Spread Betting

Spread betting is not in effect a true form of “traditional” trading, though it appears fundamentally identical, the risks are no different, in effect you are only betting on the underlying price movement of the financial instrument.

Some brokers even offer guaranteed stop losses.

Guaranteed stop losses offer protection even when the underlying instrument being traded “gaps” or moves against you, you stand to lose no more than your initial risk.

It is classed as “betting” as you bet on the price movement of the underlying financial instrument and these range from stocks, commodities, indices, Forex etc.

Could you have spotted the opportunity in the Forex chart below?

All conditions had been met if my charting techniques were applied to the above chart..

This method of trading has become hugely popular in the UK.

Winnings are tax free, there is no commission when placing a bet it will only cost you the dealing spread.

Spread betting is more suited to short term trading rather than long term investing.

You do not require a huge amount of money to spread bet, an example is you could bet on the DOW (day trade) with as little as £1 per point (pip) for a deposit of £100 or less.

You can bet on rising as well as on falling markets go “Long” or “Short”

Be warned that it is is a highly leveraged product you must know what you are doing or understand the risks or your losses could exceed your initial deposit – and guess what…you could end up getting a margin call!

The brokers are not true brokers but in effect are nothing but bookies or as some would call them “bucket shops” and they do manipulate the underlying price - in other words what you get is not a true reflection of the market price but it is near enough.

Most if not all are regulated by the government in the UK.

It is considered illegal in many countries, if you are not a UK resident you will need to check your legal position first before you venture into it.

It can be a very lucrative product if you have the trading edge, you can bet online, you do not need to speak to a broker on the other end of the phone.

You also do not have to sit and watch your trades, many brokers now offer an automated trailing stop which you can set allowing you to lock in profits if your trade or bet is moving in your favour.

If you are a new to spread betting, I would suggest you open a demo account in order to practise, when you build your confidence start placing your live trades or bets with a guaranteed stop loss at all times.

Most brokers provide their members with a somewhat reasonable charting package at no extra cost and in my opinion; this is more than adequate for this purpose.

Learn my strategy and charting techniques start with a demo account for at least a month, this way you can test my method before you lay down your money.

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