Firstly, let us dispense with the term ‘Financial Spread Betting’. Let us call it ‘Financial Spread Trading’. A subtle change in name perhaps, but one that will change the way you view betting.
Let me explain.
I do not bet on anything as this implies that I gamble. I have never backed a horse because of it’s colour or name or traded stocks because aunt Maude used to buy her panty-hose there.
Trading implies that I make a transaction and in return get something of equal or better value. I have spent years developing programs where I make a living from the outcome of sporting events. I like to cover all eventualities and come out making a profit.
In sporting terms this is called ‘Arbitrage’. I invest money in an event, and regardless of the outcome, I make a profit. Much the same as a bookmaker would. Bookmakers do not make money from backing horses and neither do most punters. Bookmakers make money from laying all of the horses or outcomes in an event, at a margin greater than 100%.
100% is break-even territory, anything over and above that is profit. The punter then racks his brain to find the winner and the bookmaker could not care less, because regardless of the outcome, he makes a profit.
What does this have to do with ‘Financial Spread Betting? Well, all markets are just a two horse race and if your horse is not winning, you can always swap.
I personally have spent a fortune on courses, only to discover that the authors were plugging some expensive soft-ware or they wanted me to subscribe to their site. Or worse still, they wanted me to attend one of their seminars and part with £5,000 of my Earth pounds.
To say that I was disappointed is an understatement. I have no problems with free enterprise, but not at my expense.
If people wish to pay huge sums of money for this information, and clearly they do, then let them. There is obviously a market for people with very large pockets.
But I prefer to actually see a return on my investment before I start shelling out even more money.
Other authors suggest that you relax and take it easy and they will kindly do all of the work for you, at a price, and you just follow their lead. One service that I am aware of, sells real-time signals to its customers for £100 per month.
What happens to you when these people go on holiday, go bust, sell up shop or a million and one other things? Well, you are left high and dry without a clue as to how to do the job yourself. You have become reliant upon them to make you an income!
As the old adage goes:
Give a man a fish and he will have fish for supper.
Teach a man to fish and he can eat fish until he is sick to death of fish and fancies a change.
He can always swap his catch for a slap-up meal at the local restaurant. He just hopes and prays that fish is not on the menu that night. Or words to that effect! It is always better to be in control of your own destiny and have a choice, rather than sitting and waiting for someone to throw fish at you.
I know how tricky it is to learn a new subject. All you want to do is get to the money making bit, get a good grasp of the subject and get on with it.
This course, however, is not designed that way. I shall give you a brief description of what it is we are trying to achieve. I will show you:
- Where to get all of the free resources required to start trading.
- How to go about using them to your advantage.
- How to trade.
- Where to trade.
- When to trade.
- and what to trade on.
Any technical stuff that we come across that is relevant to the way I trade, will be explained there and then.
Risk awareness
We all want to be successful in trading financial markets, but it is unlikely you’ll make the right decision on every trade you make. That’s why it’s so important to have a solid understanding of the rules for risk management before you start to trade. Keeping your risk very low gives you a buffer to absorb trades that don’t go in your favour. By combining what you learn in this guide with sensible rules for risk management, you can make a big difference to your overall performance.
Flexibility
Financial spread betting or spread trading as it is sometimes referred to is something that appeals to a surprisingly diverse range of people, from IFSC types to those with little or no traditional nvestment experience. Irish investors are beginning to realise that their opinion can be as valid as any fund manager’s or stock broker’s.
Spread trades are tailored, geared products that are priced off futures contracts. The spread contracts are written on multiple tradable liquid futures contracts across all key asset values. But more than that spread trades are exempt from UK taxation 😉
If you want to take full advantage trading spread bets you need to be flexible in your approach. Shorting as part of your overall investment portfolio gives you the ability to benefit directly from a falling market. You can also use short trades to defend the value of your physical share holdings, and even help smooth the day-to-day fluctuations of your trading portfolio.