jorune
The IR will ALWAYS reserve their position and you will never get the absolute certainty you seem to be seeking.
The key element is To be taxable, the spread betting wins must come not merely from an opportunity presented by a trade, they must arise from the carrying on of that trade. . This means that there must be more to one's activity than merely placing bets for it to be taxable and/or that one's activity is organised in such a way as to take it much further than an opportunity presented by a trade.
For example, a bookmaker goes further than "betting" by not only being in the business of providing the facilities for people to bet with him, but also by arranging his activities to ensure that he will, in aggregate, make a profit regardless of the outcome of individual "bets".
The only danger you face under current legislation is if your spread betting is associated with other related activities - eg: a tipping service - or if you have a system that guarantees you a profit no matter what. 'Course, if you have such a system you wouldn't give a toss about paying any tax :cheesy:
good trading
jon
Jon,
It appears that a distinction can be drawn between the betting by an individual just for themselves and the same practice but for the intention of offering it to other people i.e. better vs bookmaker/tipster etc. I am not a trader, as of yet, but I have been studying its practice.
I wonder if a method of hedging affects this arrangement?
If I were to hedge each trade in the opposite direction, i.e. If I were to go long FTSE on a spreadbet and then short on a binary bet at the same time as a hedge (cutting the binary bet off as and when the spreadbet went into profit) then while this would not as you say
in aggregate, make a profit regardless of the outcome of individual "bets”
It would help improve the overall risk to reward ratio of a trading campaign. For example the figures imagine two scenarios. Both have 100 trades, both a win/loss ratio of 35 wins to 65 losses. The system is designed to catch trends rather than scalp.
The first figure is the risk to reward ratio of each trade, the second the number of times that risk to reward happens. The risk figures are rounded off to illustrate the idea, commissions/spread would of course have to factored in.
1st Example
R= Risk to reward ratio
Total profit = R 1*15 + R 3*9 + R 5*7+ R 10*3 + R 15 *1
15+27+35+30+15=122
Total loss = 1*46 + 2*14 +3 *5
46+28+15=89
Overall profit 122-89=33
2nd Example
This imagines the profits and losses are reduced by the action of hedging. I introduced a level of 0.2 profit and 0.3 loss to reflect the imperfect nature of hedging/random prices/imperfect execution/etc. The figures of 0.2 and 0.3 are guesswork and are not based on any dataset. After the hedged amount was cut I thought to reduce by 1 all the profit/losses beyond this figure to reflect this adjustment. Again this may be naïve.
Total profit = 0.2*15 + 2*9 + 4*7 + 9*3 + 14*1
3+18+28+27+14=90
Total loss = 0.3*46 + 1*14 + 2*5
14+14+10=38
Overall profit 90-38=52
If we then applied a +/- variance of 20% to the figure of 52 to create a range of expectations (41 - 63) we still appear to be ahead of the original figure of 33. So while there is no guarantee of profit there is a suggestion that a better return on the capital can be made.