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All,


Havn't seen much discussion on spread betting as offered IG Index. www.igindex.com.au

Looks interesting particularly as supposedly not subject to capital gains tax(unless its used as hedge). Been going on in England for some time and recently launched in aussi. Havn't seen any cost comparisons against options yet.

What's the verdict?

Paul.
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First thouhgts,
Risky stuff.
Even pro gamblers get slugged tax so thats an interesting claim.

Thanks for the link I'll look into a bit more.

JR

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particularly as supposedly not subject to capital gains tax(unless its used as hedge).

No ruling from the tax office that I'm aware of but it's a fine line,

But not everyone is convinced that the Australian Tax Office will see it that way.

JEFF LEES, TAX LAWYER, DIBBS BARKER GOSLING: If you're really going into it for the purpose of saying, "I'll take my chance, I'll see what I can get," for pure pleasure, then it's a true gamble.

But if there's no chance element, or the chance element is taken out of it, then it can be a business activity and it can be profitable.

KAREN PERCY: Tax lawyer Jeff Lees says because IG Index provides detailed handbooks and advice and because clients can effectively cancel their bets, their transactions are more like futures trading than gambling and could be taxed accordingly.


This is the same as betting against a bookie at the races he/they control the bet, the income is cashflow to reduce risk on his/their payout sheet.Bookies set the market based on their considerable knowledge of the horses form etc, then as they recieve bets they ajust their odds/risk up or down depending on potential payouts & hedge money on holding bets if needed to further reduce risk.
My first thought is that the advantage is much more in IG's favour with this setup as they are likley to be holding money much longer than bookies do so thats a big advantage to them. I'm interested anyway & will see about those comparisions.

KAREN PERCY: Here's basically how it works. If you wanted to bet on the ASX 200 index based on yesterday's close, IG Index would quote you a spread, with a bid of perhaps 3,075 points and an offer of 3,080 points.

If you think the market will gain, you'd make an up bet from the offer level, wagering, say $10, for every point it moves.

If the market does go higher, then you will win $10 for every point it gains. If the index falls, you lose $10 for every point


http://tinyurl.com/14ja


JR



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No ruling from the tax office that I'm aware of but it's a fine line,

But not everyone is convinced that the Australian Tax Office will see it that way.
------------------------
It will be interesting to see how the tax office reacts to this. Probably will know till tax time next year.

The reason I was interested was I wanted to use options as insurance against the current decline and thought spread betting might be cheaper.

However my current thought is I should have been using stop losses as insurance. The best broker i have found so far that offers stop losses is AOT. aotonline.com.au $33 per trade if you do 8 trades per month.

Sorry to go off the thread a bit(new to this) but does anyone have experience with AOT or could recommend another Stop-loss broker.

Paul
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Probably will know till tax time next year.

Yep.

However my current thought is I should have been using stop losses as insurance. The best broker i have found so far that offers stop losses is AOT. aotonline.com.au $33 per trade if you do 8 trades per month.

Look I think that is the way to go.
I've used a number & never had any real dramas, I've heard some people have , I'm using my dads long time broker in Perth & pay more than that but I'm happy with what I get. Test the waters & if your not happy change,

This link gives you some comparisions,

http://www.yourbroker.com.au/news.cfm

JR

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Havn't seen much discussion on spread betting as offered IG Index

Jewel
Welcome to the board !!
Haven't seen this before - have bookmarked it to have a look at it later.
Regards
Harmy
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However my current thought is I should have been using stop losses as insurance. The best broker i have found so far that offers stop losses is AOT. aotonline.com.au $33 per trade if you do 8 trades per month.

Paul
Sheesh !! - $33 per trade. I thought Sanfords was expensive at $24 (or in my case $20 discounted). One of the annoying things about Sanfords is that they do not allow short selling and have no stop-loss system.
However, I see there's a couple of newcomers on the scene - one offering trades at $9.99 and another UK broker with no brokerage fee - they probably make it on the spread. I'm sure this will force a change among the established brokers in time.
Regards
Harmy
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<<<<<<<<Sheesh !! - $33 per trade. I thought Sanfords was expensive at $24 (or in my case $20 discounted). One of the annoying things about Sanfords is that they do not allow short selling and have no stop-loss system. >>>>>>>>>

I think I really need the stop losses for my situation. Maybe I've been reading Mish's board too much but I have a diy super fund with >200k of aussi shares and I feel very exposed. So a while ago I tried buying a some puts on asx 200(xjovm). This gave me some cover but not enough and not cheap and doesn't last long(unless i pay more)!

So if I can put stop losses in at perhaps 7%(???) under my shares for $50 month and $33 if it trades it seems like a bargain. If things go up as they may, I raise the stops. Is my logic ok? As you can tell this is new ground for me so I apprechiate any thoughts on this.

BTW I apprechiate the welcome and I will try to contribute more as I get more confident.
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I have a diy super fund with >200k of aussi shares

Jewel
With that sort of exposure in a super fund I can understand your concern. I'm not sure that actual stop-losses are necessary providing you can monitor the market on a regular basis. It also depends on the type of shares you have - ie are they volatile.
Providing you have bought the shares at a reasonable valuation and they are sound companies then taking the medium/long term view is probably best. The Oz economy is sound with a reasonably positive GDP figure and there doesn't seem to be much on the horizon to change that. Trying to beat the market by rapid trading in and out is wearing on the nerves and probably of dubious value - you can lose as much as you gain.
However, the only real advice I can offer is - if in doubt bail now and wait until this market volatility passes !!
If you follow Mish's board then you know that being in cash is no bad thing.
Regards
Harmy
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Paul

I think I really need the stop losses for my situation. Maybe I've been reading Mish's board too much but I have a diy super fund with >200k of aussi shares and I feel very exposed

Mate you need help if your managing that amount of money yourself you should have a more definite game plan IMO.

TMF has started a "When To Sell" coarse , that may be worth your money.

My firm rule is all stocks have sell stops & These are put on when the stock is brought. Others on this board have dif feelings but that is still with consideration to their total end game plan, you need one , whatever it is you gotta have one.

This is one of the first postings on a very handy board set up to help with that MF "when to sell" coarse, it provides many good links as well.
Maybe you could do some reading you might pick up some ideas.

Maybe Beardust could let you know if he thinks TMF seminars are worth it.

http://boards.fool.com/Message.asp?mid=17531422

Oh & I encourage you to post more on this or any of the boards.

*Interesting to see TMF using the 200 SMA moving average line as a selling indicator...Yawn Mamis , Weinstein ,even JR, could have told em that years & years ago.

JR
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Maybe Beardust could let you know if he thinks TMF seminars are worth it.

Absolutely!!
Learning is the best investment you can ever make.

Chris
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<<<<Mate you need help if your managing that amount of money yourself you should have a more definite game plan IMO.>>>>

JR,

yeah, i've had a bit of a wakeup lately.

Basically what I doing first is working out how to protect what I have till I work out a better strategy. I have been selling anything which I have doubts over. What I don't understand is why the use of auto stop-loss is not more widespread in Australia. I could only find one online broker who offers ongoing stop-loss. It seems so obvious that I feel I have missed something.

<<<<<<*Interesting to see TMF using the 200 SMA moving average line as a selling indicator...Yawn Mamis , Weinstein ,even JR, could have told em that years & years ago.>>>>>>

I think this was the biggest shock that woke me up. A friend showed me MA recently and it was obvious that a lot of my stocks should have sold some time ago.

Thanks for the links. I'll investigate the course further. Madly reading up on TA. Found Incredible Charts site a good resource.


Paul
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Madly reading up on TA

Paul,

DB's is a good TA site to get some understanding.

http://home.talkcity.com//MoneySt/dbphoenix/DbsBurrow2.htm

My brokers not online, this search is better gave me four,

http://tinyurl.com/15r6

IE: AOT online, ChallengeFirst, Estare online.

What I don't understand is why the use of auto stop-loss is not more widespread in Australia

Well you & me both, no reason that I can think of just another example of how slow we are in OZ I suppose.

JR

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What I don't understand is why the use of auto stop-loss is not more widespread in Australia.

Paul
It's a real pain !! However, having mental stops can work just as well although you have to monitor carefully in periods of volatility.
Regards
Harmy
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Paul
Further to my last post...... there are a number of people who shy away from actual stop losses because the big market movers can manipulate the market and shake out the stop loss orders. I'm not sure this happens in the Oz market (too small !!) but it certainly happens in the US.
Regards
Harmy
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having mental stops can work just as well although you have to monitor carefully in periods of volatility.

Yep, most brokers have SMS messaging avail which is handy & you can also access the net , incredible charts has alerts which you could set above your intended sell stop , then net or SMS to check on it during the day.

JR
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I'm not sure this happens in the Oz market (too small !!) but it certainly happens in the US

It happens in OZ I ashore you.

The stop (IMO) should always be set below the last point of support & not say eg.7% , now others don't agree , but if you buy right I've found that you don't get whip-sawed out often.

JR
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Thanks guys,

Sent off my application to aot today. See how it goes. Your comments have been very helpful.

Paul.
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IGindex sent me an invite to a seminar on Spread Betting on the 16 Sept in sunny Brisbane. Couldn't see any mention of other states on the web site but as I dont think brissy is the centre of the universe yet they will be doing the same in other states if anyone's interested.

Please dont think I'm pushing this thing, it's just the thought of reduced taxes that gets my interest.

btw I's setup with AOTonline and seems good. Lots of features. You can even setup hotkeys to do a trade. Wouldn't like to have the key jam!

Paul.
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For those readers following this thread, apart from the “Spread betting” product offered by IG Index, I noticed Westpac offers “Equity Range Deposits” and “Equity Participation Deposits” amongst other similar products in currency and gold. You can pick up info at any bank.
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