Module 2

Welcome to your second module of the Trader Training program.

In this your second module. you will learn why many of the myths and stories banded around not only by normal everyday people, but also by the press to some extent, are indeed wrong. You will understand the basic concepts of trading in spreads, the terminology and the tools you can use. To actually understanding the practice of making a trade and reducing your risk and safe guarding your profits.

  1. The Myths of Spread Betting
  2. Basic concepts of Spreads
  3. How to trade spreads
  4. How to reduce risk
  5. How to lock in profit

There is a massive wealth of information on this site, be sure that you check out everything and of course if there is anything that you’re unsure about, whether that be your understanding of the techniques we use, or a certain aspect of the site. Then please let me know via the support system online. OK, let’s get going with your second module.

Basics of Spread Betting

Financial Spread Betting

In a short space of time we have covered quite a bit of information. I hope so far that you are still hungry and keen to learn more, and have also realised that it’s not really that hard to learn enough about the markets to begin trading. We have covered some important areas, which leads nicely into what were going to talk about now – Financial Spread Betting.

There’s been a great deal of negative talk about financial spread betting over the years. Sadly the media and many of the rumours have been blown out of proportion. As a result many people decide not to look at financial spread betting as an option, let alone as a real chance to add to their current income or indeed in some cases increase it 10 times over.

Therefore, I think I should begin with dispelling a few myths that seem to be circulating and have heard mentioned here and there, mainly started by people who know nothing about it and who are being incredibly ignorant.

Spread Betting Myths

Spread Betting is too complicated, I just don’t understand it!

The reason being this, is quite simply you have not given enough time or patience to fully understand it, and it is nowhere near as difficult as some people make out, it’s alarmingly easy in fact. So don’t be put off by the jargon you read about in the tabloids: spread betting is easier than it sounds.

Spread Betting is something every speculator should know how to do, otherwise, you can’t even begin to understand, what you are missing. I’ll go as far as saying, those who keep using the traditional stock brokers are living in the dark ages, and denying themselves so many more opportunities to earn good profits.

Nobody Wins at Financial Spread Betting!

Well if that was the case then nobody would do it and least of all the major institutions. If people weren’t making serious money then there wouldn’t be a market for it, indeed a market that is growing at an incredible rate. There does have to be winners and losers, else the whole concept wouldn’t work. Current estimates show that almost 90% of those that ‘Play’ (we’re not playing) the financial spread betting markets lose their deposits or close their accounts within 3 months. The fact is that 90% of people getting involved with financial spread betting do so without any real plan. They just blindly throw their money in anything that seems to be going up or down (mostly up) and foolishly believe when they’re losing money that the tide will turn so add more money to it, or trade the opposite direction. That in itself is a real losing strategy in my eyes. There are ways to what is called ‘Hedge’ but don’t do it blindly to recoup a loss. Before they know it they have lost their deposit, returned to the pub and complained that it’s all a con.

Do Spread Betting Providers Manipulate Stop Loss Levels?

Now this is where it gets interesting. Looking at the fact that a high percentile are losing their deposits, we move to the 10% who don’t and in fact make all the money the other 90% are losing. Sounds very cut-throat and I suppose there is no other way to call it, it is simply profiting because someone else is losing. You are profiting and you will do, don’t forget you will have losing trades too, because you are in the 10% who have a real trading strategy and not some toss of the coin investment technique. So take heart in the fact that what you have wisely invested in as regards reading these modules and our site will arm you very well, so that you can make the educated choices of trade and not do it blindly.

It’s Futures & Options

NO! There are similarities, but they are not Futures or Options contracts at all, they are very different things. For instance to invest or trade in Futures and Options you need a great deal of money and know your market well. Some people that have been very successful with financial spread betting and do sometimes move to Futures and Options as there are some things, which are similar, in that they are all highly geared and the power of making money is the leverage, and you can make money when the price is going up or down. That’s about it! Futures and Options especially are highly complex and I would discourage you from trading in them for a long time yet. Regardless of the amount of money you may have now to begin trading.

I will point out though that financial spread betting prices are usually linked to that of the Future/Option market for that particular stock/Indices. So in effect you are getting the best of both worlds. The potential profitability of Futures & Options but without the huge amount of ready cash required to trade.

Also, because most of the time the financial spread betting bookmaker is linking their prices to the Futures markets – the prices that you see quoted are somewhat out of sync with the actual Index or Stock quote. Don’t worry I will talk about this later.

You need to wealthy to begin with

Perhaps that was true in the early days, but that is certainly not the case now. You can open an account with as little as a £100 GBP. Now that isn’t going to break the bank and of course trading with that amount is not going to make you wealthy – no matter how well you do. What it will allow you to do is to learn how to trade. That’s what I want to show you to begin with. That’s why when we get to the point of opening an account, I only want you to open one with the bare minimum and I will show you exactly where you can do that and how.

When you have begun to prove to yourself that you have the techniques and knowledge to learn to trade, then and only then would I suggest to begin to add to your deposit. Only when however, you have proved to yourself that you can make regular profitable trades. Up until that point, just use the £100 GPB Let’s not run before we can walk and by doing so are guaranteeing that we’re not going to lose the shirt off our backs and this stops you from worrying about it too much. Before we even start to trade with REAL money, you would have had a couple of months virtually trading with one of the many virtual accounts that we have listed and ready for you to join. Don’t do that just yet though. Learn the techniques and study the modules at least once before you even start virtually trading.

Very few people Spread Trade!

That is rubbish. At present in the UK alone, there are over 50,000 people who have a financial spread betting account with one of the leading financial spread betting bookmakers. Plus, there are more and more financial spread betting companies entering the fray every month. The market is booming. I think it’s because of recent events with people’s own investments, help in pensions etc. People have realised that the institutions really aren’t doing a great job of it and that they can easily empower themselves and do it their own way. Also, there is more and more written about financial spread betting every day, so many of the rumours are starting to dispel. Plus, you name me any other method of making money from markets when they actually go down as well as up! So slap yourself on the back for taking that first REAL step and learning more about a way that CAN make you wealthy.

If it was that easy why isn’t everyone doing it?

The fact of the matter is that quite a few people are doing it; it’s just that not many people actually shout about it. Namely for the previous reasons mentioned before. That is why I suggest to you; prove that you can do this first by using a virtual trading account, then move to a small margin with one of the financial spread betting companies I will tell you about later. Only when you have become totally comfortable, confident and making profitable trades would I even suggest that you start telling anyone about this.

A great deal of your success in this game is your attitude to having winning and losing trades and you will have your fair share of both. The last thing you need is a member of your family or close friends asking you how you’re doing, and you say that you have lost a few trades. Their negativity alone will knock your own confidence. So do me a favour, in fact the only one I am going to ask you to do. KEEP YOUR MOUTH SHUT!

When your friends etc. see you driving around in a flash car that you bought for cash, then maybe tell them about it. Don’t be surprised however, if even then they don’t believe you. Remember, most people only believe that there is one way of making money and that is to have a job that they don’t like and will spend forever complaining about.

There are millions of myths surrounding financial spread betting. I’ve just pointed out the key ones that seem to be bandied about these days. Pay little attention to them. Stay focused on what you need to learn. It’s not that hard, it just requires a little bit of thinking and once you grasp it, you will wonder what all the fuss was about.

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