Investment strategy using 'speeders', would it work?
Hi,
My broker is offering free transaction costs on speeders. Speeders are basically securities that allow you to leverage the return on an underlying security (indicies, gold, oil, individual stocks, etc.). For example if a stock is trading at $25, the bank finances $20 while you pay $5 (the price of the speeder). If the stock price goes up to $26, the speeder will be worth $6 (return on 20%). In this case the leverage ratio is 5, meaning if the stock price goes up by 4%, the speeder price goes up by 20%. The same thing happens on the downside, but you cannot lose more than you put it (once the security hits just above $20 in this case it is liquidated).
I am considering pursuing a passive strategy as follows. Buy a number of speeders in many uncorrelated securities (be it a large number of stocks, gold, oil, etc.). Set a relatively low stop-loss which is moved up as the price of the security increases. In this way you capture the upside, but very little of the downside. The fact that you are using speeders increases the speed at which this all happens. The fact that there are no transaction costs makes this even more possible.
Of course its possible that in the very short term it may make a loss but in the medium term shouldn't it be a profitable strategy?
Re: Investment strategy using 'speeders', would it work?
Speeders... seriously?
Quote:
Originally Posted by SilverBack88
Hi,
My broker is offering free transaction costs on speeders. Speeders are basically securities that allow you to leverage the return on an underlying security (indicies, gold, oil, individual stocks, etc.). ...
Hey there SilverBack88
What brokerage is this if I may ask?
I'll tell you what I think it is they are 'dressing up' here, but I want to confirm it first ;-p
Re: Investment strategy using 'speeders', would it work?
EDIT: arrg sorry, they are called SPRINTERS not speeders.
Thanks for the reply.
Its a Dutch broker (Binck).
So what could they be 'dressing up' as you put it? The securities themselves are legitimate, the leverage for the sprinters is provided by a big bank (ING).
Re: Investment strategy using 'speeders', would it work?
Quote:
Originally Posted by SilverBack88
EDIT: arrg sorry, they are called SPRINTERS not speeders.
Thanks for the reply.
Its a Dutch broker (Binck).
So what could they be 'dressing up' as you put it? The securities themselves are legitimate, the leverage for the sprinters is provided by a big bank (ING).
Hey there SilverBack88,
Cheers, I'll have a snoop around for them.
As for the 'dressing it up' comment, I wasn't making any claims of legitimacy on the 'product' they're offering you.
I was merely thinking, it just sounds like a plain old, vanilla, long option.
All they are doing, is forcing you to trade a long option 'strategy/system/callitwhateveryoulike'.
Nothing wrong with that.
I use long options successfully.
I just think it's quite clever how they've 're-marketed' it as 'something else' to deliver it to 'you', the retail client.
Anyway, I'll have to see if that's what it is first, before I comment I suppose ;-p
Yeh I don't think its any financial wizardry, just a different type of security.
I realized that the bid-ask spread can be between 2 and 7 % which can eat into profits right away.
Anyway, do you think the strategy in my original post is viable? I haven't had time to put it all in a spread sheet and model it, will do that tomorrow.
Re: Investment strategy using 'speeders', would it work?
Quote:
Originally Posted by SilverBack88
...
Anyway, do you think the strategy in my original post is viable? I haven't had time to put it all in a spread sheet and model it, will do that tomorrow.
Huh, there was a strategy in there? ;-/
I can't comment on the viability... there's nothing to work with.
Seems pretty jurisdictional to the netherlands. Kinda like their version of cfd's.
They are more like long options though, if you look at the underlying ingsprinters.nl contracts/instruments. They're priced similar to options in a weird kinda way.
Not sure if you're broker gives you all of the available long/short contracts, or just one.
You'll have to see if it works for you. I couldn't say.
Can I ask why you don't just trade 'em direct with ing?
Cheers,
Contrarian
Re: Investment strategy using 'speeders', would it work?
This is not a new concept.
But it can be a very profitable way to make money. Just be careful. Be extremely conservative with your stop losses and don't get greedy. There is no land of melk en honing when it comes to investments. Timing the markets is more difficult than people realize. Long term, commodities look bullish, especially foodstuffs like wheat and coffee. Oil appears to have already bottomed, but don't expect huge upswings in price–at least not over the next 3 to 6 months. Gold will likely trend higher, but it's always a bumpy ride with gold. Do as much research as you can, and again, keep your stop losses very conservative! (You sound like you plan to do this already, so that's good.) Don't expect insane profits, and always remember that leverage is a nightmare when it backfires. DYODD.
Re: Investment strategy using 'speeders', would it work?
You know that you're supposed to invest with your head and not your heart. But the truth is, a thriving stock market requires a lot of faith - in the economy, in corporate America, and in the promise that your investments will make you money in the long run
[url]http://freefall45.pmiracle.hop.clickbank.net[url]
__________________
You know that you're supposed to invest with your head and not your heart. But the truth is, a thriving stock market requires a lot of faith - in the economy, in corporate America, and in the promise that your investments will make you money in the long run
[url]http://freefall45.pmiracle.hop.clickbank.net[url]
Investment strategy using 'speeders', would it work?
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