Spread Betting on Financial Markets - the basics

Spread betting on financial markets

I decided to create this blog in order to share my experiences both exciting and frustrating, as I tried to make some money trading the financial markets.

In these days of recession, with job losses and rising costs, people inevitably are turning their attention towards money making opportunities.

They realise that the days when you could fuel your dreams with easily accessible credit card debt and a ludicrously high mortgage, seem to be well and truly over!

When I lost my job, I was forced to look at other sources of income, given that there are not many jobs out there today.

What I discovered, despite being bombarded with sales letters or marketing copy in the post, announcing the latest sensational money marketing opportunity, was that you don’t have many realistic options when it comes to generating income.

We’ve already mentioned looking for a job (‘just over broke’) and starting your own little conventional business can be quite daunting, given the economic climate, the attitude of banks (reluctant to borrow) and the high percentage of small businesses that fail, leaving you with a mountain of debt and humiliation.

In my time, I’m ashamed to say that in my desperation, I’ve more or less tried most home business opportunities going, which invariably leaves you with greater debt.

I’ve always been interested in speculating (betting) opportunities, be it in the field of sport or finance.

The thought of being able to make your living in this way, appeals immensely. You log on to the internet, study the opportunities, place your bet and spend the rest of the day playing golf.


We’re all familiar with betting opportunities in the fields of horse racing and football, but lately betting on the financial markets seems to be all the rage.

On the face of it, it seems more exciting and sophisticated, no doubt intensified by programmes such as the BBC’s ‘Million Dollar Traders’ programme.

The sales letter copy goes something like this: ‘ successful ex-city trader reveals the secrets of trading the financial markets. Now you can use his secrets to make £500 to £2,000 a month trading the forex and commodity markets’.

I’ve parted with my cash, and bought many of these information products and would like to help people understand the truth about this opportunity of trading the financial markets.

I admit that some of the information is very good, but I believe that people need to know all the facts before purchasing and must be realistic in terms of what can be achieved.

So hopefully my blog will take you on a journey as you share my experiences of trading the financial markets as a newbie and a complete novice.

Seems to me like a great idea!

This business opportunity was once described to me by a so-called American Guru in this field, as the best business in the world!

His point being that whether the price of foreign exchange, commodities or shares go up or down, you can still make money!

How come?

Well, in simple terms, with financial trading, you can bet that the price of something will either go up or down.




In this respect the creators of these systems and sales letters are having a whale of a time. I say this because they can e.g. use an example of say the price or value of pound sterling £ having gone up against the dollar $ and then they will make a statement like this:

‘yesterday morning the pound went up 25 points against the dollar. Had you placed a bet of £10 per point, that the pound would go up in value, you would have made £250 profit before lunch!

Sounds great and they are perfectly true, but what they conveniently forget to tell you is the following:

get it wrong, by predicting that the pound would go down against the dollar and you would just as easily lost £250.
Even the best traders, lose money on most of their deals.
The spread betting companies will take a slice of your profits.
Prices of shares, foreign exchange (forex) and commodities, rarely go up or down in a straight line, they tend to move in a zig zag manner, therefore making it difficult to lock in profit.
There is a great deal to learn and you must have a clearly defined strategy, which will allow you to make a profit in the long run.

What annoys me most is that these system creators, in their greed, make it sound as if making money trading the financial markets using a spread betting company is so easy.

The impression they give is that you can spend as little as twenty minutes at your pc or laptop after breakfast, then go away for the day and return in the evening to find that you have made a pile of money!

The reality I feel is a little bit different.

So what is the reality?

Gradually over time I will use my blog to share with you the knowledge that I learnt the hard and expensive way.

I will also feature articles by other people whom I feel have some beneficial knowledge which could help you.





Hopefully I will be able to convince you that financial trading can be both enjoyable and profitable, providing that we are realistic in our approach and avoid the sharks who are only interested in selling you an expensive information product.

There are some genuine people in this field, with quality information to share, but first and foremost, get it out of your head that this is a money for no work opportunity.

Let’s start with the basics

What should you know about this exciting business to begin with?

First of all the main objective is trying to predict which way the price of a particular thing is likely to move.

e.g. the price of gold can either go up, down or stay the same

What can you trade?

Basically I tend to focus on these three markets:

FOREX (foreign exchange) : Quite simply the price of one currency against another. Think about your holiday when you want as many dollars as you can against the pound.

Here are some of the most common types of currency pairings:

Pound sterling £ against the dollar $

The euro against the dollar

The euro against the pound

The dollar against the yen

The pound against the swiss franc etc.





Commodities:

These are everyday items which we all need to some extent in our day to day lives. e.g.

Gold, copper, platinum, oil, coffee, cotton, orange juice, wheat, corn, lean hogs, livestock meat, natural gas etc.

Shares:

These are shares in a wide range of companies e.g.

Tesco, Next, JD Sports, BP, Shell, M&S, Morrisons, Barclays, Alliance & Leicester etc.

How do you decide what to trade?

First of all in order to avoid being totally confused or overwhelmed by all the information and opportunities, I would begin by concentrating on one market e.g. the forex market or the shares market.

Once you’ve gained a basic understanding of how this business operates, you can then expand your portfolio into other markets.

Understanding charts

There are many tools to help you to trade the markets e.g. you can listen or watch the news or financial tv channels such as Bloomberg or CNBC or read newspapers such as the daily mail or the financial times. Something in the news might suggest whether the price of a share, commodity or currency will go up or down.

But mainly the most useful tool is a chart showing the price of a currency, commodity or share over e.g. the past year.


Now, a chart can be as simple or as complicated as you like and later I will explain what I mean by this.

Buy a copy of the FT (Financial Times) or visit their web site
http://www.ft.com/ and you can view all sorts of charts to your heart’s content



In simple terms, the name of this game is looking at a particular chart, and guessing what will happen to the price next?

Fascinating, exciting, potentially profitable! But not as easy as it sounds.

This article was created by Aled Evans a novice FOREX and Commodities trader, keen to share his new found knowledge with other traders embarking on this exciting journey. Feel free to send your comments or words of wisdom to yours truly: aled_evans1@sky.com
You can access more FREE information at my web site:
http://forextradingplan.blogspot.com
Thank you for taking the time to read my article and I hope you found it beneficial.


You can get free information on the 'Forex Miracle' system, which has created much excitement, by clicking on the 'click here' link below:

Click Here!

FAQ - What Is Financial Spread BettingBy [http://ezinearticles.com/?expert=John_Helios]John Helios
Financial spread betting works using the world markets such as the FTSE 100 and how it will react in a given day. It is easier to explain financial spread betting by example. On any given day you can find out on the web or by placing a call to a spread betting firm to find the “spread” on the FTSE 100. They will give a spread such 6350-6500 (6500 to place a “buy” or “up” bet and 6350 for a “sell” or “down” bet).
If you believe that the FTSE 100 will rise, you then place an “up” bet. You would bet a certain amount per point. For example you could bet £10 sterling per point. If the FTSE 100 rose to 6700 within the period specified by the betting firm (usually one trading day) this would be a raise of 200 points. This would mean that you would earn £10 x 200 points which would mean a net profit of £2,000 sterling.
If you were to feel that the market was going to fall then you would place a “down” bet. If we use the same example of £10 per point if the FTSE were to fall to 6200 which would be a fall of 150 points your profit would be £10 x 150 points which equates to a £1,500 sterling net profit. If the FTSE 100 were to rise however to 6500 you would lose £1,500 pounds.
Financial spread betting offers an easy way for individuals to bet on the movement of the market. Financial spread betting now opens the way for individual people to use the market other than through selling short in or investing in a hedge fund. It is more immediate and the potential profits are huge.
The [http://financialspreadbettingreview.com/]financial spread betting review website offers an simple guide to [http://financialspreadbettingreview.com/]financial spread betting. The website is owned by Jamie Forston-Merrel a [http://financialspreadbettingreview.com/]day trader from London.
Article Source: http://EzineArticles.com/?expert=John_Helios http://EzineArticles.com/?FAQ---What-Is-Financial-Spread-Betting&id=654756