A: There are two forms of currency spread betting: The first is the value of a currency on a future date, and the second is a daily rate spread also known as a 'on the spot' rate which is intended for very short-term trading. The spread price for a daily rate currency is much lower that a future date price. At the time of writing, the financial bookmaker will quote a 24 point spread as opposed to a 40 point spread for future rates.
If you imminently expect a big move in the markets, then a daily rate is best. But I must stress that it has to be a big move. Even a move of 24 points in a day is fairly uncommon but a 40 points plus movement over say a couple of months is much more likely.
More information on using spread betting to trade currencies is available spread betting currencies article
A: The caution is the speed and especially true of the big pairs. I freely admit to reading the chart spot on for about 80% - 90% of the time and then losing on the trade because of the whipsaws, you HAVE to have large margins and take profits frequently and losses are less that way... but we all trade currencies with a bit of fear... that's a large amount of dosh you are handling! It IS exciting and it can be VERY rewarding - but its dreadful for the stress levels at times!
In short... trading currency is dangerous... should have a health warning on the trading ticket!
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A: A carry trade is when a trader borrows from a currency where the interest rate is low, such as Japan and then converts it into a higher yielding currency such as USD, GBP or the CAD. The difference is called the carry.
Trading a forex pair is akin to buying the currency of one country, and selling that of another. Every country sets its own interest rates that it pays on money, and there are, of course, not only wide disparities among the nations of the world, but everybody's rates are changing all the time.
Now, whenever you buy the currency of one country, you effectively own that money, and you are entitled to receive interest on it at the going rate. Conversely, if (or when) you sell short the currency of another country, you actually are 'giving away' their money, and you are obligated to pay interest on it as well (at whatever rate that country charges). As an example, if I were to go long the Dollar-Yen Forex pair, I am actually buying U.S. dollars and selling Japanese yen. And I would be entitled to collect interest on my Dollars at whatever interest rate the United States Government happens to be paying. And at the same time, I would be obligated to pay interest on the Yen to whomever I sold it to, at whatever rate the Bank of Japan happens to be paying on its money. Since Forex trading always involves the simultaneous buying of one currency while selling another, this situation always exists to some degree on every trade that we ever make.
Now, when I say that I am entitled to collect interest on the currency I own and required to pay interest on the currency I sell, the question arises: who is on the other side of the trade? Who pays me the interest that I am entitled to, and to whom do I have to pay out interest on the money that I sold? And without getting into the legal aspects of international counterparty financial transactions, the answer is that it's your brokerage firm which both pays and collects this interest.
For every day that you hold a position, your brokerage firm will look at which currency you are long, and will pay you interest on your money, and they will also look at which currency you are short, and will charge you interest on that money. And simply depending on which country has the higher interest rates, you will either make or lose money on this deal.
This is my take on the JPY to NZ$ carry trade, which pretty much sums up all of them with the Yen  
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A: Your question is a little vague but I may be able to point you in the correct direction.
Firstly, all trades you enter should be part of a larger strategy, whether discretionary or mechanical, and so the outcome of each trade shouldn't be a big deal. If you find yourself getting upset about a single trade, you probably either risked too much capital on it or it was not part of a repeated strategy. If you took the best strategy ever created, waited for 1 signal from it and judged it based on that then it would be no better than any other system!!
Spread Betting makes it very simple to trade forex - the stake simply represents the profit or loss for every pip the forex pair moves. So if the Euro is currently at £0.9430, a spread better who was of the opinion that the Euro would continue strenghtening would buy a rolling daily EUR/£ bet for a stake of say, £1 per point which would be equivalent to a market exposure of £9430. If the rate rose to 0.9640 and the trader decided to close the trade this would translate into a gain of £210.
You really want to aim to get a methodology that you can be confident will give you a positive expectancy over a large number of trades. This way, when you enter a trade, you actually are not too bothered about what happens to it. If it goes against you, you just know that it was one of the 40% (or whatever) that doesn't go your way.
However, if you are having the problem of picking good trades but often getting stopped out before it has the chance to go your way, there are two possible things that you may wish to consider.
If you are using IG Index make sure to contact them and remove the guaranteed stop loss (which is the reason that the spreads appear so high.
* Are your stops too tight for the time frame on which you are trading? If you are generating signals that you expect to come good over the next day, for example, then your 30 pip stop may be too tight.
* Is there anything you can do to time your entry a little better? It sounds from the example above that you may have seen the major move coming, but you may want to think about how you can time the entry better, maybe by dropping to a lower periodicity in the chart.
Anyway, I hope this helps in some way. Keep at it.
Hope that answers some of your questions but feel free to send me queries, comments or concerns at traderATfinancial-spread-betting.com or by filling in the form below :-)
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