About Stu Whisson

Stu Whisson has been a member since October 29th 2012, and has created 2 posts from scratch.

Stu Whisson's Bio

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This Author's Website is http://financialspreadbet.com/

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Introduction to Financial Spread Betting

Financial Spread betting is a way of backing your judgment on a range of financial markets in a similar way to CFDs but classed as a bet entitling individuals to commission free and tax free trading depending on the tax jurisdiction and status.
 
 

Basics of Spread Betting

Introduction to Spread Betting

Speculating on the markets by way of betting on the direction rather than buying or selling the actual shares was originally a popular method of trading in the U.S in the early 1900’s until it was eventually outlawed. The concept was then reborn in the 1970’s as a way of speculating on the direction of the gold price, the market and range of products grew to what is now one of the most popular vehicles used in the UK for trading.

Current Marketplace

Financial Spread betting is mainly popular in the UK due to the current tax laws and is the product of choice for many traders compared to CFDs and futures trading.

Spread betting works on a spread basis i.e instead of charging the client a commission or a fee for the trade, the provider will charge a spread (please see example below) which incorporates all the costs for the trade. Clients are able to speculate on most financial markets ranging from UK and international equities to commodities futures such as wheat and oil.

Mechanics of a Spread Bet

The concept of spread betting as mentioned is very similar to CFDs and can in fact be classed as a type of CFD trade. Put in simple terms if you have a view that the FTSE100 index is going rise then clients decide how much per index point movement they wish to bet.

  • FTSE 100 index is trading at 6100
  • Spreadbetting firm is quoting a price of 6098-6102
  • You decide to buy GBP2 per point at 6102
  • FTSE moves up you decide to 6180
  • Spreadbetting firm is quoting 6178-6182
  • You decide to sell GBP2 per point at 6178
  • Profit = 2per point x 76 points = GBP6 profit tax free*

Spread bets differ from traditional CFDs in so much as they are traded over a fixed term with an expiry date, so if you have not closed your position beforehand it will expire usually at the market level at a predetermined date in the future. Many providers will allow you for a small fee (usually charged in the spread) to roll over the current bet into a new bet at expiry if you are wishing to carry on your trade.

Spread betting Providers

Providers are mainly UK based and do not operate like typical bookmakers who are reliant on you losing your bets to create their profit. As previously mentioned the bookmakers profits are derived from the spread they charge which is usually slightly wider than the current market spread.

Currently there are approx 10 leading financial bookmakers in operation. It is worth noting that different providers have different product ranges and if you open a bet with one provider you must close it with the same provider , bets are not usually transferable unlike dealing with a conventional stockbroker.

FinancialSpreadBet.com will be featuring reviews and provider information to allow an informed decision before placing your first bet.

Financial Trading 101 – Introduction to Financial Trading

Financial Trading Basics

Introduction To Financial Trading

How many times have you thought of how many of the Worlds wealthiest people managed to attain such enormous sums of money, but also manage to year on year appear to get wealthier and wealthier? To many, if not all of us, this appears to be a pipe dream, something totally unattainable and out of reach. Most look at the Worlds wealthy and wrongly assume that they know something ‘secret’, that they perhaps are doing something illegal to attain such wealth. For most of the Worlds wealthy, at least 99% attain their wealth through good investment, whether that is managed by a broker, or by themselves and 99% of the time, many invest in the financial markets using financial trading.

What Is Trading

When we utter the words Financial Trading, it can appear daunting, almost mystical. We think of traders and the ‘yuppies’ of the 80’s. All starring at large screens, with data blinking here and there and shouting ‘Buy’, ‘Sell’ and waiving their hands in the air. In as much as a lot of this has now disappeared since the dawn of instant trading through computer software, either in the exchange or now people like you and me, sitting at home, trading from the comfort of their favorite chair.

Today, it is now more than possible, for the average person, to learn to trade, to develop an understanding of the markets. With the dawn of the Internet and the brokers allowing easier access to platforms that you can use to trade online and the relative ease now of opening and funding a trading account. Enables anyone, providing they have a steady head and heart, willing to lose, be sensible and not ‘bet the farm’ of their trading ability. It can become possible, over time, to develop real skills and abilities and learn to make money from the financial markets. It does go without saying, that trading in the financial markets is not a ‘get rich quick’ scheme, or an easy way to attain wealth. Trading is not easy, it takes time to learn, skill and the ability to not let emotion drive what and how you trade. After all, most traders are trading using their own hard earned money – when you trade, you risk not only the amount you have, but depending on what you are trading, you can incur losses that are greater than that which you placed with your broker. You don’t want to get a call from your broker, demanding money, which is known as a ‘Margin Call’.

Thankfully these days, the horror stories of people losing their homes and much more are relatively few and far between. Common sense prevails in all methods of investing and trading, whether you are new to trading or an experienced trader. What is equally good these days, is that many brokers provide what are called ‘virtual accounts’ that have a virtual amount of money on a virtual, non real account. You can use this to learn, develop and get an idea of what is involved in trading online and further enhance and develop your skills and understanding in trading over time. In fact, this is one of the key initial methods we would recommend anyone to do, after they have understood the basics of the markets, what they want to trade, the methods of how they are going to trade and so on.

Trading Is A Very Broad Topic

Financial trading is such a broad term, as it does encompass such an enormous array of markets, products, let alone methods, techniques, skills, time frames and more. Financial trading, in a nutshell, is a term applied to ‘trade’ a given financial product or item. Looking at this simply; every product in the financial markets has a ‘buyer’ and a ‘seller’. Thankfully, because of the shear volume of trading that goes on, known as ‘liquidity’, finding a buyer or seller for the product that you are buying or selling is almost instant. The volume of trades made per day, in the entire financial markets is in the trillions of dollars. For example, in the FOREX market alone, this is around $4 trillion per day and that is just one market within the entire Financial Markets.

One of the key methods used in financial trading, known as ‘Short Selling’ or ‘Going Short’ or ‘Shorting the market’, is making a profit from when a derivative (an item traded) is actually going down in value. We will cover this is greater detail in further articles, but essentially it’s taking a trading position that allows you to profit by taking a contrary position to someone that things it will rise in value. If you go ‘Short’ and the value rises from the point the trade was opened, you lose money and the other person, who went ‘Long’ expecting the market to rise makes money. However, if the value drops below the point the trade was opened, you make money as you ‘Shorted’ the trade, but the trader who went long, loses money. Trading is what is known as a ‘zero sum game’ – there is always a winner for everyone that is losing.

The main markets in financial trading consist of FOREX, Stocks and Commodities. There are differing products that can be used to trade these; such as financial spread betting for example. As this website grows, we will cover each of these markets in a great deal of detail, as well as methods and techniques that are established in how to trade them, including our own tutorials, training and more. Therefore, it could be a very good idea to keep track of this website and bookmark it. For now, let’s briefly cover the main markets and what they consist of.

Back To Forex

The largest of all the main markets is now the FOREX market, knows as the Foreign Exchange (FOREX or FX) markets. This is by far the fastest and most liquid of financial markets, plus it’s the only market that is traded 24 hour per day all over the World. The FOREX market aim is the exchange of currencies and their value against other World currencies.  On a basic level, you are trading currencies yourself, when you buy currency to travel and go on holiday with.  When you visit the Bureau do Change (currency exchange) outlet, usually within the post office or bank. You are buying one currency, in exchange for another, for which the agent will give you a price, which is always fluctuating. When you return from holiday, chances are you will notice that the money you have left, when you sell it back to the agent, you will either get more or less than you did before. This is simply because of the fluctuations in the FX market for that currency. This is a very basic method I’ve used and is not how Forex Traders trade, but it gives you the ideas for the basics. In the Forex market, the trades are made in what are know as currency pairs; the USD (US Dollar) and the EUR (European Dollar) and shown as a quoted currency pair as USD/EUR. There are many more currency pairs; some are more popular amongst traders than others. We will cover the FOREX market in more detail later.

Stocks Maybe Common, But Don’t Rule Them Out

The most commonly known financial markets is the Stock Market. We have all heard of Wall Street and the London Stock Exchange, but what does it all really mean. Well for the sake of brevity for this article, we will keep it short, but just like the other financial markets, we will be going into greater detail in other articles with regards to these and other markets.  The stock Market, otherwise known as the equity markets, is a public physical entity for trading company stock and derivatives., which combined are known as securities that are listed and found on the Words stock exchanges. The key stock exchanges are the New York Stock Exchange in the USA, the London Stock Exchange in London England, the Paris Bourse in yes you guessed it Paris France and Deutsche Borse (Frankfurt Stock Exchange) in Germany. There are other exchanges, but these are the key stock exchange markets. Each country does have their own stock exchange dealing with public companies within their own locale. Those trading the equity markets are retail investors (you and me), institutional investors which consist of banks, pension fund managers and so on, as well as other companies buying stock in either their own company or in others too.

Finally, we have the Commodity market. This is where the market for raw or what are known as primary products are traded. These can be anything from physical items such as food, metals and electricity/Gas/oil. In fact, the commodity market can be seen as one of the earliest forms of markets. If we imagine that instead of money, actual livestock, grain and more were traded for other services and so on. This was a primitive commodity market. These days, the market has thankfully matured and sets the price for nearly every commodity that makes anything from the clothes we wear, the fuel we burn, the food we eat and the products we buy. All of these are affected by the commodity markets. Once again, we will be going into greater detail into the commodity market in another article.

 

Websites Google+ Page on PreziTo close, financial trading is an incredibly diverse, exciting, profitable, wondrous and interesting means of making money. Conversely,  it can be stressful, painful, heartbreaking, money losing nightmare. Being sensible, learning the ropes and the methods and techniques which we will go into detail in on this website too; such as technical analysis and fundamental analysis. Will enable you to keep you head out of the clouds, your eye on the goal and your feet on the ground. More importantly, keep you focused on learning, developing and growing as a trader – as by doing that and succeeding in that, will produce profits for you.

Introduction to Financial Trading – PDF slideshow download

Introduction To Financial Trading – Audio Download MP3

 

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