Spreadbetting and CFD's

[jswin]

Hi Steve,
I live in the UK and have spreadbetting accounts. I am wondering whether spreadbetting would be an effective way to trade MTpredictor signals as they are based on underlying market prices which sometimes differ significantly even from Rolling Cash spreads.
When MTP signals a trade, would I just use the high of the day as indicated by my spreadbetting company on the corresponding bar as the entry trigger (long trade) and place a stop at the low and not worry too much about the actual price level of the underlying market?
Would CFD's be better?
Thank you,
Joel

[rabbitrun]

Hi Joel

You've probably given up waiting for a reply and if you now have an answer I'd be interested to know.

Like you I'm trying to use a spread betting account with MTP. I think a lot of the experienced traders at least in the UK are using spread betting for tax purposes if nothing else and in principle its a great way to trade.

The question is how do you apply all of the great information generated by MTP based on the cash market to a Dec quarterly contract. Rolling contracts might be the answer but these are designed for day trading and there's interest to be paid daily when in your favour.

Believe me I've tried to find the answer. I'm currently trading for a penny a point in order to get some experience but it's difficult to know how to operate a trade when the quarterly price is in advance of the existing cash price. Do I just move everything up or down (if I was shorting) to accomodate the gap?

Could the gurus out there help?

Thanks

[martinrcox]

Hi Joel

You've probably given up waiting for a reply and if you now have an answer I'd be interested to know.

Like you I'm trying to use a spread betting account with MTP. I think a lot of the experienced traders at least in the UK are using spread betting for tax purposes if nothing else and in principle its a great way to trade.

The question is how do you apply all of the great information generated by MTP based on the cash market to a Dec quarterly contract. Rolling contracts might be the answer but these are designed for day trading and there's interest to be paid daily when in your favour.

Believe me I've tried to find the answer. I'm currently trading for a penny a point in order to get some experience but it's difficult to know how to operate a trade when the quarterly price is in advance of the existing cash price. Do I just move everything up or down (if I was shorting) to accomodate the gap?

Could the gurus out there help?

Thanks


Hi There,

I use a spread betting account and like you said I adjust the entry and stop up or down depending what the difference is between the pricing I receive from e-signal (which is my data source) and the spread betting futures price. I am looking at one of my open positions as we speak and the e-signal price is 16728 and the spread betting price is 16759 some 31 points more. So I have my stop set by atleast 31 points more than the low on the e-signal chart. I tend to add a few points to my stop to allow for what Chris calls wiggle room.

You do however have to keep an eye on the difference between the pricing from your data source and that of the spread betting firm as this differential can alter and you need to adjust your stops accordingly. I remember on one trade where I did not make this adjustment and found that I got stopped out before the stop was hit on e-signal only to find that it turned into a nice trade. I later found out that the difference between the pricing of my data source and that of the spread betting firm had changed from when I entered the trade and this change had been made after only a couple of days. However I would not say that this happens too often so from my experience you do not need to be concerned that the spread betting firm will increase their margin (if this is the reason for the adjustment) on a regular basis thereby eroding your profits or increasing your losses.

I hope this helps

[jswin]

Hi There,

I use a spread betting account and like you said I adjust the entry and stop up or down depending what the difference is between the pricing I receive from e-signal (which is my data source) and the spread betting futures price. I am looking at one of my open positions as we speak and the e-signal price is 16728 and the spread betting price is 16759 some 31 points more. So I have my stop set by atleast 31 points more than the low on the e-signal chart. I tend to add a few points to my stop to allow for what Chris calls wiggle room.

You do however have to keep an eye on the difference between the pricing from your data source and that of the spread betting firm as this differential can alter and you need to adjust your stops accordingly. I remember on one trade where I did not make this adjustment and found that I got stopped out before the stop was hit on e-signal only to find that it turned into a nice trade. I later found out that the difference between the pricing of my data source and that of the spread betting firm had changed from when I entered the trade and this change had been made after only a couple of days. However I would not say that this happens too often so from my experience you do not need to be concerned that the spread betting firm will increase their margin (if this is the reason for the adjustment) on a regular basis thereby eroding your profits or increasing your losses.

I hope this helps

Thanks for your response. My original query was some time ago and since then I've done some enquiring directly with the traders and the CFD and spreadbetting companies.
I had found glaring differences between CMC Market's charts and the charts depicted by my data provider, Genesis, particularly with reference to the highs and lows, rather than the closes. It became obvious that it was the broker who was out, not Genesis.
When I queried the trading desk at CMC, they said that the extremes of the bars on their charts represent and include the width of the spreads fed to them by their market makers and not necessarily levels at which they will have executed clients trades. In other words, there is a discrepancy between their charts, and the prices that they are actually trading. They assured me that they do not execute stops and limits unless they have been traded in the underlying market.
The upshot was (and I am referring to daily charts here although this may apply to shorter term charts) that I should not ascertain levels at which to place entry or trailing stops on the highs/ lows of the bars on their charts, but use the data from Genesis instead. CMC told me (and this came from more than one trader and I assume involves other brokerages) they were aware that their charts could be misleading but there was nothing much that could be done about it.