agent69
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Post by agent69 on Aug 28, 2020 11:36:48 GMT
ozboy , IG provide a "sandpit" area for free, where you can experiment on loads of FX historical data without losing a penny. It's a great introduction. A couple of years ago, I spent some time writing my own robots to implement all manner of 'clever' schemes I designed to break the bank, testing them against the mass of historical data while sitting back to watch the loot roll in... For example, one simple scheme might be to watch out for maybe ten or twenty successive drops in a market, followed by a small rally of two increases, at which point your robot piles in to buy the currency. You run the robot over a year's worth of GBPAUD, for example, to gauge your profit/loss. In the end, despite some quite complex algorithms involving curve fitting, data trending, etc, etc, none of the several robots I wrote could make money consistently across all the FX indices. I might win big on GBDAUD, but would lose it on another index. In the sandpit, I could never consistently make a penny overall... and this really came as no great surprise - all my mathematical education had suggested as much. Conclusion: no way I'd risk real money on it, but writing the robots was great fun and sharpened up my rusty programming skills (I was once a software engineer in a previous life, in the old days of ALGOL 😁). I commend such a sandpit to practice on before committing real cash. BASIC rules (or it did in my programming days)
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lobster
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Post by lobster on Aug 28, 2020 12:12:25 GMT
Worth bearing in mind that spread betting can also be used to reduce risk, for instance by hedging. For example, say one has a portfolio of shares that is a reasonable reflection of the FTSE index. (That is to say that if your share portfolio were to increase by , say, 10% over a period of time, there is a good chance that the FTSE index would also have increased by roughly 10% over the same time period.) OK, so for whatever reason, you decide that you want to reduce your portfolio risk, (for instance during a pandemic ) , this could be done by opening a spread bet short position on the FTSE which, assuming you correctly calculate the required stake size of the short position, would hedge out your portfolio risk ie. any portfolio losses would be roughly equal to spread bet winnings on your short position. Of course, one would also have to accept that if your share portfolio were to increase in value, then the size of this increase would be roughly offset by losses in your spread bet position. The alternative approach to reducing risk is obviously to simply sell down your share portfolio, but this is likely to be a lot less cost effective, especially if you only want to reduce risk temporarily. Just thought I'd mention this , because so many people only associate spread betting as a high risk enterprise.
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Post by Deleted on Aug 28, 2020 13:36:14 GMT
Oz, the first time I met Terry Smith we discussed tax on capital gains. If you have cert put it in your ISA. If you have a so-so put it outside your tax wrapper so if you lose money you lose the chancellor's too. If you are a great trader you should have no problem borrowing money. But never leverage until you are a great trader. If you have cert , please seek help because no such thing exists. In theory, if you did have a "cert" , then sell everything and also borrow as much as you possibly can and pile it all into your "cert" to reap as much reward as possible ........ if it's a certainty, why wouldn't you ? I've had about 4 certs in my life and you remember them like golden moments. When you know the flock has gone the wrong way and suddenly is about to run to the other end of the field and you got there earlier than them. But I have been trading for more than 40 years and it is certainly (see what I did there) unusual.
Jet2.com, Filtronic, Nikola and Silver ETF all in their time have felt like taking candy from children of a lazy disposition
Why wouldn't I just sell everything and buy the cert, ah, you are confusing the monkey with the method. I have a method which I know makes me a great living, I have a monkey in my head which has sufficient experience to be able to identify a small amount of future vision. That mixture of fear, animal preservation and confidence in the method drives my decisions.
Hedging and Pandemic. If I thought I wanted to protect myself from a balck swan event I'd use a double inverse EDF but the great thing about blackswans is that you don't know you have seen one until it is too late. Like wallstreet I've developed my portfolio to be either resilient to most blackswans and/or to have rapid bounce back. I'm assuming that in a nuclear winter my focus will be elsewhere than my portfolio.
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lobster
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Post by lobster on Aug 28, 2020 16:29:38 GMT
Worth bearing in mind that spread betting can also be used to reduce risk, for instance by hedging. Very much unlikely to be the case if you truthfully analyse the costs. Frankly if your portfolio isn't big enough to be able to afford to hedge with real futures then you're wasting your time. Hedging with retail derivatives is a ludicrous concept. And even then, you don't need to hedge porfolios. Its not as easy as and foolproof as it may sound. You can run a multi-million portfolio perfectly well without any stupid hedging. The best way to reduce risk ? 1) Construct your portfolio properly in the first place 2) Don't sell out like a lemming at the first smell of a market correction. Time in the market is better than timing the market ! Firstly regarding costs, I must disagree. With CMC Markets for example, there is just a 2 point spread on the FTSE December 2020 futures contract. You mentioned "holding costs" in a previous post, but there would only be the 2 point spread to pay in this case. (I accept that with "cash" bets you have to pay an overnight holding charge, and these can quickly turn uneconomic, especially with long positions). Yes, you could hedge with "real futures" as you say, and with a tighter spread too, but you also have to pay commissions on each side of the trade, and also pay exchange fees each month. Furthermore, any spread betting gains are tax free, unlike trades at a futures brokerage. You advise "Constructing you portfolio properly in the first place" !! Well OK, but that's a bit harsh is it not ? It's reasonable to expect a sensible investor taking a longer term view to allow for ups and downs, but this year has been nothing short of crazy. You also advise not selling out too quickly, and I agree with this, and it often turns out to be the best policy in the longer run. Anyway, you sound like you have your own portfolio, and your own strategies, and I wish you the best with both.
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lobster
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Post by lobster on Aug 28, 2020 16:32:07 GMT
Out of interest, what was your edge back in 1999 ?
1999 was like taking candy from a baby.
All you had to do was buy a lump of Apple at $14 and forget about it for a decade or so. I SO wish I'd done that
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lobster
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Post by lobster on Aug 28, 2020 16:44:29 GMT
If you have cert , please seek help because no such thing exists. In theory, if you did have a "cert" , then sell everything and also borrow as much as you possibly can and pile it all into your "cert" to reap as much reward as possible ........ if it's a certainty, why wouldn't you ? I've had about 4 certs in my life and you remember them like golden moments. When you know the flock has gone the wrong way and suddenly is about to run to the other end of the field and you got there earlier than them. But I have been trading for more than 40 years and it is certainly (see what I did there) unusual.
Jet2.com, Filtronic, Nikola and Silver ETF all in their time have felt like taking candy from children of a lazy disposition
Why wouldn't I just sell everything and buy the cert, ah, you are confusing the monkey with the method. I have a method which I know makes me a great living, I have a monkey in my head which has sufficient experience to be able to identify a small amount of future vision. That mixture of fear, animal preservation and confidence in the method drives my decisions.
Hedging and Pandemic. If I thought I wanted to protect myself from a balck swan event I'd use a double inverse EDF but the great thing about blackswans is that you don't know you have seen one until it is too late. Like wallstreet I've developed my portfolio to be either resilient to most blackswans and/or to have rapid bounce back. I'm assuming that in a nuclear winter my focus will be elsewhere than my portfolio.
Well congrats on doing well out of the above 4 investments. As it happens I did well buying Silver back in 2003 , but it was far from a "cert" ! I think the point I'm trying to make (badly ) is that there's always risk associated with any investment in shares, and nothing is certain. The trick is of course to have the risk tilted as much as possible in your favour, and it sound like that's exactly what you achieved with these investments.
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jaswells
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Post by jaswells on Aug 28, 2020 22:52:37 GMT
Do you have an "edge"? If not, what makes you think you know better than the market? In the early days of spread betting (circa 1999), I had an edge. My account was eventually closed down. Doubt much has changed. Out of interest, what was your edge back in 1999 ? In the early days the spread companies were pretty inefficient and took more risks. Particularly in sports spread betting. Every day a wide range of mis-priced spreads were set up. Often the spread firm was slow to respond to company news, changing conditions at an event or even non participants. "Arbs" were daily and common if desired. The spread companies monitored and closed primarily "arb" players. In sports 2 companies made such losses they couldn't continue - Igsports and CantorSports.
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Post by bernythedolt on Aug 28, 2020 23:59:38 GMT
ozboy , IG provide a "sandpit" area for free, where you can experiment on loads of FX historical data without losing a penny. It's a great introduction. A couple of years ago, I spent some time writing my own robots to implement all manner of 'clever' schemes I designed to break the bank, testing them against the mass of historical data while sitting back to watch the loot roll in... For example, one simple scheme might be to watch out for maybe ten or twenty successive drops in a market, followed by a small rally of two increases, at which point your robot piles in to buy the currency. You run the robot over a year's worth of GBPAUD, for example, to gauge your profit/loss. In the end, despite some quite complex algorithms involving curve fitting, data trending, etc, etc, none of the several robots I wrote could make money consistently across all the FX indices. I might win big on GBDAUD, but would lose it on another index. In the sandpit, I could never consistently make a penny overall... and this really came as no great surprise - all my mathematical education had suggested as much. Conclusion: no way I'd risk real money on it, but writing the robots was great fun and sharpened up my rusty programming skills (I was once a software engineer in a previous life, in the old days of ALGOL 😁). I commend such a sandpit to practice on before committing real cash. BASIC rules (or it did in my programming days)
LOL, BASIC was ok for college projects, but... er... a bit basic. 😁 On serious national mainframe systems like the CNI (UK Critical National Infrastructure) system I worked on, ALGOL, PASCAL, COBOL or FORTRAN would chew up BASIC for breakfast and not even bother to spit out the pips! 😁
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lobster
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Post by lobster on Aug 29, 2020 7:26:08 GMT
Out of interest, what was your edge back in 1999 ? In the early days the spread companies were pretty inefficient and took more risks. Particularly in sports spread betting. Every day a wide range of mis-priced spreads were set up. Often the spread firm was slow to respond to company news, changing conditions at an event or even non participants. "Arbs" were daily and common if desired. The spread companies monitored and closed primarily "arb" players. In sports 2 companies made such losses they couldn't continue - Igsports and CantorSports. Yes, back in those days City Index also offered sports spread betting, as did William Hill, and both of these also closed down. Poor old Cantor - both their sports and financial spread betting outfits were unsuccessful. I think the main players now are only Sporting Index and Spreadex and Star Spreads.
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lobster
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Post by lobster on Aug 29, 2020 7:43:50 GMT
It's hardly spread betting if you buy somehting in the 90's and hold it for decades...LOL There's money to be made, SXX was a decent run. DEB and others. But, most success for me has come out of identifying popular retail stocks and then taking advantage of the retail madness. Yesterday mornig AMIGO offered a similar chance. Days after Moody's downgraded on the release of 2 RNS it spiked 25%, easy money to be made there. Just follow the most followed stock on the likes of London South East and let the rampers do their work, just don't get sucked in yourself! I'm following the gold and silver bugs at the moment. I hold physical and physical ETF's. The latter for a trade, the physical for a disaster and hedge. I added to my silver holdings last year. I won't be buying now. I too follow Gold and Silver , but not always successfully ! However recent months have obviously been highly profitable for both metals and associated mining stocks. May I ask how you will decide when to exit your ETF trading position ? Is it some form of Technical Analysis perhaps ? Or do you go on fundamentals / gut feel ? IMO there is no shortage of hype online, with many perma-bull commentators making pretty outrageous forecasts for both metals. I guess it has always been thus.
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jaswells
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Post by jaswells on Aug 29, 2020 7:47:59 GMT
In the early days the spread companies were pretty inefficient and took more risks. Particularly in sports spread betting. Every day a wide range of mis-priced spreads were set up. Often the spread firm was slow to respond to company news, changing conditions at an event or even non participants. "Arbs" were daily and common if desired. The spread companies monitored and closed primarily "arb" players. In sports 2 companies made such losses they couldn't continue - Igsports and CantorSports. Yes, back in those days City Index also offered sports spread betting, as did William Hill, and both of these also closed down. Poor old Cantor - both their sports and financial spread betting outfits were unsuccessful. I think the main players now are only Sporting Index and Spreadex and Star Spreads. Cantor were a basket case, completely inept with opportunities for the trader left, right and centre. I'm a firm believer that if the spreads firm is profitable and efficiently represent the underlying market your only hope is some form of insider trading. In which case you might as well buy into the actual market as any firm won't let you do this repeatedly as they will have red flags flashing all over their dashboard.
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michaelc
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Post by michaelc on Aug 29, 2020 13:14:58 GMT
Ok, so as a much-sneered upon retail investor, if I want to gamble on a company doing badly in the future how do I do so without opening a spread ? In other words, I'm looking for something similar to buying shares in a company if I wantto gamble that the company will do well in the future. Perhaps I mean going short instead of long but short seems to involve leverage as our resident know-it-all expert keeps reminding us and doesn't have any of the advantages that going long does such as dividends etc. What is the closest I can get?
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Post by Deleted on Aug 29, 2020 14:54:13 GMT
Point well made
After my sessions with naked trader I always work out how money I'm trying to make and when I will give up, BEFORE, I buy anything. If nothing else that halt before the "spend money....charge" moment gives the adult brain a chance to catch up if your sudden enthusiasm gets the better of you. So whether you are shorting or investing "normally" have a plan first, then implement, then monitor.
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michaelc
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Post by michaelc on Aug 29, 2020 17:16:22 GMT
Ok, so as a much-sneered upon retail investor, if I want to gamble on a company doing badly in the future how do I do so without opening a spread ? In other words, I'm looking for something similar to buying shares in a company if I wantto gamble that the company will do well in the future. Perhaps I mean going short instead of long but short seems to involve leverage as our resident know-it-all expert keeps reminding us and doesn't have any of the advantages that going long does such as dividends etc. What is the closest I can get? I'm not sneering at anyone. I'm just saying things like they are. As you know, one of the things MIFIID introduced was an obligation for firms to double up on the "you'll almost certainly loose money" warnings, and the way this is done is through statistics. To quote you from IG's website: 76% of retail investor accounts lose money when trading spread bets and CFDs with this providerThus I'm not sneering, I'm not making stuff up. I'm just saying things others might carefully omit. I'm telling you that, as per the statistics, the majority of retail are muppets who get sucked in by their own greed and gluttony. They overtrade, they overleverage and kill their account in short order. Those same retail muppets then have the sheer audacity to go onto forums and claim the firms are engaging in dodgy dealings, supposedly hunting their stops, introducing artificial slippage or whatever other bullshit the retail muppets want to invent to avoid addressing the elephant in the room that they f**ked up through their own stupidity and greed. Now. Coming back to your original question If you want to gamble. Then fine. Open a retail spread or a CFD if you must. But don't overleverage, trade within your means. And have sufficient funds on your account so that you can set a nice wide stop instead of being stopped out because you set a narrow stop and got stopped out by noise rather than actual movement. And for heavens sake calculate the total cost of your trade and work out what it would take for it to actually be profitable. Hedge funds and their ilk use other tools for a reason when they want to short, but you need deeper pockets. Thank you Mr WS - an interesting post which went some way to answer my question. I think one consequence of what you have said is that there _isn't_ an equivalent to buying shares and holding. It seems to be inherently more risky shorting than longing. Particularly so if you want to short over a long period of time?
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lobster
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Post by lobster on Aug 30, 2020 10:00:23 GMT
I don't use any technical analysis and prefer using my own intellect and gut
Most likely the best way. Technical Analysis is tea-reading codswallop.
If it was that easy, everybody would be doing it and there would be insufficient private islands for everyone to sit on.
You can't just rely on magic fairy dust without an appreciation of what is going on with the key drivers of the asset concerned.
Agreed , but with the proviso that many people, for whatever reason, do believe in technical analysis, and because of this TA can on occasions become a self-fulfilling prophecy even if the analysis itself is erroneous. Personally I don't use TA. I hate the way it's pedalled is these highly unpleasant adverts luring in the newbies and mugs with the promise of untold of wealth by following some ridiculous black box "system".
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