Trading COMPX

[theman 10]

Hi

 

Im new to trading, wonder if you can help me?

 

Can I trade the compx index? dont know if the word "trading" is correct for the comp index? If so how does it work? Im based in UK, so can I spread bet on the compx and if I can can I bet 1 pound for it going up or down?

 

Thanks

[thrunner 10]

From what I've read, spreadbetting was invented in the mid 70s in the UK and is probably not available for someone in the US. It is a kind of derivative with leverage, but how the derivative is calculated, I am not sure. With options, you have the Black-Sholes calculations but with spreadbetting, it is up to the broker? to set the price. I read somewhere that 90% of spread betters lose money. The COMPX index which is the US Nasdaq index that can be represented by QQQQ as the ETF. There is also NQ as the index futures and plenty of derivative options based on QQQQ. I don't think you can spreadbet on NQ or the QQQQ options, so perhaps QQQQ is what you will be spreadbetting on.

[OAC 10]

Let me set the record straight. I am pretty sure that COMPX, which is the Nasdaq Composite which is consists of all stocks listed on the Nasdaq Exchange numbers in the vicinity of 5000+, while the QQQQ(NQ) is only the top 100 Nasdaq stocks. Thats like comparing the Dow to the S&P 500 and IWM (ER2 )combined.

[torero 10]

Here's an excerpt from Wikipedia:

 

>>>>

Financial spread betting

 

By far the largest part of the official market in the UK concerns financial instruments; the leading spread-betting companies make most of their revenues from financial markets, their sports operations much less significant. For example, in the figures for the second half of 2006, the income derived from financial spread betting at IG Group, the largest of the companies, was £29.3m, compared to £3.8m in sports.[citation needed] Financial spread betting in the United Kingdom closely resembles the futures and options markets, the major differences being

 

* the 'charge' occurs through a wider bid-offer spread;

* spread betting has a different tax regime compared with securities and futures exchanges

* spread betting is more flexible since it is not limited to exchange hours or definitions, can create new instruments relatively easily (e.g. individual stock futures), and may have guaranteed stop losses (see below); and

* the trading is off-exchange, with the contract existing directly between the market-making company and the client, rather than exchange-cleared, and is thus subject to a lower level of regulation. Although the spread betting companies themselves are some of the most regulated entities in the City of London.

 

Unlike fixed-odds betting, the amount won or lost can be unlimited as there is no single stake to limit any loss. However, it is usually possible to negotiate limits with the bookmaker:

 

* A "stop loss" will automatically close the bet if the spread moves against the gambler by a specified amount.

* A "stop win" will close the bet when the spread moves in a gambler's favour by a specified amount.

 

Spread betting has moved outside the ambit of sport and financial markets (that is, those dealing solely with shares and futures), to cover a wide range of markets, such as house prices.[6]

 

In a falling stockmarket, financial spread betting can also be used by investors as a means of hedging against predicted losses in a portfolio of shares.[7] The major Spread betting companies are IG Index, CMC Markets, Capital Spreads and City Index.

 

 

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rest of the content: http://en.wikipedia.org/wiki/Spread_betting

 

I think the word betting might be misleading as it seems to be well regulated and that it has the similar characteristics as options and futures. I have little knowledge of this market so I can't comment.

 

Regarding the percentage of losers for spread betting, it's the same in futures and options. Just different way of approaching the demise I guess.