Spread Betting Educators and Free Trading Seminars

Q. What are your thoughts on free trading seminars?

There seems to be a lot of free trading seminars about these days and I even got one through the post this morning, free seminar on property investment, in my home town! Imagine that, how lucky can I be?

A: Most free stockmarket seminars are merely tasters, at which you are shown sufficient to try and persuade you to sign up for a paid seminar, but no more than that. One or two of those paid seminars are useful but the majority just soak up cash that you could have invested instead ;o) You could of course go to every free seminar going; you never know who you are going to meet and what you are going to learn. Just leave the credit card at home and have a bad case of dyslexia when asked for an email address.

A while back a company that ran 'free seminars' asked if I would be one of their 'presenters' - I went along to see them in action just for fun as I had no intention of doing it. They were complete rip-off artists. None of them traded. They wanted me to 'close' the deals. i.e. sell £3,000 courses to those coming to the free ones. I of course declined but it was an eye opener.

I think most seminars are rip-offs and trade on people's greed and make them think they can make loads of money fast when that is not true. It takes time to make money. And no system ever works long-term. But put the graft in and take time to find your feet and be sensible, then it is possible to make some serious monies.

Q. A spreadbetting training company will give me a 2 day course for £2200. And a monthly subscription service of £90 a month!

A spreadbetting training company will give me a 2 day course for £2200, when I started looking at their website they do a monthly subscription service of £90 a month. But they have some really good tipsters in the business the last tip was Tullow oil when they tipped about 6 months it was £4.50 and now its £7.00 well the margins are brilliant. And on the spread they are making a lot of money to lots of people. Any thoughts?

A: In a phrase: They're taking you for a ride.

You have to ask a trading mentor/coach/signal service, if they're so good, why are they wasting time teaching people asking the same idiotic questions for what should be a miniscule amount of their trading income rather than sitting on a yacht in the Bahamas being massaged by two blonde bimbos. And if they 'wanted to help people' why are they charging £2000 for a weekend course?

Tullow oil @4.50, spread 4.47-4.53;

If you think Tullow oil will rise in price place an up bet at, say, £10 per penny at 4.53. Price goes to 4.86 and you get out;

Profit = 4.86-4.53 X £10 = £330.

If you think they will fall in price place a down bet at £10 pp. You decide to cut your loss and get out at 4.86;

Loss = 4.86-4.47 X £10 = £390.

Note how the spread works to give the spread betting merchant their cut.

Tips will be of no more value than those given in penny share rags. Some will outperform the market and some will underperform. On average they will do about the same as the market.

Please feel free to contact me to arrange mailing of cheque for £2200. If you want to send me a further £90/month I will pick some shares using a top-secret patented method for guaranteeing only winners are selected and pass these to you in a covert way.

Good luck (which of course you won't need if you go with my special tips)!

Side note: Everyone has a different approach to investing or trading and each person should go with what they're comfortable with. I personally use mainly lots of research and number crunching with a tiny bit of chart analysis. I have also trading fairly successfully on nothing but sentiment. What I would not be happy with is some fast-talking Johnny giving me blind tips to back. If they were that good they wouldn't need to earn a crust by trying to dupe personal investors. I, and I'm sure most would agree, say ignore them and spend the time on serious research. And really it is not speculative tips you want - it's a proven system, along with a rigid money management system, which you always stick to. Surely you want to get into the market before any tips come to light.

If you want to "invest" £2,200 learning about spread betting - I'd open up a spread betting account and deposit my money there.

Decide how much you want to lose "per bet", as a starting point - say it's £100.

Decide how much you want to bet "per point" - say £2.

In this example, this means that when you open a bet at '2 per point', your closing position should be 50 points below or above the open (depending on whether you are long or short).

Under this scenario, you will be able to suffer 22 consecutive losses (i.e. 22 x £100 = £2,200) without running out of capital.

If you are wise, you will ALSO establish your 'limit gains', i.e. how much money you want to make per bet.

I think that you would be wasting your money going to any training on this, because the most difficult thing about spread betting is your mind-set and the psychology of spread betting! What I mean by this is how you feel, and what you do when you incur losses, and how you feel, what you do when you make gains. Too many people take their gains too early, and suffer their losses for too long.

If you are to learn to trade, expect a long learning curve (18 months minimum). If you are, expect to lose lots and lots (this may just be the initial deposit but if you think you're damn hot, expect to lose your house, too). If you think you can do it in a month, what makes you so special?

If you do choose to spread bet using real money - you will understand what I mean. Make sure you have your stop losses and limit gains set before your place your bet, and become detached from your emotions.

I have been regularly spread betting shares for a number of years, and now all I see is numbers on the screen - it doesn't relate to real money at all - and that is what you need to achieve to become successful.

A final word - Capital Preservation is the key - if your bets are not structured in the correct manner, or you get too emotionally involved, you could lose a shed load of money.

Ayondo offers a demo account - and this is a very good thing to try out - because it does mimic real trading with real time bets...etc

ETX Capital on the other hand will credit you with a £100 top up when you open a real-money account to spend on trial trades, so you can familiarise yourself with the platform - this does away with the problem that a demo is sometimes different to the trading experience customers received after they have signed up for a 'real' account.

Once you start with a spread betting firm, and are rolling over trades from day to day, do check the costs to roll-over. For example, shorting with Capital Spreads gives you an income on roll-over (whereas IG Index incurs a cost). However, going long with IG Index might be better, because it costs less than Capital Spreads.

Good Luck - and remember betting is a zero sum game - can YOU beat the market?

Q. Is it a good idea to take a course coaching you about spread betting costing well over £2000 which teaches you to work within 1% of risk of losing?

Is it even true at all that mathematically there is such a thing as 1% risk?

A: If for the 2k you get a fool-proof route to Major Moolah, then just maybe... But this is not going to happen, so in all likelihood the money that could be better spent elsewhere... I suspect that they will offer you no more than you could find in a few books or a bit of Internet searching; background info on all the basics of how spread betting and market workings, explanations of technical indicators, and basic trading concepts, patterns and terms, is readily available free from my website. Many trading coaches either don't trade themselves (some tried it and failed), or have worked for institutions but not traded full time for themselves, and not all will tell you the truth about whether their methods can really make money. It's often fairly safe to give them credibility in inverse proportion to how loud they shout and how good they say they are. Promises that sound too good (i.e. get rich quick) almost inevitably are. Some educators charge $'000's for this same info in relation to spread betting, and you still don't have a good trading plan at the end of it.

As for the 1 per cent risk, this is called position sizing - the idea is that, for every spread bet, a stop loss order is placed at some level to protect you if you are wrong. One then adjusts the size of the position so should the market turn against you and the stop loss is hit, the maximum loss per trade is set to 1% of your account.

In my opinion, you will receive a much better education if you learn to develop your own trading system and tactics, building on what others have done before you. Practice on a demo account, then go live with your 2k. If your maximum loss per spread bet is 1%, you will have to lose 70 times in a row before your trading capital is halved and this would imply that you have to get it wrong right from the start. If it comes to this, you have learnt that trading might not be for you, and it's only cost you a thousand quid.

If I was starting again, I would try to find someone who is actually making real money consistently for sure (don't take their word at face value, some people lie about this), and ask them how they learned what they do. There is a great deal of counter-intuitive but vital psychology involved in trading the markets (I'd suggest starting with Trading in The Zone by Mark Douglas). All professional traders I've spoken to say that good psychology and money management plus simple logical reasonably effective trading methods works better than the 'Holy Grail' of complicated trading schemes and indicators on its own. I've been there and bought the latter - they're very pretty and make you believe you must be trading right, and most are an expensive waste of money. Trading plans that involve buying the author's expensive indicators are usually a waste of money, because there's little that's new in the world of indicators - some are just dressed up overpriced versions of open source indicators you could get for free on this site (and some indicator writers are kind enough to post their indicators here for free).

One other thing - if anyone calls themselves a 'Master', or a 'Guru', be very wary, some are very persuasive people, but only masters at emptying your wallet. If you're a natural gambler, or at the other extreme, find losing money very painful, you may find trading isn't for you. Be aware that everyone in the market, and a high percentage of those around it, wants YOUR money, and many are well equipped to take it. Everyone I've met who trades for real says it's one of the most difficult things they've done, but it's fascinating...

 ...Continues here - What is your take on Advisory Brokers?

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