Free Spread Betting Guide Full

7/28/2019 Free Spread Betting Guide Full

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Spread BeG


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C

1. History of Spread Betting

2. 10 Benefits of Spread Betti

3. How to Spread Bet 5-Ste

4. How to Manage Risks

5. Top 10 Spread Betting Tip


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The History ofSpread Betting

Financial spread betting has beenin the UK or just under 40 years, wproduct initially popular amongstselect set o high net worth investCity o London. With time, awarenaround London and into the broaSouth East England as more and mrealised its many advantages.

Today it is one o the most populused by retail investors across thespeculate on the nancial market

With spread betting, it is possible speculate on rising as well as allinmarkets, enabling you to prot romarket conditions. Spread bettingnumerous other advantages incluree prots* and high leverage, gidistinct edge over other conventi

o shares trading.


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The internet changed the spread

betting world forever

During the rst couple o decades o its inancy,spread betting remained the privy o traders inand around the City o London . The rise o theinternet in the dot com boom o the late 1990sand early 2000, however, changed the previousstatus quo orever.

The introduction o the internet triggered adramatic upsurge in the awareness and thereorepopularity o spread betting throughout the UK,making it one o the most commonly usedproducts or market speculation by retailtraders today.

For the rst time, mass retail traders were able togain instant market access and speculate on risingas well as alling prices or prot, irrespective otheir proession or where they were based, just likeproessional traders at larger nancial institutions.

The internet has also made it possible or spreadbetting providers to broaden the scope o theirmarketing activities. Leading spread bettingproviders such as City Index regularly o er reeeducation programmes, enabling aspiring tradersto hone their spread betting skills.

This stark rise in spread bettings popuapparent in the changing prole o sprthe UK over the decades. Beore 2000, tspread bettor was male, 48 years old anworked in the nancial markets either dindirectly.

Today the arage spread bettor, althouglikely to have some experience o share

younger at around 40 years o age and an occupation outside o nancial tradlonger works primarily in the City o Lobe anything rom a city worker to dentimanager to even teacher, such is the scin the product today.

Dot-com boom of late1990s


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The role of the media

In the last ve years, the media has playeda signicant part in the rise o spread betting,making it a pliable option or aspiring traders.The credit crunch o 2008 and the downallo Lehman Brothers launched big daily shareprice movements onto the ront pages o mostnewspapers, increasing the knowledge and

awareness o the impact and signicance othese price moves. This, coupled with educationcampaigns by leading spread betting providerssuch as City Index, enabled retail traders to realisethe benets o spread betting, helping them toutilise online trading platorms to speculate andprot rom volatile market price moves.

The act that traders can use spread bettingto short sell share prices (prot rom allingprices), means that there is now a much quickerconnection between a sharp loss in ones portolioto the realisation that one can hedge that loss invalue through a spread bet.

The changing face of tec

Internet Trading Platorms (ITPs), such aoered by City Index, have over the yeaplayed a signicant role in hel ping retato take their trading to the next level antheir own und managers.

With the introduction o ITPs, investors

or the rst time, able to manage a portpositions, create and amend orders, unmarket research and analyse their peroall rom one platorm. The last decade hseen spread betting providers invest min developing platorm technology to twhere live streaming news, innovative customisable charting packages are todconsidered standard oerings.

As a result, retail investors are now abexercise greater control over their invesreacting and trading the markets rom in much the same way as proessional tnancial institutions.

Continued investment into the developinnovative and intuitive online tradingalso means that trading or retail investbecome easy, secure and instantly acce


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The advent of mobile trading

In much a similar way as the internet and InternetTrading Platorms changed the world o spreadbetting orever, the rise o mobile trading has alsotriggered a wave o new product innovation withinthe industry over the last th ree years, to the hugebenet o retail spread bettors.

City Index was the rst spread b etting rm tocreate an innovative live trading app or iPhonein 2009 and Android mobiles in 2010.

Mobile trading has allowed spread b ettors totrade wherever they are and whenever they want,taking supreme control over their trades in muchthe same way as proessional traders or largeinvestment banks.

When markets are volatile and prices movingast, being able to get in and out o a positionquickly can be the dierence between a protabletrade and a losing trade and mobile trading givesspread bettors every opportunity to prot rom ast

moving markets at the touch o a button on theirphone.


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10 Benefits ofSpread Betting

Spread betting is a tax-ecient* wtrading the price movements o tho nancial markets globally. You long or short on market prices, mpossible to prot even when pricethe decline.

Spread betting oers many distibeneits as compared to other oo inancial trading. These includthe ollowing.


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4. Range of Markets:

With your spread betting account, you can g12,000 markets rom all over the world includcommodities, currencies and bonds. This meexposure to a wide range o new markets yoaccess to beore.

5. Account Accessibility:

You can access your account rom wherever yyou want via our internet trading platorm (ITor via your mobile device. We have a rangecustom built to suit the mobile device you haand multiple award-winning trading app calwhich is available or download on your iPhoBlackBerry mobile.

6. Client support and 24-ho

Our prices and client support ollow the sun amuch like the nancial markets. You can tradwhen the markets in the Asia Pacic region oNew York close at 9pm Friday evening, althou

utures are tradable until 9.15pm.

1. Tax efficient trading:

Under current UK legislation any capital gains are tax ree, givingyou an immediate double digit percentage saving on your prots.Spread betting doesnt incur any stamp duty costs or commissionseither, meaning that you keep all o your prots made in tradingwhilst the main cost o trading is actored into the spread.

2. Ability to make money in falling markets:

Spread betting gives you the opportunity to prot rom both risingand alling markets as you only trade on the price movement anddo not own the underlying instrument itsel. You can prot romalling markets by going short or selling, meaning that yourprots will rise in line with any all in the price. This gives spreadbettors a great deal o trading fexibility, allowing them to protrom any price movement, be it up or down.

3. Leveraged trading:

All spread bets are leveraged, meaning that you are only requiredto initially deposit a small raction o the total exposure to place atrade (also known as margin trading). Deposit rates start rom aslow as 1% so or example, a buy trade with an exposure o 3,000

would only require an initial deposit o 30 at a 1% margin rate.This means that you can magniy your returns on investment whenprices trade in your avour. However, leverage can be a doubleedged sword and losses are magnied in exactly the same way.

1 Spread betting is exempt rom UK stamp duty and UK Capital Gains Tax. However, tax laws are subject to change anddepend on individual circumstances.


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10. Innovative technology:

We spend a huge amount o resources each yinnovative technology to help our clients to that spread bettors get instant a nd FREE accetrading tools such as interactive charting tecmarket analysis rom our team o experts.

7. Different Order types:

We oer numerous order types to help you to manage your tradesmore eciently and around the clock, even when you are awayrom your laptop or mobile. Our range o order types have beencreated to help you to lock in prots when prices reach your prottarget whilst at the same time you can curb losses rom escalatingpast your maximum loss levels, all automatically, without needingto be in ront o your trading screen.

8. Out-of-hours trading:

On select markets such as indices and commodities, we oerout-o-hours trading, meaning that you can take a position in thesemarkets even when the underlying market is closed, making spreadbetting even more fexible than regular trading. For example, we runour UK 100 (FTSE 100) market 24 hours a day, rom Sunday nightuntil Friday evening even though the actual FTSE 100 is only openeach weekday rom 8am until 4.30pm. So whilst others may haveto wait until 8am each weekday morning or the FTSE 100 to open,

you can trade it whenever you want.

9. Trade Speed:

We pride ourselves on our speed o execution, with most onlinespread bets transacted in less than a second. This is veryimportant, particularly when markets are highly volatile and pricesare moving quickly. Whats more, prots and losses are instantlyrealised into your account balance at the end o the trade so thereis no waiting time or your prots to settle into your account. Thismeans that you can reinvest your prots straight away or withdrawthem rom your account at your convenience.

5375

5350

5325

5300

5275

5250

5225


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How to Spread Bet

5-step guide

Placing a spread bet is a relativelyeasy process. The ollowing chaptour 5-step guide on how you can rst ew spread bets with City Ind


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2. Choose your trade and st

Once you have picked a market that ycomortable with, you need to requesEach market details bid (sell) and oeprices, with the dierence between thknown as the spread.

For this chapter, we will use the rolling spread as our trade exam

I you believed that prices woul d rise, yor go long on the buy price o 5301 andprots would rise in line with any increprice. I you believed that prices would would sell or go short on the sell price, prots would rise in line with any all in

Your stake size is the amount o moneyto risk per point movement in price.

So lets say you decide that the FTSE 10rise in value and BUY 5 per point at thprice o 5301.

This means that or every point the FTShigher, you will make 5. Consequentlypoint the FTSE moves below 5301, you

1. Pick a market and take a view

City Index oers over 12,000 spread bettingmarkets including shares, indices andcommodities, so picking a market thats right oryou can be a crucial decision.

It is important that you pick a market youknow. We recommend that you take your timeto understand the amount o price volatility

associated with that market, beore you starttrading, as this will help you to attain a betterunderstanding o the likely result o any trade onthat market. For example, i you want to tradeCompany ABC, and its share price moves 2p o naverage each day, then you can assume there islikely to be a minimum 2p risk or each day yourtrade remains open.

It also helps to learn about actors that are likelyto infuence prices or the intended lietimeo your trade, such as company earningsannouncements or economic data. For example,rising oil costs oten negatively impact the shareprice o airlines (as rising uel costs would causeprots to all, thus pulling down the airlinesshare price) and so on.

Once you have picked your market and taken aview, its now time to place your trade.


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FTSE daily rolling example

I you believed that prices woul d rise, youd buyor go long on the buy price o 5301 and yourprots would rise in line with any increase on thatprice. I you believed that prices would all, youwould sell or go short on the sell price, and yourprots would rise in line with any all in price.

Your stake size is the amount o money you want

to risk per point movement in price.

So lets say you decide that the FTSE 10rise in value and BUY 5 per point at thprice o 5301.

This means that or every point the FTShigher, you will make 5. Consequentlypoint the FTSE moves below 5301, you

g. 1) Open Trade Chartg. 2) Deal Ticket


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4. Add Closing Orders

You can use the order system to both myour trades and minimise your risk, eveyou are not in ront o your trading scre

An order is an instruction to trade at a pthe uture when prices reach a specic determined by you.

There are two types of closing orStop Loss and Limit Order.

Stop loss and Limit Orders are designed

your ability to manage your trades, eve

are not in ront o your trading screen.

You can utilise closing orders to help e

you lock in your prots and minimise y

your respective prot and risk targets a

3. Financial health check

Spread betting is a leveraged product. Thismeans that you are only required to initial lydeposit a small raction o the total exposure toplace a trade.

It is important thereore that you make sure youhave enough unds to place the trade. For theFTSE 100 Daily Rolling spread bet, we oer a

margin rate o 60 x stake. This means that youneed to have a minimum o 300 (60 x 5 =300) in your spread betting account in order toplace the trade.

It is also equally important that you have enoughunds in your account to help cover any likelyprice moves or the duration o your trade. Forexample, i the FTSE 100 moves an average50 points a day and you are lik ely to keep thistrade open or two days, it could be wise to havean additional 500 at least (50 x 2 x 5) in youraccount to help cover any potential negativeprice swings against you.


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A Stop Loss Order is an instruction to close outa trade at a price worse than the current marketlevel and, as the name suggests, is used to helpminimise losses.

There are two ty pes o Stop Los s orders -standard and guaranteed. A standard stoploss order, once triggered, closes the tradeat the best available price. There is a small riskthereore that the closing price could be dierent

rom the order level i market prices gap.A guaranteed stop loss however, to which asmall ee is charged, guarantees to close yourtrade at the stop loss level you have determined,regardless o any market gapping.

In our FTSE Daily Rolling trade exampleplaced a BUY 5 per point trade at 530we place a guaranteed stop loss ordethe 5251 level, this means that our traautomatically close should the FTSE alcapping any losses at 250 (5301-5251guarantee the stop loss level on this FT

there is a charge o 15 (3 x stake size i.e

Tip: The only way to 100% limit your spbetting risk is to use a guaranteed stop

g 1) Stop Loss Chart

g 1) Stop Loss Deal Ticket


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A Limit Order is an instruction to close out atrade at a price that is better than the currentmarket level and is used to help lock in prottargets.

In this FTSE Daily Rolling example, i we placea Limit Order to lock in prots at 5351, this willmean that should the FTSE rally as we expect,as soon as prices hit the 5351 level, which would

mean a prot o 250 (5351-5301 x 5), yourtrade will automatically close and the 250proit will immediately be transerred into yourcash balance.

5. Closing the Trade

Having placed your trade and closing oyour open prot and loss will now fucttandem with each move in the market

When you are ready to close your tradesimply need to do the opposite to opentrade. So say you placed a BUY 5 FTSE trade to open. You now need to SELL 5

Rolling at the current sell price to close

By closing the trade, your net open proloss will be realised and immediately reyour account cash balance.

Using the same trade example, lets sayFTSE 100 had rallied as you had expec ttrade at 5340. Whilst the rally was not eto hit your Limit Order prot target o 5decided that it was enough to net you prot o 195 (5340-5301 x 5). By placSELL 5 FTSE Rolling trade at 5340, youtrade would ully close and your open p

195 would immediately be refected incash balance.

g 3) Limit Order Deal Ticket

g 2) Limit Order Chart


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As spread betting is a leveragedproduct, it involves a higher dego trading risk as compared to oregular orms o trading.

This is due to the act that whilst yonly required to deposit a small mto trade, your true exposure rema

ull value o your trade. This essenmeans that you may lose more thamount o unds that you may hoyour account

How to ManageRisks


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There are two types of stop losseand guaranteed

Standard stop loss

A standard stop loss is ree o charge anavailable on all markets. Once triggeredclose out your trade at the best price avin the market. Should market prices gaslippage), where prices literally gap romprice to the next without ever trading alevels in between, this could mean thattrade is closed out at a price worse to thyour requested stop loss level. This meaa standard stop loss does not provide 1management protection.

Guaranteed stop loss

A guaranteed stop loss guarantees to cyour trade at the level specied regardlmarket gapping. Thereore, guaranteedlosses are the most ecient way o prot

your trading risk 100% o the time. Pleaaware however, that or guaranteed stothere is a small charge incurred or the risk protection. We do not oer guarantlosses on all our markets.

Risk example: Company ABC trade

I you were to place a sp read bet on CompanyABC with a total exposure o 5,000 and thetrade carries an initial margin rate o 10%, youneed to deposit an initial 500 into your accountin order to place the trade. However, the ullexposure o your spread bet remains the valueo the trade i.e. 5,000. Should your positiongo against you, you run the risk o losing morethan the initial 500 deposited and may thereorehave to deposit additional unds at short noticeto maintain your position.

How can one manage risks?

The best way to manage risk is by attachingstop loss orders to your trades. A stop loss isan order to automatically close a position whenit gets to a specic lo ss level dictated by you.For example, i you have a buy position onCompany ABC at 500p and want to ensure thati the position goes again st you, your losses arecurbed should prices reach 450p, you can adda stop loss to 450p. This would mean that i the,your position would be automatically closedat the best available price to help preventyou rom incurring urther losses should pricesdeteriorate urther.

550

525

500

475

450

425Stop Loss

at 450

Company ABC Rolling


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To guarantee or not to guarantee, that isthe question

This is a common question amongst spreadbettors. For some trades in markets wheregapping is uncommon or or trades that areexpected to last mere minutes, there may be lesso a motivation to use guaranteed orders thanstandard stop losses. That said, the best andonly way to 100% protect your trading risk is touse a guaranteed stop loss. The charge or doingso is small and it gives you peace o mind in theknowledge that i prices do gap, your losses arestopped at a specic level.

?


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1. Know your market

Spread betting oers over 12,000 marktrade, so it is important that you choosthat you really understand and are comwith. A successul trader has the abilityidentiy and understand events infuenmarket movements, such as economic and their likely impact on the price actiinstrument he wishes to trade.

As a spread bettor, you need to take a cview on the direction in which you thinwill move in the uture and it helps to ryour trades using the news and chartinavailable through the secure ITP area oIndex website.

2. Never overtrade

We always recommend that no trader sever trade beyond his or her nancial mThis means that you should never use uentire cash balance as margin or a sing

opening trade, however promising it mat the time you open your trade. Markeis unpredictable and could easily leave little surplus in your account to allow ofuctuations, i the market moves againAlways have extra margin to cover youshould prices move against you.

Top 10Spread Betting Tips


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4. Cut your losses

In a losing situation it is easy to let losseaccumulate in the hope that prices willaround. By getting out o loss making pearly you will be able to cut your losses they become too large and this is wherwill come in handy.

5. Use stop losses to managyour risk

You can place closing orders (stop lossetrades both online, via your mobile andthe telephone to help minimise your loRemember that a standard stop loss doprotect you i prices gap so always consguaranteed stop loss or added protectis a small additional charge or a guaranstop loss and these are not available onmarkets.

6. Expect losses

Even the best traders get it wrong so nea loss on your trade doesnt make you atrader. It is important, however, to anallosing trades and learn rom your mistaDont get emotionally attached to your

3. Set realistic trading targets andstick to them

When trading in general, it pays to saeguardyoursel against emotions such as greed, earand hope. As with other orms o trading, it iseasy to get carried away and make impul sivespread betting decisions.

It thereore helps to outline a trading plan, which

should provide a general set o rules that youcan reer to when making important spreadbetting decisions. A trading plan need not becomplicated and could speciy things such as:

Prot goals (per day, month, year)

Maximum losses you are prepared to take

Size of the trade at any one time

Entry/exit point

Without rules, it is easy to give in to yourimpulses, making irrational spread bettingdecisions that you may later come to regret. O

course, as you become more condent, theserules can be changed and adapted to any newstrategy you may wish to adopt.


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9. Dont trade on rumours

Rumours in the market place are a reguoccurrence and, just like Chinese whispcan quickly deviate rom reality. By undproper and timely research beore plactrades, you should eel much more conyour positions. Always orm your own oabout every trade so that when you aretrade, you are condent that you have tvalued and considered view.

10. Keep informed and up-to

Make use o all the resources available to maximise your understanding o theYour trades will move in tandem with tmarket and by being in a position to reto market news, you will be in a much bposition to open new trades or exit posquicker than i you were not keeping uwith market events. The City Index InteTrading Platorm is constantly updatedyou the latest news and inormation rorespected news providers and market a

Some traders even believe that the best lessonsthey have ever learnt come rom losing trades asopposed to winning ones.

7. Be disciplined

Some traders can be so emotionally involved ina position that they may make impulse trades,whereby they either get in or out o a position

prematurely. So it is vital that you stick to yourtrading plan and not l et your emotions take over.Consider the appropriate levels to take prot andlosses and stick with it.

8. Dont put all your eggs in onebasket

It is always advisable to trade a variety omarkets to spread your risk. I you place a largetrade in one market, your trading account willlive or die by that one market. By spreading yourtrades across a variety o dierent markets orsectors, you are diversiying your risk.

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Free Spread Betting Guide Full