Do Spread Betting Strategies Really Minimise Losses

Spread betting is a risky type of financial investing and one in which great losses may occur. However, utilising proven spread betting strategies can help minimise losses. There are many spread betting strategies which really can help investors earn more profits than potentially suffer losses.

Spread betting strategies are many and vary with the financial instrument being traded. One strategy which is possible on almost all trades is the execution of a stop loss. A stop loss outlines a total loss a trader is willing to lose on a particular trade and when that loss has been reached, the trade automatically closes.

A guaranteed stop loss is another of many spread betting strategies which helps minimise losses and works in the same way as a stop loss. The major difference is the stop loss takes some time to close out the bet and therefore a small amount of additional capital may be lost. There is no waiting time with the guaranteed stop loss and so the loss limit is guaranteed.

Other spread betting strategies include outlining the trades planned for each day and adhering to this plan. Spread betting strategies can prove beneficial to minimising one’s losses which can help all traders but especially novice traders.

Financial Spread Betting Is Not Executed on the Stock Market

Many UK residents have discovered the world of spread betting and it has made many citizens significant profits. Financial spread betting is a type of spread betting which focuses on the financial instruments found on the stock exchanges. These financial instruments include bonds, stocks, commodities, indices, and forex markets. Although these instruments are involved in spread betting, financial spread betting doesn’t really take part on the stock exchange.

Spread betting firms offer spreads on individual markets, and financial spread betting involves a bet being placed on this spread. No purchase of an instrument ever takes place and it is normally on the stock exchange where one would execute these purchases. Instead in financial spread betting, a trader will contact the spread betting company and place a wager on the spread. The trader will determine which direction the price of the financial instrument will move and make an appropriate buy or sell bet.

All aspects of financial spread betting are handled through the spread betting firm because no instruments are really being purchased. The spread betting firm takes the money wagered, collects losses as necessary, and deposits any profits. Therefore, in financial spread betting a trader is dealing only with the spread betting firm.

Fixed Odds Betting is a Popular Type of Financial Betting

There are three different types of financial betting for investors to participate in and the most popular of which is fixed odds betting. Fixed odds betting is the wagering of a financial instrument against odds created by a bookmaker or on a betting exchange.

In this type of financial betting, the odds are presented normally in fractional odds with the first number representing how much one could win in relation to the second number, the stake size. A fractional odd of 4/1 means a trader stands to make £400 for a wager of £100. Traders who make wagers on fixed odds are awarded the winnings plus their initial stake.

Fixed odds financial betting can be found regularly in betting on sporting events. The bookmaker presents odds on a variety of sporting events which traders then place wagers. Financial betting such as this type has been around for years even before the Internet was invented. Fixed odds is such a popular type of financial betting because of its history among sporting fans.

Financial betting is a type of gambling event which is regulated by the gaming commission and therefore many traders participate in fixed odds investing.

How are Profits Calculated in Spread Betting?

Spread betting can make people large profits with only a small amount of capital wagered. That is because profits in spread betting are calculated by the point movement of the spread times the stake size. The more correct a trader is the more profits. Likewise, the more incorrect one is the greater capital lost.

In spread betting a bet is made on a spread of numbers. A trader may buy or sell the spread for a stake size of one’s choice. A trader places a spread betting buy bet on the spread 23-25 for a stake size of £2. The closing market price ends up being 35, a ten point difference, and is multiplied by the wager and the total profits are £20.

These spread betting profits could have been greater if the trader had staked £5 per point which would have resulted in £50. Another way the profits could have been greater was if the point movement had been more than 10 points. A 20 point movement would have resulted £40 in profits.

Calculating profits in spread betting is will give an approximate value if the bet is in the trader’s favour; however one can never predict the accuracy of the bet.

How is Currency Forex Trading Different from Other Markets?

Currency forex trading is very different from other markets and was mostly traded by financial institutions until technology provided an outlet for the general public to participate in this market. Most markets are traded on a major stock exchange, such as the London Stock Exchange, but currency forex trading does not have a regulated exchange. Continue reading “How is Currency Forex Trading Different from Other Markets?”