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Be A Market Trader
SPREAD BETTING ON money markets such as the FTSE, NASDAQ, New York Stock Exchange
offers unlimited profits, strategies to minimise losses, and numerous ways to make a profit in a short space of time. Here's how to get involved in this exciting form of gambling.
Spread betting was developed as a way of gambling on line movements in the money markets.
In recent years spread betting firms have made it highly accessible to the average punter,
as well as offering the chance to place spread bets on a variety of sports, including football.
This article deals with financial spread betting stocks market, which is one of the most
attractive ways of making a quick profit from gambling.
While taking serious money is something only those with real expertise should become involved in,
there is now no reason why anyone who likes a flutter, providing they have the cash to spare,
shouldn't look at playing the major markets of the world.
It's fun, there are plenty of safeguards in place to prevent losses spiralling out of
control and, if your judgement is proved right, huge profits can be had.
One reason why financial spread betting stocks market now offers the average punter good profit
potential is because the minimum stakes are now extremely low.
This is the case for the FTSE and all major world stock market indexes (or indices.)
Financial Spreads trading Limited, an offshoot of the highly successful Sporting Index Ltd,
offers stakes from £2 per point upwards.
Furthermore, on offer is a huge choice of markets and other betting possibilities, which can allow
you to take advantage of any specialist knowledge or insider tips.
For instance, as well as the FTSE 100 value and Wall Street markets, punters can also
bet on stock exchange movements from South Africa through to Hungary, Russia or Austria
(although generally this is best left to the professionals).
With Financial Spreads Stocks Market Traders Ltd punters can also bet on options, currencies,
commodities, government bonds, interest rate movements and individual shares.
To get involved in spread betting, all you have to do is get in touch with one of the many firms
offering spread betting facilities to set up an account.
It's possible to get involved via the Internet - Betfair former City Index spread betting
www.betfair.com or
Paddy Power Trader Spreads at
www.paddypowertrader.com
Or BetHiLo company at
www.BetHiLo.com -
sports spread betting made easy.
Both offer online spread betting facilities. When you open an account with a financial spread betting
firm you will be sent a folder of information explaining the basics of how to bet.
Let's now examine exactly how financial spread betting works, and how you can make some money from it.
How Does Spread Betting Stocks Market Trade Work?
When you bet on any of the world's financial markets you are essentially taking a gamble on which
way the market is going to go.
Take the FTSE-1OO index as an example. Imagine the bookie is quoting a spread of 6500-6525
for the January FTSE. That means they expect the FTSE index to be in that range by January calendar.
Say you decide to stake £5 per point that the index will be higher than that range when
January arrives. To do this you would place a buy bet.
If, when January comes, the market moves to 6540 you win £75
(6540 - 6525 = 15 points x £5).
If, however, the market falls to 6495, you lose £150
(6525 - 6495 = 30 points x £5).
What happens if you think that the index will be lower than the bookie's spread in January calendar?
In this case you would place a sell bet. If, come January, the market moved to 6475,
you'd win £125 (6500 - 6475 = 25 x £5).
If, however, the market rose to 6530 you'd lose £150
(6530 - 6500 = 30 x £5).
In any spread bet you must close off pressure, or terminate, the bet in order to collect your profit.
Your overall winnings (or losses) will depend on the quote given at that time. Normally, a spread bet on,
say, the FTSE (unless it's on the daily price) will apply for three months.
So, a spread bet placed in late October will expire, unless it's closed early, at the end of December.
Note that in spread betting you always "buy at the high and sell at the low". So, when you
place a buy bet you are in profit for every point above the top figure in the spread quoted when you
placed the bet.
When you place a sell bet you are in profit for every point movement below the lowest figure quoted.
The difference between the figures in the spread accounts for the bookie's profit margin.
Any bet is ended (also called terminated, or closed off) by placing an equal sized wager in the
opposite direction to the original. So a sell will end a buy bet and vice-versa.
Limiting Your Losses On Spread Betting Stocks Market Trade
Perhaps the main advantage with spread betting is that profits are unlimited.
However, the punter's main fear is that losses, despite the various safeguards iI place,
can mount up too quickly.
Spread betting bookmaker Financial Spreads attempt to assist here through offering their Select account,
where stakes as little as 50 pence a point can b placed, up to a maximum of £4 per
point.
Although Select punters can't be on the full range of markets, guarantee stop losses
(see below) are applied automatically with this type of account. Any of course, profits are still unrestricted.
One way spread betting punters minimise losses is by applying stop losses In other words, before
betting they will work out the maximum they can afford to lose.
If the market moves in the wrong direction they will terminate the bet at the stop loss figure,
ensuring the don't lose more than they can afford.
Here's an example. Imagine the bookie is offering a spread on the January FTSE index of 6500-6525.
You think it will be higher than that figure, so you place a "buy" bet for £5 a point.
Let's say that £400 is the most you can afford to lose, should the FTSE index not be at the level
you'd hoped.
So your stop loss limit if the market moves in the wrong direction is 6445, meaning you would
lose £400 (80 x £5).
Sn other words, if a future quote moves below 6445-6470 the bet will be terminated. (Remember,
with spread betting you sell at the lowest figure given in the quote.)
This method is useful if the mark goes against you. It can also be used lock in any profits so
that gains are guaranteed.
When you open a bet, the financial bookies will allow you to pier a limit order on it.
This simply means you can ask for the bet to be closed if reaches a pre-determined level of proof.
You might want to do this is to ensure that any gains aren't wiped out by the market subsequently moving in the
wrong direction.
Furthermore, you can ask for any bet, buy or sell, to be opened if your chosen market reaches a
certain level the future. This is known as a Forward Order.
Guaranteed Stop Losses On Spread Betting Stocks Market Trade
Since financial markets move extreme quickly, punters will place what's known as a "guaranteed stop loss".
These are a slight variation on the basic stop loss. Discussed earlier.
Normally, if you ask for a bet to be closed out at a certain level the dealers will do their best
to accommodate your wish.
However, in a fast moving market they cannot guarantee the stop loss being executed at the exact
level specified.
Thus, you may end up losing more money than intended. If you want to guarantee you don't
lose more than a certain amount, paying for a guaranteed stop loss is the answer.
Setting a guaranteed stop loss will protect yourself from losing more than you want to. Let's say
you place a sell bet on the January FTSE index for £5 a point, with the quoted spread
being 6375-6385.
You might decide to restrict potential losses to £500 through applying a guaranteed stop loss to the wager.
The spread firms will charge for this by slightly adjusting the figure the bet is placed at.
With Financial Spreads, it's three points. So, in this case the sell figure would be adjusted to 6372.
If you didn't want to lose more than £500 you could ask for the bet to be closed if a
future buy quote hits 6475 (again, remember you always buy at the high and sell at the low of a quote).
The maximum this bet could then cost is £515 (bought at 6475, sold at
6372 = 103 x £5 = £515).
The £500 is the maximum you'd pay if the quote went against you, and the £15
is the charge for the guaranteed stop loss.
With unlimited profits and ingenious ways to limit losses, financial spread betting has plenty to offer.
If this article has whetted your appetite, check out other articles on financial spread betting tips so
you can really rack up those winnings!
Free Bets
Glossary Of Financial Spread Betting Terms
- Buy - Placing a bet if you believe a market will move upwards. This is always placed at the higher end
of the spread.
- Sell - Placing a bet if you believe a market will move downwards. Always placed at the lower end of a
spread.
- Spread - The difference between the buy and sell price.
- Tick - The minimum point movement in a market.
- Closing a Bet - When a bet is ended through an equal sized wager being placed in the opposite direction
to the original (ie. a sell will end a buy bet and vice-versa).
- Filled - When a bet order has been carried out.
- Stop Loss - See article above.
- Gaps Through - If a market goes through the stop loss level specified by a punter without the
stop loss being executed. This can happen in a fast-moving market.
- Guaranteed Stop Loss - Avoids a market gapping through (see article above).
- Margin Call - The cash amount required covering an adverse bet when a credit or deposit account limit has been breached.
- Last Day of Dealing - The last day on which a punter can open or close a bet in the relevant market.
- Cash/Spot - The current level of an underlying market.
- Contact Note -
- - A letter sent out which confirms bets placed.
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