A: Yes, you must buy before Ex date but you don't have to hold till record date. You can sell the next day and you are still entitled to the dividend. That's what ex dividend means - without dividend. So if you hold the day before ex day and sell on ex day the div is yours. But remember on ex day the share usually falls in the market to match the dividend payment.
A: The essential differences between spread betting and fixed odds betting are:
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A: In order to answer your question you would need to consider the type of company that you are betting against -:
In the case of ‘Binary Betting’ there are two distinct types of markets available. The first type is a company which simply acts as a ‘market place’ – it provides a place where customers can bet against each other – this type of company makes its money by skimming off a percentage of your trade size, almost like a fee for transacting.
The second type of company is a ‘market maker’. They generally operate by pricing their markets through a mathematical algorithm with a number of variable inputs such as current underlying price and current customer positions. In essence they bet directly against the customer. They take the view that their pricing model takes a small amount of ‘value’ off the customer each time they trade. The law of large numbers therefore predicts a small but steady profit over an extended period of time.
Let’s take your suggestion about a customer who develops a winning strategy. We could ask ourselves the following question….. ‘Which of the two types of company stands to lose if a customer has a winning run?’ I would suggest that your winning run would not effect the first type of company which we discussed. They do not take a position against a customer and are in fact ‘market neutral’ at all times. They make their money by facilitating trade and on that basis it would not be in their interest to hinder customers trading activities.
This is not so of the second type of company. In the second type of company they act as your counterparty. If you win then they lose. In essence you imagine that you are purely betting against their pricing algorithm. As well as acting as market maker the company is also in control of execution procedures. This presents potential conflicts of interest. My personal view is that certain market makers attempt to gain an advantage by not executing trades immediately. In some cases deals are routed for manual dealing when computers could just as easily execute the trade in an instant. There is a reason for this type of manual dealing. The companies know that during the delay, which is the nature of manual dealing, the market will carry on moving. This effectively gives the company an element of hindsight with regard to its previously quoted prices. If the price has moved in a manner which favours the company (reduced your profit/increased your loss) then it makes financial sense to reject your order even if your order was valid when you submitted it. Of course, when the boot is on the other foot, and the price moves further in your favour it makes financial sense for the company to accept your order because they know full well that rejecting your order would lead to you re-entering the order on even more favourable terms.
I spoke some time ago with a lead market maker at one of the larger spread betting co's in London and he admitted that the Binary Bet arena was now a much more challenging area of the market place than it had been a few years back. His theory was that initially punters where from a broad spectrum of experienced and inexperienced. This led to many inexperienced punters paying the price and donating large amounts to the companies. After a period of time only more experienced players were left. This was more of a challenge to firms which offered tight spreads. People’s ability to spot 'value' started to challenge the house edge. The firms also suspected that arbitrage was taking place in some quite large volumes. The upshot is that most of the firms retain an edge which is greater than the price quotes. By that I mean that they manually process orders or delay quotes to clients in order to disrupt certain clients’ activities or to 'pinch' extra value. All of the firms realise that purely mathematical models are beatable by experienced players in one form or another
A: In running betting (or bet in-running as its sometimes called) means that you have the ability to place a bet whilst an event is actually taking place. It normally applies to sporting contests which are being broadcast live on TV. When, for example, a football match is being shown live, the spread firms will update their prices on a number of markets 'in running' as the event unfolds.
This gives you the opportunity to place new bets or close existing bets, either to take a profit or to stop out a losing bet.
The spread will gradually narrow as the event unfolds and the conclusion comes closer.
A: There's no problem in opening an account from Spain but the tax rules are pretty murky for those outside the UK. The first point is that spreadbetting doesn't exist in Spain and therefore you have to assume that it will be taxed like something that does. The question is 'what?' If it's gambling then I think that would be taxed like income i.e. up to 45%. Better hope that instead it's treated like futures and thus subject to capital gains rules. If the position is held for less than a year the gain would again be taxed like income. If the position is held for more than a year then the rate (from Jan 2007) is 18%.
So suppose you were trading currencies long term and rolling your positions every 3 months. If they were futures then the rolling would not be counted as a disposal and therefore you could take out your profits immediately, but leave the position open and delay the taxable event until you finally close it - that could be years. Better check with your local authorities as to what taxes will apply to you.
A: I believe that most reputable companies won't deal CFDs with US residents - although some dodgy ones might (note – NorthFinance is located in Cyprus and not regulated by any authority so use it at your own risk...) -:
Welcome to our live chat service!And some others will allow trades from an offshore company owned by a US resident. For instance IG Markets states in its information pages:
United States customers -:Under existing US legislation, we are unable to enter into margin trading transactions with US residents.
US Customers are defined as:
A: Spread bets are not allowable in a SIPP. CFDs are, but not all SIPP managers will support them. Risk is about the same, the main difference would be that with a spread better you pay a higher spread but no commission. CFDs usually have a lower spread but you pay commission. In a SIPP both would be tax free, outside a SIPP the spread better is tax free. CFD could be a good way to incorporate margin trading into a SIPP. It also unfortunately increases the risk of a wipe out to a novice very dramatically.
If you are inexperienced trade with small stakes using spread betting and see if you can make money. If you can do that you MAY be able to make money with CFDs in your SIPP. And remember spread betting companies market the fact that you can leverage up on a small deposit. This is akin to taking out a loan to buy shares – high risk but really at the end of the day it is up to you to not overleverage your acount.
A: The reason most traders lose money is because they buy price not value. Calling the price right is merely guesswork, and ordinarily guesswork does not reap rewards. The exception to the rule merely serves to prove the rule.
The fact is if your analysis suggests that the valuation is below that which your calculations suggest, you ought to buy it, and vice versa. If your analysis is correct, at some stage the valuation will come out. The markets are not efficient, otherwise valuation inconsistencies would not appear. The markets, especially in the short term, are just the views of collective sentiment, and willing buyers and sellers determine the outcome or price. Over a sustained period, willing buyers and sellers adjust to the underlying valuation, or so one hopes. It is obvious, however, and as Buffett famously said, the markets can stay irrational for a lot longer than the investor can stay solvent. Therein lies the beauty of the inefficiency of the markets, and that which leads to the opportunities in the first place.
The reason investors can get it wrong is because the initial analysis is flawed. This may be due to factor that the investor was not able to predict in terms of outlook (for example, several years ago investors may not have anticipated a consumer slowdown and thus when assessing a retailer may not have factor that into their assessment and so forth) .
Ascribing a valuation to a company is not an exact science since it is based on interpretation of facts, and an opinion of outlook and market forces going forward. Getting it right requires considerable skill, plenty of experience, tremendous judgement and an ability to sort out the wheat from the chaff…
A: Clubs are certainly able to spread bet with out paying CGT. It is only businesses and professional traders that run into tax problems. Clubs are not classified as a business according to the Inland Revenue and FSA so are welcome to venture into the world of spread betting.
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