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Spread betting is a risky product - learn to control the risks

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What is one of the biggest advantages of financial spread betting?

The image provides the correct answer, with spread betting traders can go long (buy) or short (sell), so it is possible to benefit from rising and falling markets. This unique characteristic gives a great advantage to all those who use spread betting as their trading instrument. Long gone are the days when only financial institution could buy and sell in the financial markets.

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Spread Betting Education: Introduction to Spread Betting Books

Financial spread betting is one of the most popular trading activities done all over the world, especially for those who like to do this online.

There are a lot of benefits that spread betting traders enjoy when they are involved in financial spread betting, not to mention that there are no taxes on any of the winnings made. Of course, it is also obvious to everyone that those who do succeed in the trade enjoy great profits. However, going into the activity can be daunting and financially crippling if the one getting involved does not know anything about the system. And this is where the spread betting education comes in. it is very important to learn everything there is to know about the betting and how to avoid getting ruined in the process.

Fortunately, there are a lot of printed books available which can be bought in online bookstores like Amazon. There are books which are very simply worded that even idiots can understand the system, and then there are the more advanced books which talk about pips and candlesticks. Pips and candlesticks obviously play a big role in the betting and if the trader does not even know what they stand for, they are not going to succeed.

In order to succeed in the trading, however, books are not the only tools to use. There are also online platforms which are freely offered for those who wish to learn. However, each of these free simulated trading platforms is usually offered by different trading companies and it is important to choose the right one before going through the education.

There are also free books online which can be downloaded directly into the computer system in PDF form. Some of these are classic books which offer great insights on the system, and then there are some which talk about modern approaches.

The important thing is to get the information and get the basics before making any financial spread betting trade, online or personally using a professional trader. Without the basic information, you may end up giving over full control to a professional trader who may or may not con you.

Summary

Spread betting is a type of trading which allows you to bet on the price of an asset without owning the asset.

This type of trading is typically used by people who want to trade shares, currencies, and commodities but don't want to buy them outright.

Spread betting is a form of trading in the financial markets where bets are placed on both the rise and fall of prices.

The spread between the bid price and the ask price is called ‘the spread’.

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Financial Spread Betting Using Double Top Pattern Charting

The double top pattern will start by a rise in price, then will show a drop, it will rise in price again around the same level as the first rise, it will then have another drop. This pattern appears like the letter "M". It is important to note that the initial uptrend of the chart should have developed over a long term of several months.

The decline will happen next which is called the trough. Generally this will be from 10% to 20%. This will continue with minor rises and falls (called breaks) until the second peak in pricing arises. This peak will be approximately the same level as the initial peak. When the next decline happens you will generally notice that the volume of demands is now less than the supply.

The actual pattern will run in this manner:

# The prior trend.

# It's first peak.

# The trough.

# The second peak.

# The decline from second peak.

This charting will appear quite simple and straight forward; however when spread betting you want to ensure you are not jumping in too soon. Be sure that you are not betting on double tops which are deceptive, there should be approximately one month between peaks. Make sure that the charting pattern lows are at least 10%. It is also very important that you examine fully the decline, as the supply and demand may be decreasing. The strength of such supply may be deceptive. It is also important to note that if you notice the trough taking more time than expected to move upwards, this could also mean that the demand is not as powerful and could be ending.

Experienced financial spread betters (unlike those who lose) will look for the break before they enter the trade. Once this does occur they will enter short trades with the anticipation that the prices are going to decline. It is important to make note, that often times the double top will start however fail to break, therefore it is important that a stop loss order is placed to aid in risk management.

Warning:

This is a form of margined trading that an investor can use to speculate and invest on the markets. It is possible to open several accounts that will provide you with a chance to take part in trading. This is possible because of the existing tax polices and leverage you get from financial spread betting.

This service is growing rapidly and there are various companies to offer better services to investors and provide spreads that are tighter. Apart from providing a cheaper investment option, as a private investor, you will have a variety of markets to choose from. The range of markets that are available will vary depending on the broker you choose but all of them give individual shares, forex, market indices, commodities and interest rates.

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Commodity Option Trading

Commodity Option Trading

Options are a very useful complement to stocks and stock options. Some commodities are very weakly correlated with the stock market and thus offer a good opportunity for diversification. Commodity option trading also let's you capitalize on knowledge that might be hard to put to work in the stock market. If you are a farmer you have a better understanding and more knowledge than most about agriculture. That will help you very little in the stock market. But in the commodity that can give you an edge over other traders. If you're a meteorologist you have invaluable expertise for trading weather derivatives like the CME monthly frost days.

     Furthermore, Commodity Option Trading offers you opportunity to hedge your risks from other positions. A farmer can use wheat puts to lock in a certain minimum sales price and a utility can use heat-day options to guard against the excess electricity consumption of a summer heatwave.

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The Power Of Simplicity In Spread Betting

The newbie who are just beginning financial spread betting are inclined to make their trading methods too complicated, because they analyze every piece of economic data and also by not having a particular trading approach. It is usual for traders to jump from one indicator to the next; especially after having many losses. Traders tend to give up their system as soon as it shows a few successive losses. The problem is not in a trading method at all. It deals with lack of discipline, control or risk and over trading.

If you want to become a successful trader, it is vital to choose a simple approach to all of your spread betting related activities. You should have a simple money management scheme that will allow you to control your risk on every spread bet. As opposed to popular belief money management is not complicated. You just need to determine your trading method and clarify how many trades you can win. This will be your financial spread betting system expectancy. Many systems will not have expectancy bigger than 70%. It means that it would be possible to lose three trades out of every ten you take. So, you can see even if your expectancy is 70% you will not risk 5% per trade because not many people can emotionally manage losing 15% of their spread betting account in one week. So, you should decide on a percentage that you can afford yourself to put under risk when trading. 3% is commonly optimal. We keep this simple, it should not be too complicated.

Simplicity is when you can manage your own emotions. The secret of managing your emotions that market can evoke in you is by making a solid written plan. It is easy. Define your goal in the market, write down the rules that will help you to achieve it and then follow it. When you get off track and stop following your plan, you will begin complicating the things and stepping back from the right mindset telling you that you should trade effectively.

And the last thing, acquire a simple and suitable spread betting method. It is very important to your success in all other aspects of trading. Spread betting is mainly psychological and there is a wide range of trading methods that will win more than 50% of the time. It is true. But most people go wrong when they try to use indicators in their method and trade price change indirectly, making the things even more complicated. If you trade using price action you trade directly of what the chart recommends you. This easy and efficient method of spread betting will help you focus on maintaining your discipline in the other areas of trading psychology and money management. Trading should not be complicated, a simple and logical method combined with self-discipline is what you need for success.

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Choose the right spread betting strategies for successful trading

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Financial Spread Betting With Commodities

Commodities trading has been another popular avenue that traders have been pursuing. This relates to trading in base metals, food items, precious metals and so on. The trading is done in a similar manner to stocks and foreign exchange and the basis for trading is the demand supply fluctuations in specific commodities.

So how does financial spread betting come into play with commodities?

The answer is simple. The high prices of certain precious metals for instance like gold, platinum would make it difficult for the common trader to buy and stock them for trading. If they are finding stock prices expensive, one can imagine how difficult it would be to trade commodities in the physical market. Moreover, these are not items that lend very well to physical trading unless you are in the business of commodities and have your own wholesale or retail set up. That can be one reason for you to hedge positions by playing futures or spread betting on them.

For most traders however, commodity trading represents an opportunity to make quick money based on fluctuations in the international market and it is the same advantage of leveraged trading that they can enjoy when doing financial spread betting on them. In fact the whole of this year has seen tremendous upsurge in gold, silver and platinum prices and all those who have gone long on these precious metals have made a lot of money.

The volatility in a metal like gold is also not very high in the sense that prices may not take a huge dip. This encourages traders to keep wide stop losses so that even if the price does drop, they are not stopped out and can trade the upswing again when they do their margined trading on this metal. Oil was another commodity that was heavily traded in the futures as well as in the financial spread betting market and that pushed up the oil prices significantly.

It must be however mentioned that prices of commodities do follow events in the international space and it would help if you can follow those closely. In addition, local regulations also play their part with some governments increasing or decreasing duties on either import or export on certain commodities they perceive are in short supply or in excess. This would have an immediate effect on the market price and that is something traders need to be cognizant of.

By trading commodities with a financial spread betting broker you will get to enjoy the various benefits that include:

Stamp duty is not charged Derived products such as spread betting are not charged any stamp duty when shares are bought or sold.

Capital requirements are low This is a margined product that allows you to buy shares on a margin.

It can be a short or long term investments It is possible to make some profits in the falling markets when it comes to financial betting because it is a derived product therefore you can either buy or sell shares.

Vast range of markets By getting involved in financial spread betting, you will have the opportunity to trade in various markets around the world including UK, Continental Europe, America and Asia. Apart from the range of markets available, you can speculate on forex markets and commodities like bonds, interest rates, gas, oil and wheat.

Capital Gains Tax is not paid This is the most essential benefit that you get from financial spread betting compared to any other investment that you may be involved in. This means that any amount of money that you make will not be taxed. It is important to note that any losses that you get will not be offset on the tax bill.

Trade is open at any time Unlike normal market trading that only opens from 8 am to 4.30 pm, spread betting offers trading all day and night from Sunday to Friday. This means even after the markets have closed, you will still be able to make money.

Risks are controlled Financial spreads have controlled risk bets that allow you to have a stop level when you are dealing in the spread. Once the stop level reaches, the bet will close automatically.

Availability of credit facilities A majority of companies that offer spread betting give credit accounts that ensure that capital is not tied up. This is given according to financial status and experience.

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Financial Spread Betting And Money Management

Financial spread betting can be exciting and rewarding, but only if you have taken all the necessary precautions and have fully researched and become accustomed to the way in which it operates. One of the most important requirements is to understand you need to have a very good money management system in place. This can protect your investments so that when you do make profit, you do not lose it all or more. Money management is needed long term and should be carefully followed.

Many profitable and successful traders have stated that a good part of their success in spread betting is that they have developed and stringently follow certain money management techniques, by which they will set a certain percentage of their capital as their maximum loss value.

Many successful financial spread betting investors make use of the 'Fixed Percentage Rule'. This basically states that you are going to take a certain percentage of your capital and allocate it for each of your bets. It has been stated on many investment websites that 2% is the most widely used percentage. It may not necessary be what you are comfortable with, however, it can be used as a basic starting point. There are various approaches to using this method.

There are generally two key questions that must be answered to a satisfactory level. These will help determine what percentage of your capital you are most comfortable with risking in the event you sustain losing positions.

1. What is the largest amount that I can invest that will keep within the range I have set in my risk management plan?

2. What portion of my current spread betting capital should I stake on my next trade that is keeping me within my current money management strategy?

Once these questions have been answered sufficiently and you are ready to open your spread betting positions you must then decide upon your positioning sizing. In essence this means that you need to be sure that in the event of a losing position your stake is no more then what you have decided upon as your maximum loss.

Even after you have done all your historical research, and you have followed the trends and pinpointed which areas and products you wish to begin spread betting upon, you must remember that profiting is only half of the equation. The other half is maintaining the gains or profits over a period of time. Structured money management is required long term.

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Binary Betting Can Help You Reduce Trading Risks

For fostering the probabilities of making more profits and for lessening the chances of making a loss while trading, it becomes imperative for traders to identify and comprehend systems other than spread betting. Spread betting, by far has been a good but a very risky product to rely on; thereby giving rise to the urgent need for a safer and less risky trading product. In this view, binary betting has emerged as a safer, productive and a very profitable trading product for traders throughout the world. If you have been jeopardized by the flickering market trends and uncertainty prevailing around, then by learning how binary betting can help you reduce trading risks will definitely relieve you from worries.

Very well implicated by the name, in binary betting there are only two opportunities that are available to the trader, either he accepts the proposition or rejects it. In this kind of betting too the proposition is presented in offer price and bid terms only.

1. Binary betting can help you overcome the anxiousness that surmounts because of the capricious market and stop losses. The reason being, by using binary bet products you are aware right from the beginning what amount you are destined to lose or earn during the trade. Therefore, you are not oblivious and take the right decision for maximizing profits. 2. For opening a spread betting account you are not required to pay a huge amount because such accounts are available at comparatively low prices. So, you do not have to worry about making huge investments for opening the account. 3. You can apply these to any of the major indices of the world. 4. This also allows prospects for a sound and a productive money management system. 5. It is safe and involves less risk.

Since you are aware right from the outset how much you can win or lose, the power that comes to you for being able to alter bets accordingly makes you less prone to any sort of trading risks. With these multi facets and high chances of making huge profits by smartly bidding, binary betting has emerged as a promising trading product that can help millions make a million.

Binary Betting Tips and Strategies

Do your homework - Look at what's happening on the markets to get a feel for which bets are most likely to succeed. You can find all the information you need in the newspapers or on news websites.

Look ahead - Check the forward-looking financial calendars to see which major scheduled news announcements could affect your bets. You can find these calendars in most broadsheets and on the Internet from most investing sites.

Use the charts - The charts on the binary trading sites can help you to identify trends. Use this information to help you decide how a market is likely to move and what sort of bet might succeed.

Refine your binary trades - Adjust the parameters of your bets to reflect what you think is going to happen. Remember, the better the odds offered, the more you'll have to pay, so make sure you're happy with the stake you choose.

Try low-risk, low return binary bets - Lower-return binaries offer a good chance of success, so you'll come out on top most of the time.

Dabble in high-risk, high return - If you're experienced and can comfortably afford to, you may prefer to make bets with a lower expected chance of success but the high returns mean you don't need to win too often to make a good overall profit.

Monitor your open binary trading positions - You can sell back most of your binary trades (except intraday bets) to take profits or limit a loss. By monitoring these bets closely you can take advantage of any opportunities that come along.

Remember that your winnings are tax-free - Under current UK legislation all betting profits are tax free. However, laws can change and the rules in your country of residence may differ to those of the UK. Seek further tax advice if you need to.

Gamble sensibly - Don't bet more than you can afford to lose! Whatever happens with binary betting you can never lose more than the cost of your bet, but never gamble with money you can't afford to lose.

Enjoy your binary betting - Binary betting can be fun and highly profitable, but if you feel it's becoming a problem for you, you should stop immediately and ask for help.

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Financial Spread Betting – What Is It?

Financial spread betting offers both beginners and seasoned traders a way to speculate on the asset of their choice in a fun, quick and enjoyable manner. It has replaced the traditional forms of investing and has provided a low cost method to trading normal shares, commodities, indices, bonds and much more in a safe and flexible environment. There are many advantages to financial spread betting, here are just a few to help get started.

Tax Free Profits – Any profits gained through spread betting are free of capital gains tax. (please check the laws in your specific country)

No Commissions or Fees – The spread in the bid/ask price is the only thing you pay.

Flexibility – spread betters can make huge profits from both bull and bear markets.

Margin – This allows you to maximize profit potential by laying down v.small sums in relation to the total position.

Range – Most good brokers will offer you a huge range of assets to choose from, in some cases thousands.

Trading Tools – Features such as ‘Stop Loss‘ and ‘Profit Target’ can limit your risk on the downside, while at the same time there is no need to be glued to the screen if your price reaches the desired level, these features will trade for you and can eliminate emotions, enabling you to stick to your system/plan.

There are hundreds if not thousands of different ways and systems to trade the markets, each come with their upsides and downfalls. Some traders enjoy following a trend in the hope of catching a fast move, whilst others enjoy scaling any aggressive moves in the belief that a correction in the opposite direction is in the pipeline. Most brokers offer educational services coupled with a variety of trading tools to help get you started. Some will even offer you a demo account before you begin, but bear in mind that to get a real feel of what feels like to be in the markets, you have to use REAL money.

Please remember – Financial spread betting is risky, volatile markets move quickly so always make sure you have a stop loss in place. On the flip-side, if a position is going in your favor, why not use a ‘Trailing Stop Loss’ to help ensure you lock in as much profit as possible.

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Financial spread betting is a great tool to trade the markets.

Top advantages of spread betting:

1. Trade on margin.

2. No tax. You actually pay no tax on your trading profits.

3. A wide range of markets.

4. Lots of brokers to spread bet with.