMR - Initial Minimum Requirement
<o></o>

Spreads<o></o>
Notice that there are two headings for the spread in the table above. <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1:time Hour="8" Minute="53">7 till 9</st1:time> is normal working hours. Outside these hours the spread goes up dramatically<o></o>

Types of account
E*TRADE Spread-betting offer deposit accounts, which means that you can begin trading once you have deposited funds into your account. No credit account is offered<o></o>

Online Trading
Various depending on the countries market opening and closing. Shares seem to follow the market, indices start at <st1:time Hour="7" Minute="0">07:00</st1:time> depending on country
<o></o>

Phone Trading
07:00am until <st1:time Hour="21" Minute="15">21:15pm</st1:time>, Monday to Friday
<o></o>

Mobile Trading
Not Offered <o></o>

Dealing Currency
£££ Pound <st1:City><st1lace>Sterling</st1lace></st1:City><o></o>

Stops & Orders
Exactly the same as Forex. Has usefull OCO (One cancels other) order ideal for straddling. Every bet will automatically generate a loss stop at the CGSL or whatever your account will allow, which ever is lower.<o></o>

Education
Beginners Guide to Financial Spread Betting which is an online tutorial which covers the basics.
<o></o>

Platform Type
Its Java but it seems pretty good. Bit annoying as you have to swap screens to adjust stops and orders.<o></o>

<o></o>
Charting/Technical Analysis
A bit basic but MA, Bollinger Bands, Para SAR, Log Scale, MACD, RSI, Directional Movement, Stochastics, Williams %R, Momentum, Volatility, Price Oscillator, Standard Deviation and Fib Retracement. All this in real time.<o></o>

Fundamental Analysis
No news feeds
<o></o>

Platform Stability
I’ve not noticed widening of spreads but once during NFP (I think in May) all the USD pairs closed down during the high voltility
<o></o>

Demo Account
Offers a selection of products, for example; In FOREX<o></o>

AUD-USD, EUR-GBP,EUR-NOK,EUR-USD,GBP-USD,GBP-EUR,USD-CAD,USD-CHF, USD-JPY,USD-SEK.<o></o>

Demo chart is more basic and 15 minutes behind. It may be my imagination but the demo prices seem to move more than the live ones.
<o></o>

Other Products
Indices, shares, commodities, currencies, bonds and interest rates
<o></o>

NB. All timings are <st1:country-region><st1lace>UK</st1lace></st1:country-region> (GMT +1)<o></o>

<o></o>
Attached File(s)
File Type: doc etrade info.doc   54 KB | 586 downloads
  • #18
  • Edited 5:30am Jul 29, 2006 4:11am | Edited 5:30am
One thing to bear in mind when choosing a spread-betting broker is their trading times, especially between Friday and Monday. My broker is open 07:00am until <?xml:namespace prefix = st1 /><st1:time Minute="15" Hour="21">21:15pm Mon til Fri an</st1:time><st1:time Minute="15" Hour="21">d 24 hrs on most forex but closes at 21:15 Friday night and re-opens 00:00 Monday morning. Trouble is over here in UK the USD-JPY opens at 22:30 Sunday nights and EUR-USD just after. Its only a short time but any open trades will be unprotected.</st1:time>
  • #19
  • Aug 5, 2006 2:49pm Aug 5, 2006 2:49pm
Has anyone any experience of IG Index. I signed up with them a couple of weeks ago and they look pretty good on the surface and they seem to have an impressive number of pairs on offer. Havent traded with them yet and they dont seem to have a demo on offer. Any information would be gratefully appreciated

Lyndon
  • #20
  • Aug 7, 2006 10:10am Aug 7, 2006 10:10am
IG Index are fine (at least for modest size), but remember:

1. All stops and limits are based on the MIDDLE price not their bid or offer price.

2. Fills on stops and limits can take ages to come through (e.g. 5 minutes). But they do say that as long as their quote touched that price then that's the price you get.

3. The daily rollover time is 8pm UK time, 2 hours earlier than most other firms.

You might want to look at GFT (http://www.gftuk.com/spreadbetting/) who claim fast fills. But I can't vouch for that as I've only tried them on demo.
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