The Ultimate Leverage Investment Thread

[john kane]

the guarentee is simply a guarantee - you say what your stop loss is, no matter how fast it drops or how low it opens at, you have sold it at the stop loss you specified. the cost is extra spread (i have this type of account, everytime i place a trade and say the spread is +/-0.4, it'll then say 'guarenteed stop losses an extra +/-0.15; i'd need to check the proportion extra it charges).

http://www.igindex.co.uk/content/sit...anagement.html

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You can choose to open your position as a Controlled Risk bet. This means that you specify a level at which you want your bet to be closed, should the market move against you. We then guarantee your position will be closed at this level, even if the price gaps suddenly.

There is an extra charge for this protection, in the form of a Controlled Risk premium, which is added to your opening price. Your position is closed at our standard 'buy' or 'sell' price.

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i am sure they must be a way to exploit this. the reason why most serious investors won't use this type of account is that you have to have the money you can lose in your account, whereas with the non-guarenteed stop loss they don't have this requirement.

[spider]

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am i wrong? if so, please explain how the guarantee works. is there a buyer who will always bid at L*X? if so, is there a cost to this type of "insurance"?

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I found a reference to this and it really is a guarantee (an implied put basically) unlike a normal stop loss. I don't understand the payment mechanism however. The web site I looked at said "3 points" was standard but I don't quite understand that. OP here seems to be saying you pay a larger spread but I don't completely understand that either (i.e. what this works out to as a percentage of the possible loss in the stock's price).

In any event, I assume the implicit cost of this guarantee must be comparable to buying a put since it's effectively doing the exact same thing if I understand correctly.

[DcifrThs]

[ QUOTE ]
the guarentee is simply a guarantee - you say what your stop loss is, no matter how fast it drops or how low it opens at, you have sold it at the stop loss you specified. the cost is extra spread (i have this type of account, everytime i place a trade and say the spread is +/-0.4, it'll then say 'guarenteed stop losses an extra +/-0.15; i'd need to check the proportion extra it charges).

http://www.igindex.co.uk/content/sit...anagement.html

[ QUOTE ]
You can choose to open your position as a Controlled Risk bet. This means that you specify a level at which you want your bet to be closed, should the market move against you. We then guarantee your position will be closed at this level, even if the price gaps suddenly.

There is an extra charge for this protection, in the form of a Controlled Risk premium, which is added to your opening price. Your position is closed at our standard 'buy' or 'sell' price.

[/ QUOTE ]

i am sure they must be a way to exploit this. the reason why most serious investors won't use this type of account is that you have to have the money you can lose in your account, whereas with the non-guarenteed stop loss they don't have this requirement.



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so you bought a put...ok that at least makes sense.

Barron

[kimchi]

[ QUOTE ]
[ QUOTE ]
the guarentee is simply a guarantee - you say what your stop loss is, no matter how fast it drops or how low it opens at, you have sold it at the stop loss you specified. the cost is extra spread (i have this type of account, everytime i place a trade and say the spread is +/-0.4, it'll then say 'guarenteed stop losses an extra +/-0.15; i'd need to check the proportion extra it charges).

http://www.igindex.co.uk/content/sit...anagement.html

[ QUOTE ]
You can choose to open your position as a Controlled Risk bet. This means that you specify a level at which you want your bet to be closed, should the market move against you. We then guarantee your position will be closed at this level, even if the price gaps suddenly.

There is an extra charge for this protection, in the form of a Controlled Risk premium, which is added to your opening price. Your position is closed at our standard 'buy' or 'sell' price.

[/ QUOTE ]

i am sure they must be a way to exploit this. the reason why most serious investors won't use this type of account is that you have to have the money you can lose in your account, whereas with the non-guarenteed stop loss they don't have this requirement.



[/ QUOTE ]

so you bought a put...ok that at least makes sense.

Barron

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Spreadbetting is a fictional market created by the broker, hence the prices don't exactly mirror the underlying market prices as I mentioned earlier. SB brokers are basically bookies so when you win, the broker loses. They have a slightly seedy reputation because of this and have a vested interest in you busting out and not just churning your account like CFD/futures broker.

The slippage is therefore sometimes unbearable. This is why SB is not suitable for daytrading and the financing makes them unsuitable for longer term trading/investing. If you hold a position for a few weeks or a couple of months, then they are probably a decent vehicle for smaller accounts to trade.

There are commission and tax free (because it's classed as a bet - betting/gambling is tax free in The UK) - but they make most of their money from spreads and financing (assuming you don't immediately bust out)

I don't think spreadbetting is available in The US.

[john kane]

thanks kimchi for giving a good explanation of spreadbetting as i think a lot of people can't do it due to country restrictions so aren't familar with it.

it's gone well with what little i've done so far, long gold has been great, wish i had long oil as i'd be thinking of doing for ages now, and yen is coming back against the dollar.

i think i will put a 20% stop loss on a chinese tracker fund, leveraging at 5 times.

i have a choice of 2823 A50 China Tracker or 2801 MSCI China tracker (from memory MSCI is morgan stanley china index, that is all i know). any advice on which one?

plan would hold till a couple of weeks before olympics. yes i know a lot of people have this idea and i am very late to the boat, but i think it would be a good idea nonetheless.

currently i have +£30 per $1 swing in gold
+£100 on every $1 increase vs £ but that is just a hedge on dollar holdings i have
+£100 on every 1 yen decrease vs $.

I'm going to triple the yen holdings, so i'd have £3k in total with going busto if it hits 123 yen to $1.

I'm going to put £3k into the china tracker, so for every 1% swing would be £200.

I'm also going to put £1k into northern rock, £20 per 1p swing in share price, so effective stop loss at around 160p.

so to summarise:

£3k in gold. 13% downswing = busto
£3k in china tracker 20% downswing = busto
£3k in yen vs dollar 9% downswing = busto (obv shorting dollar)
£1k in northern rock 25% downswing = busto

thoughts appreciated please.

edit: return is in line with the stop loss, i.e. 25% stop loss = 4 times leverage, 10% stop loss = 10 times leverage etc.
gold 3+ year long investment
china till olympics
yen/dollar till i read otherwise
northern rock long term but likely will settle after a few months and ill look elsewhere.

thoughts much appreciated.

so far up 13.75%, all tax free as well [img]/images/graemlins/smile.gif[/img]

[john kane]

omfg only just checked the hong kong index, about 17th august it was a bit over 20,000 or so now it's a bit over 29,000, around a 45% increase in 2 month. fuckkk, wish i had decided to go for this 2 months ago.

[CrushinFelt]

[ QUOTE ]
£3k in yen vs dollar 9% downswing = busto (obv shorting dollar)


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I don't hate it because the dollar is going to get hammered more than it has... but the yen scares me :x

[john kane]

which currency would you prefer? i can split it between a 2 or 3, but all shorting the dollar i think.

[CrushinFelt]

Actually, I'm not sure the approach I'd use, but I'd short the Pound

[john kane]

cool thanks for reply.

another ffs moment, i consider long indian 50, i go see chart and within last 2 weeks are slow rises in past year it has just shot up 25%. ffs.

im definitely going to carry on looking into this kind of investing, i think it's the best for me.