Financial Spread Betting News Information Tips

Linden Huckle asked:




Spread betting UK is growing at an incredible rate. The world wide web has made this much easier for the masses, so it is probably understandable that the popularity has increased so much along with the fact that it is classed as gambling and therefore does not incur any tax!

With the incredible on line trading platforms we now have, it is pretty much handed on plate. Lazy, probably is not the right word to use here, we all live in the fast paced world of sky television and super fast broadband, society today almost demands services such as these, so it has never been easier to dabble in this market.

Another benefit to the on line services is the ability for the financial spread betting companies to offer cost effective trading, where investors can enter for small amounts of money.

Types of spread betting

Financial spread betting companies in the UK offer various ways to invest.

1. World Stock markets. There are now more and more companies that allow you to spread bet on the world stock markets. This is becoming very popular, the bets are based on the total value of the world stock markets. So you bet on the whole FTSE 100 going up or down, if you venture out of the UK you can also try the S&P500, Nikkei 225, or Dow Jones.

2. Shares, where you try and predict if a particular share goes up or down and when.

3. Sport spread betting. People in the UK love their sports, so naturally this market is becoming huge. Investors can bet on football, cricket, rugby, horse racing, etc. Football is the most popular, accounting for more than half of all the bets.

4. Financial spread trading on the forex markets offers high liquidity with 24 hour markets and huge trading volumes.

I you are considering investing, be careful and only risk what you can afford to lose!

Vernon

Ashley Jessen asked:




Cashflow is king and when it comes to trading those rules apply even more so. One of the greatest challenges a trader faces is the inconsistency of income due to market fluctuations and poor performing trading systems. Dividends can help overcome this challenge but will require a sizable chunk of money to begin with.

Income generation with CFDs – is it worth it?

If you are looking to generate an income from trading Contracts for Difference via dividends and a low maintenance strategy you might want to ‘run the numbers’ so to speak before jumping in. Looking at some very basic numbers gives us the following example. You buy $100,000 worth of stock using CFDs and throughout the year you earn 6% in dividend payments or $6,000. Sounds good so far right? Also keep in mind that you might need only $10,000 to run your $100,000 position means you are already earning 60% return on your $10,000 float.

Have you taken CFD financing into account?

Despite making what looks to be a fantastic return on a relatively small outlay you need to consider the overnight CFD finance that you will incur throughout the year. With CFD financing running at 2-3% about the cash rate you will be looking at around 6% per year to finance the trade. Essentially this negates the whole income producing idea behind holding good dividend producing stocks.

So what is the workaround CFD strategy to earn dividends without paying too much finance?

As you can see the basic rule of thumb is the longer you hold your Contracts for Difference position the more CFD finance that you pay. The trick then is to multiply the effectiveness of this strategy by locating good uptrending stocks that pay a solid dividend and hold for a couple of days to weeks prior to the ex-div date. Using this CFD dividend strategy will allow you to hopefully benefit from a capital appreciation of the stock you are on plus receive a healthy dividend on the ex-div date.

By doing it this way you avoid having to pay the CFD finance for a full year and only pay for the shorter period of time that you are holding the position. You get to benefit from a possible capital appreciation whilst receiving the full dividend. Also keep in mind that CFD brokers do not pay any franking credits on dividends earned through CFD trading.

Brittany

Lucy Johnson asked:




Financial spreadbet may sound complicated, but the truth is, it is easier to understand than many believe. Here are some point guides that you should follow when entering financial spread betting. These will allow you to fully understand the spread betting market. More than that, these can also be applied to currency trading…

1. Practice makes perfect – Just like any other business, it is essential that you try and test every strategy or practice on a “demo” account so as to fully understand the inner workings of financial spread bet. Until you master spread betting, you can go and bet on real money.

2. Start low and slow – When opening a financial spread bet account, set up first an account with a minimum of $1,000. This will evade you from making staggering losses and keep your betting size to small faction. Play the market slow and you can start at UK FTSE. The blue chip stocks are even better as they are more liquid. For a beginner, stock market and forex is generally too volatile.

3. Increase profits – Know when to bet. The market can move sharply either up or down so you need to analyze and study the market by keeping track of the trends. You can also purchase software to predict the financial spread bet market.

4. Avoid averaging down – Never increase your position once the market moves against you. However, if you are up, you can make the wise move of increasing your position.

5. When making financial spreadbet , use firms that provide firm quotes – Employ proper regulate firms. Know that there are lots of unscrupulous people out there that want to take advantage of you and take your money.

So, watch out! Know these important guide points and you are way to a successful spread betting venture. These tips are just few of the many thus you need to fully understand everything that is involved in spread betting to make the most profit from it.



Brian

Justin Power asked:




Have you ever been attracted by some of the more exciting financial opportunities often written about in the media? Spread betting, for instance? Day trading? Futures? Those promoting these strategies speak of the potential for massive gain. It is possible, they claim, to double, treble, quadruple your cash – or more – in the shortest possible time. The idea of making a vast profit in a matter of weeks, days, even hours, is – of course – extremely tempting. So this week I thought I would explain how these much publicised financial instruments work.

Spread betting has garnered a great deal of attention over the last few years. Its appeal lies in the fact that it allows you to bet cheaply on the rise or fall of an asset without actually owning it. Historically, if you wanted to trade in different markets – such as international shares, indices, property or commodities – you had to use a variety of different methods to do so. Not with spread betting. You can get exposure to a market instantly, with only a small deposit – typically about 10% – 20% of the value of your bet. In other words, a ?1,000 bet could cost you as little as ?100. What’s more, there is no commission to be paid, no stamp duty on dealing and no tax to pay on winnings.

How does it work? A spread betting firm will predict where an individual share or market will stand at a future date or period of time. They won’t name a specific price but rather an upper and lower range. This range is referred to as the spread. You can then bet on the spread in one of two different ways. If you expect the share or market to be above the spread you can buy at the high end. If you expect the share or market to be below the spread you can opt for the low end. This is best explained with an example. Supposing a spread betting firm is quoting a spread of 6,100 – 6,110 for the FTSE 100 during January 2007. If you feel this is a bit pessimistic you might decide to bet ?100 a point above 6,110. Any time before the end of January you can close your bet and take your gain or settle up your losses. Let’s say you are right and the index climbs 50 points to 6,160 at which juncture you close the bet. You will collect ?5,000 (50 points x ?100). Let’s say, on the other hand, you are wrong and the market falls 50 points below the top end of the spread to 6060 (6,110 less 50). Your error of judgement is going to cost you ?5,000! Basically, the more the market moves in your direction the more you stand to gain and the more it moves against you the more you stand to lose. It is possible to limit your losses by paying for something called a ‘guaranteed stop-loss’ but the cost is usually so high as to make the chance of gain almost impossible.

Day trading first came into the news about six or seven years ago as a method by which small, private investors could make money from the stock market. The name says it all. Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. It was the result of two phenomena. The first was greater market volatility with prices of some stocks – especially in the information technology sector – rising or falling by a substantial amount each day. The second was lower dealing charges allowing investors to buy and sell for a relatively low cost. At the heart of the concept is the idea that you need to close your position at the end of each trading day – taking your gains or losses then and there.

Putting your money into a futures or commodity contract also holds out the promise of substantial gain. As with spread betting, commodity trading involves predicting the price of a particular commodity – anything from gold to frozen orange juice, and silver to pork bellies – at a specific point in the future. And, as with spread betting, gearing plays a big factor in the activity. Its history, however, is rather more respectable. These contracts were originally a way for manufacturers to reduce their risk. For instance, in the days when silver was more important to the photographic industry than it is in this digital age a company like Kodak might contract to buy a set amount of the metal a year before they actually needed it at a pre-agreed price. On making the contract they would traditionally pay a deposit – usually 10% of the total contract value. Before long it was realised that this was a way in which anyone – not just manufacturers – might make a great deal of money. How? Like this. Let’s say you think silver is going to go up in price. You pay ?10,000 to purchase a ?100,000 contract. If you are right and silver goes up 10% you make ?10,000 – doubling your money. On the other hand, if silver falls 10% you lose your ?10,000. And if it falls 20% you would lose an additional ?10,000.

You may have noticed that in describing these three different methods by which it is possible to make – or lose – a small fortune I have not once used the words ‘investment’ or ‘investor’. Spread betting, day trading and futures are all out and out gambles.

Melissa

Ben McGrath asked:




The first thing to remember is that trading is not a level playing field. Professional traders have a lot of advantages over the private trader. Despite the accessibility and availability of CFDs to retail investors nowadays, in general, the pros still win more often than the non-pro traders. Why?

The pros have:

Better access and information flow
Fund managers and institutional players spend significant amount of money to access market information. Most of these institutions are backed by large teams of researchers and analysts who constantly monitor the market. Professionals will almost certainly have a lot more information at their fingertips (or at the end of a telephone) than private traders. They will know a lot of people in the market and can formulate views by speaking to others.

Work as part of a team
Institutional players usually have researchers, analysts and other market specialists that work as a team to maximise profitability. The typical private trader is just that – a single person. There is nothing wrong with that of course, but a private trader has to do everything from making the tea to executing the trades. Often working in a team can help professional traders – much of the work can be delegated.

Huge amounts of capital
This is of course the single biggest advantage that a professional has. Often the money is not their own and that can make trading easier on occasions. Due to the nature of their business, fund managers and other institutional traders have easy access to millions of dollars of external capital not available to retail traders.

While institutional traders and fund managers have inherent advantages over retail traders, there are ways to level the playing field. If you are to treat CFD trading as a business (as you should), you must ensure that:

You have enough capital
There’s a well-known saying among traders that goes: “Don’t trade with money you cannot afford to lose.” Sometimes this is called ‘scared money’. If you are to trade (CFDs or any other instrument), make sure that you have enough capital and that you are not trading with money you are not prepared to lose.

You get real time charts and other tools
Access to information is vital in trading. You have to know what is happening in the market particularly if there’s a lot of volatility that may provide profitable trading opportunities. You have to know the exact price movements to be able to trade the trend. End-of-day data download will be useless if you’re trying to catch intra-day price movements.

You have the fastest Internet access you can afford
Broadband access has never been more affordable, so take advantage of this technology to enhance your trading.

You pay lower/lowest commission
Commission is a business expense and must be kept to the minimum. Even large institutional traders seek ways to pay the lowest available commissions.

You have a fast computer
Prices of computers have gone down considerably and you only need to spend a few hundred dollars to have a fast computer with enough power and storage capacity. Invest in a reliable computer and do not let technology get in the way of your trading profitability.

You use a professional research service
While you could have an information overload given the amount of information readily available on the Internet and other sources, it is wise to use a reliable research or newsletter service that may provide some guidance on specific trades or markets. Use these research services as a starting point to do your own research.

Judy