5 basic questions

[Hugo Drax]

Hi i'm totally new to Financial Spread Betting - i've recently set up an account with IG Index i'm looking for some basic pointers -hope this is the right place to chat


1. What is the difference between Financial Spread Betting and Day Trading?


2. Financial Spread Betting - What are the odds?
Are the odds 50/50? - surely it can only go up or down?
But this does not seem to play out in practice


3. What is the main cause for share movement during a day?
- market forces or company information?


4. What exactly is meant by Research?
what boxes need to be ticked to be considered good research?

5. I have been reading Ann Logue's Day Trading for Dummies - What else should i be reading to start with?


many thanks

 

[barjon]

try here first http://www.trade2win.com/boards/first-steps/8332-t2w-first-steps-guide.html and the other sticky threads in the first steps forum

 

[Hugo Drax]

thanks for the link
could you please comment on question 2 specifically, regarding the odds?
- as i cannot find an answer for this anywhere

 

[wasp]

Hi i'm totally new to Financial Spread Betting - i've recently set up an account with IG Index i'm looking for some basic pointers -hope this is the right place to chat


1. What is the difference between Financial Spread Betting and Day Trading?

None.

2. Financial Spread Betting - What are the odds?
Are the odds 50/50? - surely it can only go up or down?
But this does not seem to play out in practice

No, it could......

Go up, spike down, go up a bit, go up a bit further, plummet..... bounce in a range all day..... All manor of things......

Download Broco metatrader and take a look at some charts.

Trading Platform

3. What is the main cause for share movement during a day?
- market forces or company information?

A number of things. See Barjons link.

4. What exactly is meant by Research?
what boxes need to be ticked to be considered good research?

When you are consistently profitable.

5. I have been reading Ann Logue's Day Trading for Dummies - What else should i be reading to start with?

Not a book man but there are plenty of links and plenty of better books.

Get the old search engine running through this website.

many thanks

.

 

[UKtradergirl]

Spread betting is not fixed odds.

Basically, you bet a value per point. For instance, on the FTSE100 you might bet £1 per point.

This means you get £1 for every point the FTSE goes up, and you lose £1 for every point it goes down.

Example:-

FTSE 100 trading at 5000. You think the market is weak and will fall. The Spreadbetting company will quote you something like this:

FTSE 100 4999 - 5001

The higher figure is the value at which you would enter the market when BUYING. The lower value is the one you enter at when SELLING. The lower one in our example is what would be taken. So... you sell £1 a point at 4999.

The FTSE moves down 10 points to 4990 and is now quoted as 4989- 4991. You decide you want to take your profit. Now you must BUY £1 a point to cancel the trade. You will buy at the UPPER level quoted, so 4991.

Your profit will be: 4999-4991 = 8 points. (£8)

Even though the market moved 10 points in your favour, you see you have only made 8 points. This is because of what is called the spread, the difference between the two quotes the spreadbetting company gives you. This is in effect their 'commission'.

I don't want to overload you with information, but, when trading you will probably want to include a 'stoploss' also (if you have the limited risk account with IG they will make you place a stoploss anyway). A stoploss is a point where your trade will be closed out if the market moves against you. (e.g. a stoploss 10 points away would close your trade if the market moved against you 10 points-- in the example above this would result in a loss of £10, although in practise it can be as much as £12 or more, but that's a whole other story and not for here!).

Hope this makes sense. If you have any more questions please ask.

UKTraderGirl

p.s. just wanted to add, if you do have a limited risk account with IG, then they will use 'guaranteed stops' which means if you place a stop 10 points away, you will lose 10 points and no more, so ignore my bit above about saying you could lose more!

 

[UKtradergirl]

Hi i'm totally new to Financial Spread Betting - i've recently set up an account with IG Index i'm looking for some basic pointers -hope this is the right place to chat


1. What is the difference between Financial Spread Betting and Day Trading?


2. Financial Spread Betting - What are the odds?
Are the odds 50/50? - surely it can only go up or down?
But this does not seem to play out in practice


3. What is the main cause for share movement during a day?
- market forces or company information?


4. What exactly is meant by Research?
what boxes need to be ticked to be considered good research?

5. I have been reading Ann Logue's Day Trading for Dummies - What else should i be reading to start with?


many thanks

Just wanted to address your questions also:

1. Financial Spread Betting is just a vehicle for trading. Day Trading is actually a method/system/style of trading. For instance, instead of spreadbetting you could buy shares directly through a broker. Also, instead of day trading you could do long term investing, position trading, swing trading, scalping.

2. Answered in my last post.

3. Both of the things you mentioned cause price movement. That's the trick to trying to get things right. You will most likely need to have a grasp of both and understand how they could effect the market to have any measure of success. Trading off the market prices alone is possible, but if you don't pay attention to the news or company fundamentals you could be in trouble, especially with lower valued stocks.

4. The exact research you need to undertake depends entirely on what you are trading, and how long you intend to hold your trade for. When you are day trading, you do not generally need to be aware of all the ins and outs of a company, etc, but you will need to be alert to big news stories. Mostly you will want to research price charts. You will be looking at price action and trying to determine crucial levels at which a market may either take off, or perhaps stall for a moment. Depending on how you are trading you will need to look at indicators perhaps... or just price action... moving averages, volume.

Other research may include researching your trading... either past or present. Brushing up your knowledge on areas you are not good at, evaluating your money management strategy and checking risk:reward ratios are in proper order.

5. Read as many books as you can! Be wary of anything though that claims you can get rich quick, etc etc. There is a thread on here containing many recommendations for books. (i'll see if i can find it and post it here).

---

Ok found the link for recommended books:-

http://www.trade2win.com/boards/trading-faq/30637-books-should-beginner-read.html

 

[wasp]

http://www.trade2win.com/boards/first-steps/42760-guidance.html#post545654

 

[Hugo Drax]

many thanks for your answers - very much appreciated, a big help
- i'm just digesting them