Small Spread Betting account and Strategy - advice for a new trader?

sharesr4us

Member
73 2
Hi Lok101,

Welcome to a great forum. A few pointers....from a beginner like myself (Expert traders please correct me if I advise wrong!):-

1. You've got to be patient and remember to work on your psychology. One of the things I've learnt from past failures is that one cannot let his/her emotions get in the way when the trading - one cannot panic, otherwise your doomed to fail. Truth said, I still sometimes let me emotions get in the way, but slowly I'm working on them and trying to keep a cool, calm mindset.

2. I personally think that you have opened a live account prematurely and should have continued trading using demo accounts for a longer time...maybe leave your live account alone for now and go back to demo accounts...play about and see what strategies you can come up with...

3. You need to have an entry, exit strategy all the time in the event of a loss/profit.

4. You can't get too greedy when making profits and need to have a plan in place of how you would exit the trade.

5. Be prepared to lose as no trader is perfect and even the best will always make losses.

6. Don't throw your life-savings away - ONLY trade what you think as extra cash and won't lose sleep over it, as you could lose the whole lot.

Ask away any questions as there are some great members on this forum whom want to help.

I hope this helps.
 
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CityTrader

Established member
665 26
Trade small
Trade your gut instincts.
Read the papers, watch financial news channels.
Get a feeling for sentiment
Do NOT get sucked in by the bulletin board bull****ters
Don't follow tips
Don't ask other people what they think
Don't overtrade.
Expect to lose at first. ( read through as trade small!)
 

remme001

Member
69 2
There is a reason most professional traders don't SB.
Yes and it's simply because they will be liable to pay tax if it is their main source of income in which case the advantages of spread betting become completely redundant because it is not beneficial to this type of trader.

There is also no such thing as a stop loss or a guaranteed stop loss but most people don't believe this.
Guaranteed stops are typically backed by insurance by the broker meaning if for whatever reason they failed to close your position at a specified price the difference between the price in which your order was executed and the stop loss you had set will be covered by the insurer or broker instead of the client. You normally have to pay a premium because of this.
 

jsc

Member
84 13
Yes and it's simply because they will be liable to pay tax if it is their main source of income in which case the advantages of spread betting become completely redundant because it is not beneficial to this type of trader.


Guaranteed stops are typically backed by insurance by the broker meaning if for whatever reason they failed to close your position at a specified price the difference between the price in which your order was executed and the stop loss you had set will be covered by the insurer or broker instead of the client. You normally have to pay a premium because of this.

I don't think I need educating thank you. I was the broker.
 

Splitlink

Legendary member
10,850 1,234
Hi all,

New to the forum, fresh meat, so be gentle! I have read a fair amount on the various areas covered by the ‘trading umbrella’, but I still have a lot to learn. I have read most of the stickies’ on here, and practiced paper trading with a demo SB account for some time to get the feel of it, and figure how to actually place a trade. Predictably I did quite well on my demo account, which therefore encouraged me to open a live account with real money which I have subsequently not done so well on! So, I need to improve my strategy and have a re-think on my approach.

To begin with I have some basic questions first that will allow for simple straightforward answers. I haven’t been able to see clear cut answers on these so far, so I do apologise if they have been repeated:

1. Is Spread betting classed as ‘trading’ in the same way dealing with a conventional broker, and buying/selling shares on the open market is?
2. Is using an online SB platform a more risky way to approach trading, or would it be a better option to look at open market via a broker and buy / sell shares in the more traditional way?
3. What fundamental research can one do (if any) to facilitate a successful SB strategy, other than observing technical indicators and candlesticks, or is it not really worth doing (other than being aware of what’s happening in the news etc.)?
4. Leading on from above; Can you combine fundamental analysis with technical analysis to conduct and operate a successful strategy on a SB platform? (i.e. FTSE100)


To elaborate on the above, in a nutshell to save a long post; I wanted to start trading and have explored the various avenues available. I have opened a live SB account following several months successful trading via a demo account (which I might add, can lull you into a false sense of security!). Initially I was doing well, then it started to go bad. I am using a limited loss account in that I cannot lose more than my stake and I don’t want to borrow money or anything like that. I also ALWAYS trade using stop losses in place. The idea is to start small and grow the account gradually. I am under no illusions and have the patience and mind-set to approach it correctly (or so I think). However, I realise I need to improve my money and risk management skills. I explain below:

So, onto my problems! It isn’t the win loss ratio, it’s my profit ratio. I’ve exported the trades to a spreadsheet and examined them. To put it simply, I have had many more winning trades than losing ones, however, the value of my losing trades exceeds the cumulative value of my winning trades, therefore I have effectively screwed myself. I know I am going wrong but I am struggling to understand how to change my process. The issue I find is that I have been trying to keep it small and trade with small amounts, which normally means I have to close out the trade on a small win as soon as I start seeing profit, as normally it tends to reverse and either close me out on my stop, or if I adjust the stop thinking it’s going to pullback (which many times it has) it drops even further and I lose more money on that particular trade. Nobody likes losing let’s be honest, but I accept I need to improve on it, as odd as that may sound! I have tried the ‘ride your wins and close the losses’ strategy, but I normally find that the market reverses which effectively reduces the potential profit I could have achieved on a trade if I had closed it out when I deemed it to be an acceptable win. It’s a tricky process being able to identify how far one should place their stop from the entry point, whilst allowing the market to ‘breathe’ as it were. If I reverse my process meaning my losing trades are my winning ones, I would be sorted! That is despite the fact I have infinitely more winning trades than losing trades. I need to get back to the drawing board and re-establish / firm up my strategy before continuing, but would appreciate any advice or input available. I am enjoying it, but I also can appreciate the extreme stress it can cause when it goes [email protected] up! I want to learn more though so please do let me know your thoughts, as well as providing decent advice as to how you think I can correct my strategy.

At the moment I am trying to keep it simple using moving averages to identify trends and directions. This was what was working for me previously. 10, 20, and 60, and then trying to enter a trade when I can see the crossover, or clearly identify when there is a strong up-trend or down-trend. I currently trade the 1min charts as have been using small amounts and taking small profits (but sadly the bigger loses too as described above). I also realise I have been over-trading, another reason why it’s gone wrong. So I can see a few reasons why I haven’t been doing well but I just need some guidance on my strategy.

So far I am thinking:

Improve my risk and money management skills
Trade a longer time frame perhaps (5 or 15min charts?)
Have set stop loses and do not move them even when losing
Trade less!
Accept losses / improve ability to accept and understand when I am wrong!

If you are able to provide advice and direction to facilitate the above, that would be excellent. Any help appreciated!

Thanks gents.

Hi,

jsc and 0eakoil have got it right. I'm not about to add to their remarks except to say that I am a Spreadbetter of many years. I am not especially good at it but that's my fault, my SB has, always, been straight with me and I make enough money to know that it works. If I had stayed with a broker, I would have been broke years ago, probably. My secret-which is no secret, if you read through the main threads, is low stakes. SB-ing allows me to do that. Remember that a broker costs tax plus ten quid per point.

DBPhoenix has come back, after a few years. His "Straightline Trading" may be a good method for you to follow.

Good Luck-
 
 
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