Trading News Feed | Trader Hideout
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Written by Trader Hideout Editor
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Thursday, 18 December 2008 15:54 |
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As The Times noted earlier this month, ordinary investors are making themselves a neat little pile of pounds by betting against the sterling, and in fact, it is becoming more popular than buying shares in the current economic climate. Spread betting companies have seen an increase in the number of spread bets being taken against the pound and are seeing handsome payouts to the ordinary investor as the pound continues its slide. |
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Written by Trader Hideout Editor
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Wednesday, 17 December 2008 11:20 |
In an earlier article titled ‘Top 3 Spread Betting Rules for the Novice’, we gave three short rules to get the novice started, however, it just didn’t seem enough so here are another three spread betting rules that the novice should live by.
Rule Number Four: Watch the pennies
In Rule Number Two, we advised you to start small, however, you also have to manage your money bank. Many expert and successful spread traders do not risk more than 2 percent of their bank on a single trade. Use the stop-loss appropriately so that your trade will be closed automatically if you lose that 2 percent. That might not sound great when you’re starting off small but if you don’t follow this rule, you may never make it big.
Rule Number Five: Specialise
As we mentioned in Rule Number Three, spread trading is a skill that can be learned. So, try to get to know one or two markets really well and do not be tempted to play the field in areas you do not know. Experts say that each market has its own rhythm and certainly the big winners in this field do not play at random – they trade only on oil, or gold, or specific stocks and shares, but they never trade at random.
Rule Number Six: Cut your losses but not your profits
Beginners are often said to ‘run their losses and cut their profits’ and that’s what this rule is all about.
If you see the prices dropping, do not be tempted into the thought-trap of ‘the price is bound to recover’. More often than not, it doesn’t and you will only lose more money.
On the plus side, do not panic if you see a profit either. If you’ve made £200, it’s tempting to grab the money and then watch as a few minutes later you would have made £250, then £300. Having said that, you will not go broke if you take a profit so it’s a judgment call and if you follow Rule Number Five, you’ll be better placed to make that call.
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Written by Trader Hideout Editor
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Monday, 15 December 2008 11:18 |
Now that you’ve discovered spread betting, or spread trading, before you rush off in the excitement to open a financial spread trading account, here are our top three spread betting rules for the novice would-be trader.
Rule Number One: Never trade more than you can afford to lose
As with all investments, if you are ‘playing’ or trading with money that you cannot afford to lose, then you are a fool. You will get scared and make emotional decisions, which in the world of spread trading could mean you’ll be wiped out quick, so don’t use this month’s mortgage payment.
Rule Number Two: Start small
The reality of the situation is that there are many beginners who lose their money at the start. This does not have to happen to you. There are virtual trading accounts that you can use to practice with and then once you do have enough confidence to try it for real, the minimum trade with most financial spread trading companies is £1 per point.
Rule Number Three: Be clear
Be clear and be realistic about what you want. If you want the rush of winning £250 in 5 minutes as a hobby then great but if you want to get rich then remember, it definitely will not be easy although yes, it is possible. Spread trading is not gambling, it is a skill that can be learned with hard work, so read spread betting websites, articles, books and magazines. Practice and learn, but expect to make some losses. |
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Written by Trader Hideout Editor
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Saturday, 13 December 2008 11:16 |
The answer to this question probably lies in what you are spread betting on. Spread betting is high risk, there is no doubt about that. Rather than gambling your stake money, you can make profits or losses that are virtually unlimited, although there are ways of limiting your losses which we will not go into here.
The markets you can spread trade or spread bet on are also endless. You could spread bet on the general election or sport or you can spread bet on the financial markets and here is where the difference of opinion lies.
If you spread bet on politics or sport, then it is pretty fair to say that it gambling. However, financial spread trading can be a different beast altogether. If you bought shares in a company, they could go up or down and you could make a profit or a loss, would you call that gambling or an investment?
Financial spread trading is the same but with two main differences. Firstly, if you buy a share, you pay the stockbroker’s fee, plus 0.5% stamp duty plus if you make any money when you sell you have to pay capital gains tax if you have made more than the government’s allowance.
With spread trading, you can place an ‘up-bet’ on a share that will give you exactly the same exposure as if you had actually bought the shares but you are not locked in and you have no fees or tax to pay (at the time of writing).
Bookmakers do need to make their money and they make their money by widening the gap between the offer price and the bid price, which will therefore be slightly wider than a stockbroker’s spread, but otherwise, spread betting is a better option.
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Written by Trader Hideout Editor
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Thursday, 11 December 2008 12:12 |
Anybody from anywhere in the world can open a trading account and start forex trading, however, how true is it that UK forex traders have an advantage over everybody else worldwide?
According to some experts, the opening hours of the London session are the most profitable part of the trading day for those trading in a major currency pair such as GBP/USD and EUR/USD. Some say that the morning session in the UK usually shows a strong trend in one direction on the major currencies so it is easier to make money from these trends. It is because this session is so convenient for UK fx traders when compare to those in another time zone that they say the UK forex traders have it easier.
The other reason is that UK traders can use spread betting as an alternative option to a forex broker. Although it is more or less the same, forex trading gains through spread betting are currently free of tax so even if it’s their full time job they do not have to pay a penny in tax to the tax man.
It might be only two advantages, but in many eyes, the UK forex trader does have the advantage over those in other countries.
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Written by Trader Hideout Editor
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Wednesday, 10 December 2008 13:09 |
Here we are again with spread betting myth number three. Surprisingly to those of us in the know, it is a gross misconception that hardly anyone does spread betting at all.
In the UK alone, more than 50,000 people hold a financial spread trading account with one of the country’s leading spread betting companies. Indeed, there are more spread betting companies springing up and more spread betting accounts being opened every single month.
The market is growing all the time and although the reasons may not be clear, perhaps it might be because people are realising that their pensions are not getting them to where they thought they would be, their property prices are falling and they’ve realised that they cannot rely on the major institutions to sort their life out for them so they’re empowering themselves and doing something about it.
In addition, there is now more information than ever before available about spread betting and how it works, plus articles like these to dispel the myths and the lies.
As the markets are declining at the moment, there is little else to help people make money when the markets are dying. There are more and more people starting to partake in spread betting every day; just be sure that you are one of those that learns about it properly and can really make some money with it. |
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Written by Trader Hideout Editor
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Tuesday, 09 December 2008 12:07 |
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This is the second in a series of articles designed to dispel the myths surrounding spread betting, and that is that nobody makes any money by spread betting.
If that were true, then nobody would be doing it, there would not be so many spread betting companies out there and certainly not the major institutions. In fact, the spread betting market is growing all the time.
Naturally, there are those who make money and those who lose money, which is the same with anything or there would be no money to go round, but consider these figures.
Approximately 90 percent of people who open a financial spread betting account lose their deposit and close their account within a period as short as three months. This is predominantly because they open their account, throw their money after anything that seems to be going up or going down and hope they’ll make some money. Even worse, some of them then throw good money after bad falsely believing that the tide will turn or they start trading the opposite way hoping to earn back their money. However, consider another interesting figure. If 90 percent of people are losing their money trading the wrong way then that leaves 10 percent of people trading the opposite way and winning all the money that the 90 percent are losing. You need to make sure that you are in the 10 percent and not the 90 percent and you do this by ensuring that you have a proper trading strategy in mind and learn your trade before blindly throwing your money away.
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Written by Trader Hideout Editor
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Monday, 08 December 2008 15:05 |
In this series of articles, we explore the myths and lies about financial spread betting and this first myth is perhaps one of the most common: that you need to be rich to start spread betting.
Now, maybe in the early days this might have been true and spread betting firms would only open an account to the wealthy, however, this is no longer the case.
In fact, you can open a spread betting account with a betting firm with as little money as a £100 deposit. For most people, that is an affordable amount to start with and although it is true to say that investing £100 is unlikely to make you rich, it is also unlikely to break the bank either.
What it is though, is enough to let you learn how to trade. Indeed, to learn how to spread bet it is possible to open a virtual spread betting account. Using a virtual account, you can make ‘pretend’ trades so that you can learn how to spread bet and be certain that you understand how it works before you risk any real money.
So there you have it, you certainly do not need to be rich to try a little spread betting. |
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Written by Trader Hideout Editor
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Friday, 05 December 2008 15:03 |
According to the Guardian, the exchange rate of sterling versus euro and the premium of UK government bonds versus German ones are indicators that will signal whether the financial markets are betting that Britain will enter the Euro.
The current financial crisis worldwide has meant that some people in Britain are now more open to the idea of Britain entering the Euro, according to Jose Manuel Barroso, European Commission President.
So far, British politicians have been wary of this idea and although few experts are taking Barroso’s comments seriously at the moment, if his views are right then financial markets would need to rethink how several of British assets are valued at the moment.
"We take the Barroso comments with a large pinch of salt but if anyone were to seriously believe that the UK might enter the euro, they would have to decide on the timeframe and then look for the entire (UK) yield curve to converge towards the French or German ones over that period," said Hans-Guenter Redeker, global head of foreign exchange research at BNP Paribas. "If you really believed this, you would also buy sterling like there was no tomorrow.”
Any trader that believes Britain will enter the Euro would want to buy sterling against euros and what is possible the best gauge of whether or not Barroso’s comments are true may be the level of spread betting on the topic.
Financial spread betting firms are not seeing an increase in the number of spread bets currently placed on British euro entry. In fact, William Hill spread betting said they have had only 3 spread bets on British euro entry in the last three years and spread betting company IG Index has also reported little interest in this spread bet. |
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Written by Trader Hideout Editor
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Thursday, 04 December 2008 16:07 |
Spread betting can sometimes be difficult for people to grasp, however, a simple example is usually the best way to explain it.
Many people use the FTSE 100 for spread betting or spread trading, so we will use this as an example. To begin with, you would contact a spread betting firm to ask for its ‘spread’ on the FTSE 100. You can usually do this via telephone or on the company’s website.
Let’s say that they give a spread of 4000 – 4200.
Which way you bet or choose to trade will depend upon how you feel the FTSE will move. So if you think the FTSE will increase, then you place a ‘buy’ or ‘up’ bet. You opt to ‘buy’ at, say £10 per point at 4200. This means that for every point over 4200 that the FTSE 100 goes, you earn £10. Therefore, if the FTSE closed at 4390, that is 190 points over so you earn a profit of £1900. If, however, you are wrong and the FTSE falls to 4050, you would lose £1500 (150 points below the 4200 level at £10 per point).
If you thought the FTSE would fall, then you place the opposite bet, i.e. a ‘down’ or ‘sell’ bet. For the same example, you bet £10 per point at 4000. If the FTSE falls to 3900, then you make a profit of £1000 (£10 x 100 points), but if the FTSE rises to 4100 then you lose £1000 (£10 x 100 points over).
From this simple example, it is easy to see that spread betting offers a simply way for people to bet on how the markets move. Previously, if someone thought the financial markets were falling, they would have to invest in hedge funds or sell shares ‘short’ to profit, so financial spread betting is a way to solve this problem.
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