Newbie Question(s)

[Vinnyvagus]

Hi everyone

I'm new to the spread betting idea and have this week bought myself a couple of books on Amazon to help me understand spreadbetting (I have though been doing it on Sport for a while - but keen to move into the financials)

OK i'm aware of the issues in the financial markets at the moment (who isn't) but all I'm wondering is:

1) Is it best to just research, read and get to grips with the spread betting but hold out until such time the financial markets get better before i part with my money as a newbie - or is now just as good a time as ever?

2) Next is I have read that there is some sort of ruling against "going short (SELL)" - now is this on the likes of FTSE 100, S&P etc... (sorry if its obvious to you guys...but I'm just asking the question as I'm new to this)

3) What site(s) do you all recommend to open a spread betting account with? OK you all have your favourites but thought I would see which comes back to me here as the most popular for me to look at.

Thanks in advance for you help.

 

[tomorton]

Hi Vinnyvagus - The thing to remameber is that you are betting against the SB companies, forcing them to find others to bet against you and cover their risk: if they can't find enough people, it is head to head, you against them and they are clever, with many tricks.

1) There is no need to be out of the markets, the right TA signals work regardless of where the market is or what Bernanke and Paulson or the papers say (we read the charts, but the charts can't read). But when times are volatile, it would be good to make sure you have stops in place and you might reduce your position size if your stops are being hit more often. Stay alive until you can win the game.
Note: There is a marginally higher risk at present that an SB firm might go bust. For this reason you might limit your capital submitted to them (though you would be enbititled to 100% compensation on the first £30,000 deposited with a Uk company if they went belly-up).

2) In the UK, there is a list of financial companies you can not currently short. Your SB firm will tell you which ones or go to the FSA website. You can still short the FTSE100 index if you want.

3) Just try one, but start with small positions until you are consistent, then increase your exposure and open a second account as a back-up.

 

[Vinnyvagus]

Thanks Tomorton. Some good points there. I've just been reading the first of my two books i purchased. Some bits i understand...some bits I will no doubt have to read again. One thing for sure is that its advised to have and automatic stop-loss set up - so I will be taking that advice on board!

Another thing ..as a new person starting out is it best to start with the likes of the Indicies rather than the likes of company stock, Commodities etc... or not?

 

[tomorton]

The TA of indices behaves more often like the text books say it should - it is unusual for a company-specific piece of shock news (good or bad) to affect a whole index and even the movement of a whole sector is smoothed by the other sectors within the index. Indices don't have annual report release dates or ex-dividend dates that can muck up your nice TA. There is much more analysis of index charts available than individual companies. The spreads and margin requirements for spreadbetting indices are usually a lower overhead. The downside is lower volatility, so a slower rate of return but for many people this is balanced by lower risk. I wold leave commodities until you are well-versed in market behaviours and TA.

 

[monkal]

Hi Vinnyvagus

Why don't you open a demo account with one of the SB companies. This should give you some idea how it works. And my advice to you - don't bet real money yet. Try to find some system that will suit you and test it on the your demo account. It will probably take some time but it will worth it.

Good lock

 

[Vinnyvagus]

Yeah I've done just that. Tradefair.com give you a fake £10,000 pot so have just opened a DEMO account with them. This should give me a good idea of what to do etc Thanks guys...