Posted by Billy Edward on December 8, 2010
Having first dabbled in shares in about 1994 as a way of bettering my C&G savings account, I understood I could do it and would find it interesting (made 24% in year one and 20.4% year two, only using teletext, Investors Chronicle and no computer).
I’d constantly fancied giving up paid employment by 50. That was looking like a pipedream, as I never made any surplus cash from any job I ever had (never volunteered to do overtime, never chased bonuses – favored gardening).
At 49, the firm I worked for got bought by Americans of the type which make good Americans cringe. Time for a sharp exit. The only way I could increase capital to set up in business by myself (or to buy a cheap franchise) was to sell my modest terraced home in a S.Warks village, pay off the mortgage, downsize to something barely habitable in a very very cheap area, and invest whatever was left. That took me a year to arrange, where I attended numerous franchise exhibitions and weighed up every type of business on every page of the Yellowpages, no matter what field. Also, read some inspiring articles regarding individuals who had discontinued day jobs to become investors or traders. They all started out with much more capital than the 25k I thought I would likely have. Cheapest houses were in rundown ex-mining areas (E.Midlands and S.Wales valleys) and were a very dismaying prospect.
A headline in a Sunday Times article caught my eye; “If you thought house prices were rocketing – here is 10 which sold for under 10k a week ago.” One I think was a 2300 sale in London (wedged between railways – “You can buy it on your credit card”), a couple in Notts, most in South.Wales. Advantage to me of South.Wales was proximity to coast and hills and rivers. Did not fancy any of the really dismal 8k valley terraced ones, but pondered if any estate agents with that low cost mindset handled properties simply outside those areas. Made full use of the company car, driving back and forth around the south side of Brecon Beacons National Park between Ammanford and Abergavenny, and sure enough – agents south of that line priced their properties north of that line much lower than did the posher agents in Llandeilo and Abergavenny. Ended up buying a 3bedroom detached house with forecourt parking and big back garden sloping down to a small river, 20 miles from the sea, 200yds from the park, for 23k. Scruffy and not completely watertight, but habitable. Had steered clear of the job with seven weeks to spare before 50th birthday ;o)
The only worthwhile franchise prospects involved were too great an outlay, and would just work for a person prepared to put in far more effort than I could muster enthusiasm for. Various other ideas had come and gone. Thus despite warnings that I was much underfunded to do so, I went with trading shares. At that time (Xmas 1997) we were seeing online brokers chopping their fees and finance sites providing new access to facilities, so it was clearly becoming a lot more practicable. The overheads and regulatory costs involved in every other business were greater – in this they’re minimal. Having no customers or employees to worry about is an enormous advantage.
It seems to work.
Getting the best information on Spread betting is no easy task nowadays. If you are looking for more information on Spread betting, then I suggest you make your prior research so you will not end up being misinformed, or much worse, scammed. If you want to know more about Spread trading course, go here: Spread trading course
Posted by Billy Edward on December 7, 2010
Spread betting is probably the simplest form of derivative trading around and is certainly the most tax-efficient. Spread bets permit you to bet that the price of an underlying asset (a share, commodity or index) will rise or fall. What this means is that you could hedge your existing holdings, maybe betting on a fall in the FTSE 100 to offset the risk of a fall in your UK portfolio.
You could likewise use spread betting to speculate on your view of an underlying asset (a share price or index level, for instance), either trying to profit from a falling price or expecting to make enhanced gains from a rising price. Betting on falling prices is called ‘going short’, whereas betting on rising prices is named ‘going long’.
The wonderful advantage of spread betting is that gains are completely free from tax. This means you don’t have to pay capital gains tax at 40 % (for higher-rate taxpayers) on gains over the annual exempt allowance, which is currently 9,200. On the other hand, you cannot offset any losses from spread betting on gains made elsewhere.
Spread betting is also very flexible and permits you to select risk levels to suit your own circumstances. The reason being the higher the degree of gearing (magnification) you use in the hope of increasing returns, the more your profits or losses will be enhanced.
For example, you could set your gearing level at 10 times (10-1), where your profit or loss would change by 10p for every point move in the FTSE 100 index. If you were more confident (or could endure to make a greater loss), you could gear up by 1000 times, where every point move by the FTSE 100 would create a 10 change in the value of your bet.
Although spread bets can be kept open for several months, you must leave a deposit (referred to as margin) with your broker. A typical minimum margin level would be about 2,000. Nevertheless, if you are making a loss on your position, you need to top up the margin every day – although you don’t have to keep the bet open for as long as you intended at the outset, of course.
If you bet on a rising price, you can make unlimited enhanced profits. And, if the market moved against you, your losses could be enhanced but capped, as the underlying price could fall no further than 0p.
However, if you bet on a falling price, your potential profits would be improved but limited. And if you bet on a falling price and it rose, your losses could be unlimited – hence, the need to top up your margin (on any day you lose money) acts as a break and could force you to close a disastrous position, instead of accumulating huge losses, which would only be settled at the close of the bet.
You can likewise restrict your potential downside by setting a stop-loss with your broker. This would close your position, if the underlying price moved against you and past a predetermined level (falling 10 % below its opening price, for instance).
Stop-losses shouldn’t be set too tight, however, because the underlying price could move against you before changing direction, so you do not desire to be closed out too early. You can likewise use a trailing stop-loss, which keeps the same percentage-point distance yet follows a rising underlying price up in a bull market, allowing you to lock-in some gains.
Spread-betting providers set their own spreads, which are not necessarily the same as the bid price and offer price for an underlying share. Thus spreads can be set much wider for spread betters (even though, in theory, competition between brokers should keep spreads fairly tight).
In reality, though, underlying spreads on some shares could be as wide as 5 percent, even though they’re usually much tighter for large, frequently-traded shares. It is because the wider the spread, the larger the movement needed by the underlying price for the bet to pay off.
You go long with a spread bet by ‘buying’ the underlying asset at its offer price and close it by ‘selling’ at the bid price. To go short, ‘sell’ the underlying asset at the bid price and close by ‘buying’ at the offer price.
The only difference is in foreign-exchange trading, sometimes known as forex, which is a form of spread betting. Currencies are at all times shown in pairs and you buy the one you think will perform better. For example, if you think the dollar will fall relative to sterling, you need to buy sterling (versus the dollar).
To conclude, spread betting is great fun, and almost anybody can take pleasure in the odd bet now and again. But when you want to make money from spread betting, then it must be taken seriously and a disciplined and tactical approach is required.
Getting the best information on Spread betting is no easy task nowadays. If you are looking for more information on Spread betting, then I suggest you make your prior research so you will not end up being misinformed, or much worse, scammed. If you want to know more about Spread trading, go here: Spread trading
Posted by Billy Edward on
Trading (spread betting) shares for a living. There are many outcomes I wish to achieve in my life and there are numerous outcomes I have already accomplished. What usually occurs is the outcomes continue to keep ,getting bigger the more I achieve. This is a great sign that I’m doing something right in my world. Over the years, I’ve heard a lot of people say, keep it real and keep your outcomes realistic and achievable. Yes make them achievable but when it is achievable, it is not unrealistic. Let me share a story with you going back to 1998:
I was elated as I had achieved my dream of making more than 30,000, on paper, on the stock market. I had been investing in shares since 1998 but I soon found I loved the thrill and started day trading. I lost a whole lot in the beginning, about 4000. I set myself an outcome of making 100,000 and aimed at it for weeks. My balance began changing from being in the red to being in the black. I upped my trading game and started playing the markets utilizing spread betting. Within the space of a few months, I was getting nearer to my outcome of 100,000. However as soon as I started going from a deficit to making a profit, I stopped concentrating on my outcomes. The tech market really was flying and I was feeling on top of the world. I was skipping university (one of my other goals was to get a degree in psychology) to stay at home and day trade.
I remember one day I had 100,000 in shares, again on paper; I was trading on a 14 day contract. Then the tech market began falling. I panicked but thought it’ll turn again, this was just a blip. Quite soon, I couldn’t get rid of my shares as nobody was buying; they were all selling. I wouldn’t sell for the ridiculous amount they were offering. Then the realization of the market being in meltdown struck me.
Eventually I went bankrupt to the tune of 65,000 and it was not a good feeling by any means. I left with an education in money and a degree in psychology; I was able to get my degree in 2000. That was the year which changed my life forever.
So, in the last 4 years or so I have been reading trading books, watching seminar videos and DVDs and learning as much as I could with regards to financial spread betting.
I’ve seen loads of Vince Stanzione’s seminars – the 2000 and 2002 events from Milton Keynes, the “Seven Keys Seminar” from 2004, the Ed Downs and Martin Pring one day session from 2004, the huge two-day “Masters” workshop. I’ll confess, I got hooked on the learning process.
Therefore, I have chose to start spread betting again but this time in a very boring, business-like and professional way.
Now I trade more or less full-time and I have made a website about trading which includes a commentary of my daily buys and sells to demonstrate to other people that it’s possible to make a healthy profit from spread betting. One thing I don’t do is encourage people to blindly follow me particularly as I use momentum which means prices could very easily have risen before anything is published.
The idea is that I will update you on my progress by way of this website, and that way, you can send me comments…etc and see how much money I (hopefully) make.
CEO Andy Richardson said that “The aim and wish with this new web site is to build an online community, where people could get advice, meet other traders, have a moan, or even tell lavish stories. Its success will be determined by the involvement of its users.”. The future is to form regional groups and promote the industry in an even more economical approach.
Spread betting is a tax free, cost effective alternative to traditional share trading. It allows you to speculate on the movement of stocks and shares without utilizing a stockbroker, for that reason, you don’t need to pay commission or fees. UK residents benefit further still because your profits do not incur Capital Gains and Income Tax. In this way, you can sell or buy to take full advantage of profits in volatile markets.
Getting the best information on Spread betting is no easy task nowadays. If you are looking for more information on Spread betting, then I suggest you make your prior research so you will not end up being misinformed, or much worse, scammed. If you want to know more about Spread trading, go here: Spread trading
