Bucketshop betting (tax free beer money)

[Businessman]

The UK still has bucket shops (spread betting firms), profits are tax free as considered gambling in the UK and gambling profits are not taxed in the uk.

I activated and funded a dormant spread bet account I had sitting empty this week.
So this is just a bit of fun on side. Looking to see what I can make trading just off gut feel. No defined trading plan in place for this betting account.

I will be betting on the main Stock Indexes.

I love beating the bucket shops, makes me feel like Jesse Livermore from the first few chapters of 'Reminiscences of a stock operator'.

I have no idea of how long this journal will last, in the past I have spread-bet until i start giving back profits. Then i stop, sometimes taking a break for a few years.

First week:
£719 profits, £233 in losses, net £486.
78% win rate, 0.86:1 profit loss ratio.

Breakdown of PnL:
DOW30: +364
NDX100:+165
SP500: +23
DAX40: -69

 

[themickey]

No defined trading plan in place for this betting account.

When you say this, do you mean you have no trading system, methodology?

Looking to see what I can make trading just off gut feel. No defined trading plan in place for this betting account.

Nothing systematic or mechanical, just discretionary?

My reason for asking is from my experience I can't see how this would work.
Neither can I see the reason for going down this path.

My impression of you, you are a savvy trader, certainly no noob and your 1st profit in this journal expresses that, so what gives?

 

[Businessman]

I have never been a good discretionary trader, i still don't know if i am.

Maybe after watching the market after 20 years every day as a systematic trader, i have finally developed the intuition and pattern recognition to get a good feel for what might happen next..

I can certainly sniff out many more moves these day than I was ever able to predict before.

eg. Friday was option ex, it was fairly typical option ex day. I mean that weird price action you often get on option ex day in the stock indexes. Was able to make a couple of profitable trades.

 

[themickey]

I have never been a good discretionary trader, i still don't know if i am.

Maybe after watching the market after 20 years every day as a systematic trader, i have finally developed the intuition and pattern recognition to get a good feel for what might happen next..

I can certainly sniff out many more moves these day than I was ever able to predict before.

eg. Friday was option ex, it was fairly typical option ex day. I mean that weird price action you often get on option ex day in the stock indexes. Was able to make a couple of profitable trades.

Would you consider systematic discretionary?
That is, running a system which picks opportunities mechanically but deciding discretionary whether to take and when?

The problem I have with full discretionary, it's too time consuming.

 

[TheDawn]

The UK still has bucket shops (spread betting firms), profits are tax free as considered gambling in the UK and gambling profits are not taxed in the uk.

Gambling profits are not taxed in UK?? So unhedged investment trading shouldn't be taxed in UK then cuz that's really gambling; you only have 50/50 chance of winning. But profit that gambling joints are taxed right??

I activated and funded a dormant spread bet account I had sitting empty this week.
So this is just a bit of fun on side. Looking to see what I can make trading just off gut feel. No defined trading plan in place for this betting account.

I will be betting on the main Stock Indexes.

I love beating the bucket shops, makes me feel like Jesse Livermore from the first few chapters of 'Reminiscences of a stock operator'.

I have no idea of how long this journal will last, in the past I have spread-bet until i start giving back profits. Then i stop, sometimes taking a break for a few years.

First week:
£719 profits, £233 in losses, net £486.
78% win rate, 0.86:1 profit loss ratio.

Breakdown of PnL:
DOW30: +364
NDX100:+165
SP500: +23
DAX40: -69

View attachment 299829
View attachment 299824

As long as they are not trading against you, you would have a fair chance of profiting provided you have a proven profitable trading plan. If they trade against you, you won't stand a chance profiting against them. Even if you do, they won't let you keep your profit. They will just refund you your initial deposit when you want to withdraw. That's my experience with the bucket shops in retail forex. I don't know how spread betting firms in UK work.

 

[spy]

Would you consider systematic discretionary?
That is, running a system which picks opportunities mechanically but deciding discretionary whether to take and when?

The problem I have with full discretionary, it's too time consuming.

These are just shades of grey really... aren't they? IOW, no one turns their bots on and then leaves never to be seen again; unless they're hit by a bus

 

[Businessman]

Gambling profits are not taxed in UK?? So unhedged investment trading shouldn't be taxed in UK then cuz that's really gambling; you only have 50/50 chance of winning. But profit that gambling joints are taxed right??

Unhedged investment trading in the UK, is subject to 18% CGT. It is not classed as tax free betting because no betting duty is paid on entry.
For intraday-betting on YM i pay 2 point spread vs 1 point spread on the CME. That extra tick covers the betting duty. But there is zero commission charged. So it is not that much more expensive than trading futures directly.
In all these spread bet firms pay lots of corporation tax and the last time i looked probably around £100 million in aggregate in betting duty to the government on top of the corporation tax. So the government is happy.

Even if you do, they won't let you keep your profit. They will just refund you your initial deposit when you want to withdraw. That's my experience with the bucket shops in retail forex. I don't know how spread betting firms in UK work.

I trade with IG, i think they are probably the most reputable bucket shop in the world. They have always paid out to me in the past. If I ever made too much, they would probably limit my size (because i am intra day betting which can be harder for the them to hedge), hence i have no delusions of ever making a million a year day trading with a bucket-shop. Happy to make in the five figure range with this side hobby.

 

[TheDawn]

Unhedged investment trading in the UK, is subject to 18% CGT. It is not classed as tax free betting because no betting duty is paid on entry.
For intraday-betting on YM i pay 2 point spread vs 1 point spread on the CME. That extra tick covers the betting duty. But there is zero commission charged. So it is not that much more expensive than trading futures directly.
In all these spread bet firms pay lots of corporation tax and the last time i looked probably around £100 million in aggregate in betting duty to the government on top of the corporation tax. So the government is happy.

Sorry what's YM? Only 18% CGT! Wow!! That extra tick is probably what we pay for PFOF we just don't know. LOL yeah it's not bad at all. I need to move to UK LOL.

I trade with IG, i think they are probably the most reputable bucket shop in the world. They have always paid out to me in the past. If I ever made too much, they would probably limit my size (because i am intra day betting which can be harder for the them to hedge), hence i have no delusions of ever making a million a year day trading with a bucket-shop. Happy to make in the five figure range with this side hobby.

Yeah they are one of the largest bucket shops in retail forex too. We are going to have to agree to disagree on them being the "most reputable" though. LOL They certainly had their fair share of blocking traders from withdrawing their profits and they do trade against their clients. Now they've created a DMA mode I see so they must be b-booking. Glad you are making good money with them but just be careful.

 

[Businessman]

The problem I have with full discretionary, it's too time consuming.

It doesn't have to be, you can trade 2 hours a day or 20 hours a day. Entirely up to the trader.
As for Systematic vs Discretionary vs Hybrid. I don't see much difference between them, in that the deciding factors are things like patience and emotional control (how you emotionally handle losses).

 

[Businessman]

IOW, no one turns their bots on and then leaves never to be seen again; unless they're hit by a bus

That would be possible except for internet outages, broker outages, exchange outages, bugs in your brokers code (sometimes happen after updates), bugs in your own software, hardware failure...
If all that stuff was 100% reliable, you could turn your bot on, come back after a year. In the real world stuff does go wrong.
Good news is that kind of stuff is rarer these days, happened more often in the early days of electronic trading. But still not zero chance going forward.

A robust non curve fit system itself doesn't need to be changed, unless it's edge has diminished to the point of not be worth trading with anymore, which is unlikely but could happen.