Posts from — August 2007

Many traders opt for paid subscription services to charts and live prices. Some of these services are indeed valuable but there are plenty of free places to find these things. 

One good place to find both free live prices and a range of charts that you can manipulate is FinancialSpreads.com. Just open an account and you’ll get access to their charts and live market prices. You don’t even have to trade with them. Simply apply for an account at FinancialSpreads.com. 

Good luck! 

DB 

Looking for the best spread betting companies – see CleanFinancial.com

Our intention here is to:

• Help provide on free online financial spread betting tips
• Tell you about new features on CleanFinancial.com
• Discuss the latest markets
• For those less experienced at spread trading we will also be going through a series of “how to spread bet” examples. The difference here being that we will pick the markets that are making the headlines, eg on a day like today we could discuss the S&P500 losing 3.2% in July and how to profit from that, how to trade on the Tin market that hit an all time high today or discuss the good old oil markets that regularly provide room for profits (and losses).
• Where you can get a range of free online spread trading features
• Latest offers and news from the spread betting firms, from client offers to tight spreads

We’re going to start off with some spread trading tips: 

How to start spread betting – Financial Spread Betting Tips

If you are new to spread betting then you may find this column interesting. We are going to present you with 100+ tips and strategies. However rather than annoyingly drip feed them to you one at a time we thought we would give you the first 11 tips in this blog. 

Some of these tips may seem basic however

• These are often where people slip up
• We will get to more complex trades, techniques and strategies later in this series

Test your knowledge and ability to trade 

1. Paper Trade. Start with paper trading ie trade real markets but with fictional funds. Write down all of the trades you would normally place ie note down the date, buy and sell values, stakes, date and why you wanted to place trade. It’s easiest to set up a spreadsheet on your PC. Develop it with columns for your needs, or at very least, set it to work out your profits / losses. You don’t need to be an excel genius but you should get to grips with the basic formulas. Once set up you can then update your Trading Spreadsheet to help you quickly workout different profit/loss permutations 

2. Feeling too lazy to go for tip 1? Set up a Test Account and trade. Eg you can set up a Demo account with firm like FinancialSpreads.com: Spread Betting Demo Account. It takes less than 2 minutes to set up and they will give you test account with £1000s / virtual credits to test your skills (you’ll also get more used to their software and layout, hence the reason they provide these free spread trading services). The prices are often 15 minutes behind the real live prices but that should be OK for your test trading. 

3. Whilst paper trading / using Test Accounts make sure you get used to Selling, closing bets and the advanced features that some firms offer eg One Cancels the Other (OCO) and Two Factor Sell Stop Trades. It’s also worth looking at Pairs Trading (these will be covered later in this series). Most of these trading options sound strange but are quite simple and will help you become more professional with your investments. Once you understand spread betting these techniques are straightforward but I wouldn’t necessarily suggest them to a new spreads trader. The point of paper trading these features is to get you to think about how the markets can move in complex ways and how one market influences another. This is something that can catch you out or you can exploit. Traders often make mistakes because they mentally isolate a share / product and therefore ignore market / sector influences of other shares / products 

4. Sorry the dull bit – upgrade your Trading Spreadsheet with what you did, the market bought / sold, the price, the price you aim to close the bet at, any stop losses that you set, what you plan to do if the market moves against you. Don’t forget to add some reasoning eg why you liked the bet, why you closed a bet, why you didn’t close a bet when you were on a loser. This will help you develop a plan and also help you stick to it. Also use a calendar element with notes for yourself eg ‘look at the price of PQR on date X’ 

‘Betting’ or ‘Trading’ 

5. Treat spread betting seriously. If you treat it like betting / gambling you will get hurt 

6. If you can’t say in your Trading Spreadsheet why you placed the bet – you’re now gambling not spread trading. Don’t trade 

7. Remember you are not A-Cop-Who-Gets-Things-Done. Don’t rely on your Hunches. Don’t bet with your heart. Use your head. Think of explaining “why you made the trade” to your other-half or father or a friend. If during this scenario you imagine that they’ll frown or that you can’t really explain why you are placing the trade then it is possible you should not place the spread bet or you should do some more research first. 

8. If you’re the sort of person who plays poker, likes regular sports bets, daydreams about scratch cards and bingo, does the lottery and is impartial to a few casino outings then financial spread betting may not be right for you. The markets can get exciting and can encourage the gambler in you. Financial spread trading will also relieve you of your money a lot quicker than Betfair, Ladbrokes or Sporting Index ever did 

What Not to Trade  

9. Make bets on the markets / companies you know something about. If you don’t really know anything about the top 100 companies in the Nasdaq 100 don’t trade on them or the Nasdaq 100 Index. If you know little about Forex markets – stay away from Forex markets. If you are most familiar with the Oil industry, start your spread trading by looking at Brent Crude Oil and oil exploration companies. 

10. Newcomers should stay away from Indices like the FTSE 100, Wall Street and S&P500. It’s difficult enough researching, trading and predicting which way one company’s share price will go. Predicting 100 or more companies is not going to be easy. eg as mentioned above the S&P500 was down 3.2% in July. The worst month since July 2004. A lot of that is blamed on the problems in the US subprime mortgages market. But firms specialising in ‘Alt-A’ borrowers are also in trouble. ie the consumers who are a level above the subprime market. All this will influence any S&P500 bet. Are you sure you know enough about the market? 

Day Trading 

11. We often comment on the risks of Day Trading on this site. Many people find day trading takes up too much time and too much emotion. That results in traders responding poorly to market conditions. You end up buying poorly researched products. You end up selling your portfolio too quickly and cheaply when panicking. Not only that, but the spreads on some markets are too wide for day trading. It will be difficult to make a profit even if the market moves in the right direction. It may be more sensible to try trading markets between a period of 1 day to 4 weeks. That takes a lot of the emotion away. For more free tips and financial spread trading strategies see: Spread Trading Strategies.

Good Luck! 

DB