These days, I’m regularly receiving questions regarding spread betting from some of you. Since I thought some of them might be of interest to our visitors I’m publishing the answers which I’ve researched here:
Basics : Spreads Q & A : Advanced FAQs : Spreads Q & A : Derivatives : Market FAQs : More FAQs : Stop Loss FAQs : Expert FAQs
There are two ways to browse through the questions – either use the Index lists above or browse through the FAQ sections below. We will be adding more questions in the next few months.
What it Is
What is Spread Betting?
Why is it called Spread Betting?
Some Spread Trading Examples
Derivatives and the Origin of Spreadbets
Is it Really Tax-Free?
Is Spread Betting Gambling?
Trading Risks
Spread Betting for Beginners
Is Spread Betting for you?
Is this OK for a Complete Novice?
Pros and Cons
Pros and Cons of Spread Betting
Trading from the EU or USA
But aren’t they just Bucket Shops?
FTSE Futures, Financing and Margins
FTSE Futures and Market Trading Times
Questions about Margin Requirements
Betting on Stocks, Rollovers and Margin Calls
Questions about Margin Calls
How Providers Price Individual Shares
Betting on UK and US Stocks
Questions about Rollovers, Quarterlies and More
Currency, Forex and Gold Spread Bets
How to Spread Bet Currencies and Forex Pairs
Currency Spread Betting more Risky?
The Workings of the Carry Trade
Speculating on a Recovery of the Pound
How to Get Exposure on the Yen
Spread Betting on Gold
Penny Stocks
Trading Penny Stocks
Spread Betting on AIM Stocks and Small Caps
What is the ISDX market?
Why do Penny Stocks & USA Shares have Wider Spreads?
Pricing Futures, Cost of Carry, Fair Value & Trading Out-of-Hours
How the FTSE/Dow Future Spreads are Priced
Trading After-Hours/Out-of-Hours Implications
Pricing of Rolling Bets Out-of-Hours
Systems Testing, Fair Value, Cost of Carry and More
Do firms ban Winners &/or Skew Prices?
Do Spread Betting Providers Close Winning Accounts?
What about Binary Betting Firms Closing Accounts?
Are Spread Prices ever Skewed?
General Stock Market Workings Questions
Analysts Jargon, Underweight, Neutral and Overweight
Preference Shares and Share Splits
Yield, Ex-Dividend and Record Date
Promotion and Relegation of FTSE Stocks
Mergers and Takeovers
Buybacks, Debt, Placings and Profit Warnings
Housebuilders Priced below Book Value and REITS
Why are Shared Ownership Schemes usually a Bad Idea?
Risk Grades, Price Monitoring Extensions & Capitulation
Bonds, Gilts and LIBOR
Bonds and Credit Ratings
Depository Receipts and Index Linked Gilts
LIBOR and the Bank of England
Betting on Interest Rates
Strategies and Money Management
Adding to Winners & Cutting from Losers
Money Management is KEY in this Business
Using Charting Tools to Predict Future Price Movements
Level 2/How Interest Rates affect Stock Prices
Level 2 and its Workings
Stock Market Workings and Market Makers
Why do Market Makers Exist?
How Interest Rates affect the Prices of Stocks
Using Spread Betting as a Hedging Tool
Using Spread Bets to hold out Longer Term Positions
What is Hedging? Hedging a Spreadbet
Using Spread Betting for Hedging Purposes
Hedging the Sterling against the Dollar or Euro
Hedging Against Market Crashes
Expatriates and United States Residents
Leveraged ETFs, Oil stocks and Housebuilders
Oil stocks, Contango and Backwardation
Why you should be wary of investing in a Leveraged ETF
Wine as an Investment
Living from Spreading & Preventing Addiction
CMC Stop Spikes and Why Most Traders Lose Money
Making a Living from Spread Betting & Trading
Why do so many Spread Bettors Lose Money?
Addiction and why so many Index Traders end up Losers
Successful Traders
Attributes for Financial Spread Betting Success
Money Management and Risk of Ruin
Getting Rich Fast from Trading?
How much Time do I need to Dedicate to Trading?
Bad Shopping Habits – to Spend or to Invest?
Long Term and Passive Investing
Having a Trading Plan is Fundamental in this Business
KISS Trading Strategies: Is Simpler, Better?
Developing a Trading System/Strategy
Dollar Cost Averaging: A Flawed Strategy
Is Trading Zero-Sum or Negative Sum?
How Important is Luck in Trading?
Does Compounding Really Work?
Sell in May, Buy Back in November. Fact or Fallacy?
Making A Good Income Spread Betting from a Small Pot?
Becoming a Millionaire Spread Betting?
Why do so many Traders Lose Money?
The Basics
Why do Spread Bets have an Expiry Date?
Spreadbets versus Share Dealing
The Benefits of Leverage (and the Risks!)
Going Long and Going Short
What is a Point/Pip/Tick?
Initial and Variation Margins
Trading with Smaller Stakes or Limited Funds
Calculating Exposure and Closing Positions
Is Demo Trading identical to Trading for Real?
Minimum Deposit and Credit Betting
Short Selling and Odds of Winning
Stop Losses and how Leverage Affects your Trading
Position Sizing: Amount to Risk per Trade & the 2% Rule
Shorting and Making Money Spread Betting
Shorting and Short Selling Questions
Short Selling with Guaranteed Stops
Shorting Disclosure Requirements and Restrictions
Isn’t Spread Betting Risky and Unpatriotic!?
Odds of Winning and Successful Spread Betters
Intelligent Ways of using a Spread Bet
How do Spread Betting Firms Make Money?
How Spread Betting Companies Make their Money
How the Spreads are Calculated for Futures
Financing Charges in Spread Betting
Stop Orders, Realistic Expectations and the Dangers of Overgearing
Introduction to the Different Order Types
Starting with a Meagre 75 Pounds?
Stocks vs Spreads vs Spread Trading vs Fixed Odds
Market Gaps and Slippage
But when should I Sell?
Averaging Down and Pyramiding Up
Leverage and the Dangers of Overgearing
Advanced Strategies and Mechanics
Strategies – Pairs Trading
Rolling Dailies or Longer Term Futures?
FTSE Tracker and Dividend Index Adjustments
Spreadbet Charges and Funding Costs
Technical Analysis
Technical Market Indicators and their Workings
Resistance and Support Levels
Do Technical Indicators Work?
Moving Averages and MACD
Double Tops, Volume and Reversals
Using MACD and RSI with Daily Charts
Correlation, Stochastics, Fibonacci, Dow Indicator
Candlesticks Patterns and Indicators
Head-and-Shoulders Formation
Commodity Channel Index (CCI)
Elliot Wave, Gann, TED Spread and ATR
What is IG Index’s Autochartist?
How Corporate Actions are Accounted for
How Dividends are Accounted for in Spread Betting
Stock Splits and Consolidations
Rights Issues and Stock Suspensions
Comparing Different Derivative Products
Spread Betting versus CFDs
Spread Betting versus Direct Market Access (DMA)
Using Options as a Hedging Tool
Spread Bets Compared to Covered Warrants/Turbos
Likelihood of Spread Betting becoming Taxable?
Complaints, Segregation of Funds and Provider Counterparty Risk
Do Spread Betting firms Hedge their Customers’ Bets?
Segregation and Ringfencing of Client Funds
Complaints and Enforcement of Debts
Spread Betting White-Label Clones
MiFID Rules: Implications for Spread Betting and CFDs
Working for a Financial Spread Betting Company
Selecting Stocks and Investment Research
Selecting Shares: Low or High Priced? Buy One or Many?
Researching Stocks & Guesstimating Future Share Prices
Researching and Tips for Trading Penny Shares
Researching Stocks and Shares to Short
Good Value and Efficient Market Theory
Sources for Investment Research and Information
Tipsters and Publications
Exchange Traded Funds
Scalpers and Arbitrage Traders
Scalping, Day Traders and Spreadbetting
Why do Spread Betting Bookies hate Arbitrage Traders?
Educators and Advisory Brokers
Spread Betting Educators and Free Trading Seminars
What is your take on Advisory Brokers?
Telephone/iPhone/Blackberry/MAC Dealing
Protecting Profits and Limiting Losses
What Types of Stop Orders are Available?
Placing a Spread Betting Limit Order
Are Stops Losses Really Needed?
Where do you Place the Stop Loss?
Don’t Move Stops Orders Once Set
Stop Limit Orders and OCOs
How Contingent Orders Work
Placing Stops Out-of-Hours
IG Index and Stop Loss Orders
Use a Guaranteed Stop Loss or Ordinary?
How much do Guaranteed Stop Loss orders Cost?
Situations where Guaranteed Stops are Useful
Trailing Stops and How to Use Them
The Limitations of Stop Losses
Do Providers Spike Out Stops?
Phased Exits and Managing Losses
Impulse Buying and Panic Selling
Emotions and Overtrading
LOOKING FOR AN EXPERT RESPONSE? SEARCH FOR IT HERE
First let’s not kid ourselves – I’m going to put in an early health warning to say that spread betting is not for everyone – you can make very large gains but equally big losses. Using gearing increases the risk, no doubt about that but as long as you know what you’re doing and understand the risk you will be all right. Strangely, I find the bigger your portfolio gets, the more risk-averse you become.
Before starting remember spread betting and day trading in general is risky: in other words if you can’t afford to lose it, you can’t afford to risk it!
Have a spread betting question or don’t understand a stock market concept? – this is the section to ask! Before you submit a question please browse or search our list of answers to previous questions. Your question may already have been answered. If you do not find an answer, submit your question by e-mailing traderATfinancial-spread-betting.com