Financial Spread Betting News Information Tips

Getdealing asked:




             Introduction to Spread Betting

 

 

So what exactly is spread betting?

 

Spread betting is a high risk, high reward way to play the world’s financial markets.

 

The “spread” in the phrase Spread Betting refers to the Sell (Bid) and Buy (Offer) price quoted by a spread betting company. This price is calculated around the live market price of a financial product.

 

If, for example, the live price of the FTSE was 4909 then the spread betting company may quote you 4908 (BID) – 4910 (OFFER)

 

The “betting” in the phrase refers as you would imagine to the fact that you are betting on the direction of the market.

 

When you spread bet you are not actually buying the stock or index but are betting as to which way you think the market will move.

 

You can bet per penny (in the case of shares) or per point (for commodities or indices) and the amount you bet is known as the “stake” , which can be from as little as £1, EUR1, $1 per point or penny movement.

 

All Spread Betting profits are recognised as the winnings of a bet, and are therefore free of Capital Gains and Income Tax in the UK.

 

Example 1

 

The FTSE “live” price is 4909

 

The spread betting company is quoting 4908-4910

 

If you think the FTSE will go up you “BUY” at 4910 for £1 per point

 

If the FTSE live price goes up to 4960 the spread betting company may quote

4959-4961.

 

You then “SELL” at 4959

 

Your TAX FREE profit would be your “SELL” price of 4959 minus your “BUY” price of 4910 multiplied by your “stake” (£1) which =  £49.

 

Now let’s say instead of the FTSE going up it actually went down to 4845 and you decided to cut your losses.

 

Example 2

 

With the “live” price now at 4845 the spread betting company would be quoting you 4844-4846.

 

Your LOSS would now be your buy price of 4910 minus your sell price of 4844 multiplied by your stake (£1) which = -£66

 

With spread betting you can bet on the market to RISE OR FALL.

 

Let’s look at an example where you think the market may fall.

 

Example 3

 

The “live” price of the FTSE is 4900

 

The spread betting company are quoting 4899-4901

 

As you think the FTSE will go down you “SELL” at 4899 for £1 per point

 

If the FTSE live price goes down to 4855 the spread betting company may quote

4854-4856.

 

You then decide to “BUY” at 4856

 

Your TAX FREE profit would be your “SELL” price of 4899 minus your “BUY” price of 4856 multiplied by your “stake” (£1) which =  £43

 

Now let’s say instead of the FTSE going down it actually went up to 4950 and you decided to cut your losses.

 

 

Example 4

 

With the “live” price now at 4950 the spread betting company would be quoting you 4949-4951.

 

Your LOSS would now be your “BUY” price of 4951 minus your “SELL” price of 4899 multiplied by your stake (£1) which = -£52

 

 

 

                  To Make Profits in Spread Betting you need to

 

 

                                       BUY LOW/SELL HIGH

 

                                                  OR

 

                                       SELL HIGH /BUY LOW

 

 

 

                     It doesn’t matter which way round you do it!

 

 

 

SPREAD BETTING IS A RISKY BUSINESS.

 

There are ways to reduce your risk.

 

PRACTICE ON A DEMO Account – Our partners Capital Spreads provide a demo account where you can learn in a safe environment with a “virtual” £10,000.

 

BET SMALL – When you start to trade with real money bet at the lowest stake of £1 per point and only trade with money you can afford to lose.

 

                               USE “STOP LOSSES”

 

What is a “STOP LOSS”?

A “stop loss” trade is one that is made in order to set a limit to the loss made by an adverse price movement.

 

It’s an instruction that you can give the spread betting company through their site or on the telephone if you wish.

 

Let’s look at an example.

 

Example 5

 

The “live” price of the FTSE is 4875 then the spread betting company would probably be quoting     4874-4876.

 

You think the FTSE will go up and “buy” at 4876 for £1 per point.

 

You don’t really want to risk too much money on the trade and you don’t want to have to sit and stare at the computer all day so you enter a “stop loss” order to close your bet and automatically “SELL” if the price reaches 4845.

 

At the end of the day you come back to look at the market and you see it has fallen to 4810.

 

As you had entered the “Stop Loss” order to sell if the FTSE hits 4845 you should see on your spread betting account that you had indeed closed your bet at 4845 (or somewhere close to that price as stop losses are not guaranteed to be executed at the exact level specified).

 

We believe every trader, no matter how experienced should always trade with a stop loss. Our partners at capital spreads offer an automatically generated stop loss feature as standard.

 

 

By using Stop Losses you limit the amount of money you can lose to a pre-agreed amount (although stop loss levels are not guaranteed)

 

 

How getdealing.com helps

 

Once you have learnt the mechanics of how to spread bet you will need to understand what makes the market you are trading move.

 

Markets move quickly and react to news stories, results and economic numbers instantly, making it imperative that you are kept informed in real-time.

 

Sifting through countless news reports trying to pick out what is likely to move the market is a daunting task for the new trader.

 

In the getdealing.com “dealing room” we act as a news aggregator, bringing your attention to the events that are moving the market right now. We can’t tell you where the market will go but we can tell you when it is likely will move!

 

Our market moving event calendar will show you all the scheduled economic releases that will have an impact on the market today. We show you what the market is expecting (the Forecast), what the prior number was (the previous), and we release the current data in real-time (the actual) If the number is considered to have a positive impact on the economy the number will be green and if negative will be red.

 

By hovering the mouse over the” i” you can get a brief description of what the data means and why it is watched.

 

The free getdealing.com live Trader Updates is a market commentary that brings you the real-time news and views of the many market professionals we speak with throughout the day. We monitor every news wire to deliver you only the stories and data that will be having an impact on the markets right now in a language you can understand and act upon.

 

While the twitter commentary brings you the real-time events that are moving the market right now we have also added a selection of financial RSS feeds for general financial news.

 

Every morning we publish a “Morning Run Down” to let you know the important events that happened in the markets overnight and tell you what to look out for today.

 

Our live spread prices are provided by Capital Spreads and show the prices that you would be trading on right now in real-time.

 

Watch how the live prices react to the data and news that we provide and learn what is driving the market.

 

Try trading using our “dealing room” page to help you make your decisions.

 

www.getdealing.com



Virginia

John Helios asked:




Financial spread betting is easier to understand than many believe. This simple ten point guide offers you the tools to enter the financial spread betting market with more understanding.

1. Practice makes perfect

If you are a novice then the world of financial spread betting is full of dangers. I would suggest opening up a “demo” account. There are plenty of companies that will allow you to do this. They usually give you up to ?10,000 to play trade with. Get comfortable and then go to real money.

2. When opening up a real account

Companies will let you set up for as little as ?200. I would suggest setting up your first account with a minimum of ?1,000. This will allow you to absorb more losses than with ?200 or ?500, keep your betting size to small fraction. I suggest that 2% is an ideal maximum risk but with a small account 5% is generally figure used.

3. Start Slow

The UK FTSE 100 is a good place to begin. The blue chip stocks are even better as they are more liquid. The US stock market and Forex (Foreign Exchange) is generally too volatile for a beginner.

4. Increasing your profits

The best time to bet is when you believe the market is going to move sharply either up or down. This is done only by studying the market and noticing trends and practicing also helps. There is software to buy that can help you predict the market.

5. Never Average Down

This means simply never increase you position when the market moves against you. Although if you are up then increasing you position can be advisable; a good example would be when you open at ?1 a point on the FTSE at 6000, stop loss at 5900. The market moves to 6100. That means a profit of ?100. In this example you buy another 50p and moving your stop to 6000. Should the market move against you, you will break even on the ?1 point per trade but be ?50 up on the 50p per point trade. (If this doesn’t seem to make sense just read again slowly and it will become clearer).

6. Daily Bets

If you decide to bet daily make sure that you have access to the all information constantly. For the beginner it is easy to spot general trends that take place over days rather than hours. Daily betting can lead to small losses accumulating into large sums. The desire to cover you losses becomes greater.

7. When betting

To make sure that you are covered always use firms that give firm quotes on the screen. Use proper regulated firms. There are unscrupulous people out there who will not think twice about taking your money.

8. Telephone betting

If you close a deal by phone then state your requirements firmly and accurately (ask them to repeat back to make sure). Check you contract note carefully and never ever expect advice as it is against the law.

9. Minimising your losses

When placing your bet always use a stop loss (maybe even a guaranteed stop loss) and perhaps a limit order. This will then protect you if the market suddenly turns against you.

10. Profits

In the first six months don’t expect to make a profit. You will be refining your technique in the real world environment. Please be strict with yourself and bank even small profits rather than betting them again for bigger gain. It will take a long time before you know technical analysis very well. The first six months will also be about finding out about yourself and if you can deal with losing money. If you can’t handle the fear of losing money then step away.

Financial betting can be confusing and scary. If you feel overwhelmed then just sit back watch the markets and wait until you feel safe to stick your toe back in the water. When you start to master the intricacies of financial spread betting then it can be a rewarding and even fun experience.

Ann

Serge Martin asked:




If you are a small or private investor, one of the easiest ways for you to be a part of the Forex is through financial spread betting. This is because unlike other brokers, a spread betting broker will not require big deposits.

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 commodity 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.

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.



Cathy