Best share spread betting account?

grey_gym_sock

khampson wrote: »

I do bank with halifax so what are your thought on Halifax share builder? I know its shareand you still need to watch what your buying but it says £1.50 only per trade but its only on a set day each month?? If I buy shares into a company at say £25 a time minus stanp duty and £1.50 is this a better idea than spread betting?

at £25 a time, that's too expensive - that's 6% just to buy, and much more to sell, at £11.95 a time.

the % to sell depends how many months you keep buying the same share - i.e. it falls if you buy the same share lots of times.

the problem with buying the same share too many times is that you need at least 15-20 different shares before you've got a reasonable spread of risks. so how long would that take?

both to keep costs reasonably low, and to avoid too much company-specific risk, i'd look at either funds or investment trusts. both are collective investment schemes, which allow you to spread your money cheaply over a large number of shares.

some of them do require a minimum of £50 per month. not quite sure what your options are with £25 per month, but i expect there are some.

EdGasket

jamesmorgan wrote: »

I don't think you understand spreadbetting - you are talking about buying futures. Spreadbetting allows you to purchase shares exactly the same as direct investment. You can buy at today's prices, you can benefit from dividend payments. The key difference is you don't pay stamp-duty or broker charges, but you do pay a slightly higher spread and you pay interest on any trades that you hold at the end of the day (however, this can be offset by investing your capital in an interest account). Spreadbetting is less attractive when interest rates are high, but in today's low interest rate environment, it enables you to 'buy' shares at a lower cost than direct investment.

I used to buy shares directly, but I now make exactly the same purchases from a spreadbet account and save an average of 0.5% on each trade. This may not seem a lot but due to the frequency I trade, it changes my annualised returns from 7% to 17%.

Then how come, when I used to spreadbet, a long-dated bet nearly always had a higher price, ignoring spread, than a near-dated bet? e.g. June BP 560-2, March BP 555-7 ??
In my experience spreadbetting companies give you the future price for a future date not todays price. That must be so otherwise they would make a loss!

jamesmorgan

EdGasket wrote: »

Then how come, when I used to spreadbet, a long-dated bet nearly always had a higher price, ignoring spread, than a near-dated bet? e.g. June BP 560-2, March BP 555-7 ??
In my experience spreadbetting companies give you the future price for a future date not todays price. That must be so otherwise they would make a loss!

If you want to trade current prices, use Daily Funded Bets (DFB). On IG Index currently if you want to buy Vodafone the price is 162.6-162.9. On my stockbroker account (real live prices) the price is 162.7-162.8. I've never noticed a significant difference in prices from my spreadbet account and current live prices.

EdGasket

jamesmorgan wrote: »

If you want to trade current prices, use Daily Funded Bets (DFB). On IG Index currently if you want to buy Vodafone the price is 162.6-162.9. On my stockbroker account (real live prices) the price is 162.7-162.8. I've never noticed a significant difference in prices from my spreadbet account and current live prices.

Well the DFBs have overnight funding costs so its just a different way of charging you I guess. Either way the bookies get their rake and overall you lose.

Nomad2006

EdGasket wrote: »

Well the DFBs have overnight funding costs so its just a different way of charging you I guess. Either way the bookies get their rake and overall you lose.

I'm getting the impression you didn't have much luck spread betting.

jamesmorgan

EdGasket wrote: »

Well the DFBs have overnight funding costs so its just a different way of charging you I guess. Either way the bookies get their rake and overall you lose.

Yes, of course they charge you interest. They are effectively lending you up to 95% of the funds to buy your shares. However, if you have this capital in a high interest account, it should largely balance this cost. You can't trade in stock markets without incurring some charges - the key to success is to try to minimise these charges for your particular investment strategy. For me, spreadbetting works out cheapest. Others with a different strategy will find other methods work out cheaper.

EdGasket

Nomad2006 wrote: »

I'm getting the impression you didn't have much luck spread betting.

Yes, I was one of the 90% mugs with no 'edge' (AKA inside information); I made a loss, lesson learnt, move on.

Nomad2006

EdGasket wrote: »

Yes, I was one of the 90% mugs with no 'edge' (AKA inside information); I made a loss, lesson learnt, move on.

It doesn't require inside information to make money, any more than you need inside information to make money buying and selling shares.

What it does do is make it very easy for a beginner to take too large a position on margin, and blow out their account as soon as there is a small adverse market move. After which they will decide the game is rigged and never touch it again. This is what I would guess happens to a large proportion of that 90%.

merlingrey

Nomad2006 wrote: »

It doesn't require inside information to make money, any more than you need inside information to make money buying and selling shares.

What it does do is make it very easy for a beginner to take too large a position on margin, and blow out their account as soon as there is a small adverse market move. After which they will decide the game is rigged and never touch it again. This is what I would guess happens to a large proportion of that 90%.

Yeah in poker and probability theory you'd call it variance, poker players quit because they bet too much of their bankroll per hand and hit a wall of bad luck.
The other killer is chasing losses, a psychological mindset to double down bets when something is going against you in the hope a turn around will have you break even.

EdGasket

Nomad2006 wrote: »

It doesn't require inside information to make money, any more than you need inside information to make money buying and selling shares.

What it does do is make it very easy for a beginner to take too large a position on margin, and blow out their account as soon as there is a small adverse market move. After which they will decide the game is rigged and never touch it again. This is what I would guess happens to a large proportion of that 90%.

Ok well you're obviously more clever than me. The bit about needing 'inside information' to win at spreadbetting was a quote on the radio from an IG Index dealer; so straight from the horses mouth. Anyway you'll find out the hard way.