spread betting,CFDs or futures??-newbie

[mattbird55]

Hi guys, im a newbie trader just reading up on the subject. First problem seems to be what to trade and which companys to use. firstly I was gonna try spread betting (IG INDEX) but when you are betting large amounts the spread seems very wide and expensive (IT CANT BE CLASSED AS GAMBLING FOR NO REASON SURELY??).

So How about futures trading? is this possible from home on a PC?? if so what UK companies are the best to use?? I notice that my stock broker (Selftrade) trades CDFs so will look into that.

But what are your opinions guys, i know very little about this stuff and would much appriciate a nudge in the right direction.

Thanks in advance

 

[Jack o'Clubs]

If you're a complete newbie (which your post suggests you are) open a training / paper-trading account with one of the spreadbet companies and see how you get on. After a few weeks or months of that you'll have a much better idea of what kind of trading / markets suit you. Most of the other stuff you've asked is already on these forums or in the Knowledge Lab so suggest you learn to use the 'Search' function.

 

[damianoakley]

Hi guys, im a newbie trader just reading up on the subject. First problem seems to be what to trade and which companys to use. firstly I was gonna try spread betting (IG INDEX) but when you are betting large amounts the spread seems very wide and expensive (IT CANT BE CLASSED AS GAMBLING FOR NO REASON SURELY??).

So How about futures trading? is this possible from home on a PC?? if so what UK companies are the best to use?? I notice that my stock broker (Selftrade) trades CDFs so will look into that.

But what are your opinions guys, i know very little about this stuff and would much appriciate a nudge in the right direction.

Thanks in advance

Hi Matt,

Your post indicates that you are just looking at Spreadbetting, CFD, or Futures markets.

In my opinion, these 3 instruments would be particularly challenging for a beginner as they can be particularly volatile. Have you looked at trading stocks at all? Not via spread betting or CFD's, but trading the ACTUAL market directly?

Being a stock trader, I am probably slightly biased towards simple stock market trading, but genuinely I do think that it could be a more "gentle" start to your trading career than going straight for potentially more volatile instruments.


Thanks

Damian

 

[mattbird55]

have been investing in shares directly for quite some time, with moderate success. I generally go for quite boring things tho i.e high yeilding banks and tabacco firms/tracker funds etc. I will continue to invest most of my money this way but would like to devote about 10% or so to more volatile short term trades. Would love to short oil right now. or possibly go long on a couple of shares but just want to know the most cost effective way of doing it.

As said earlier spread bets seem very dear as the spreads can be quite large. Even if you get the trade right the spread takes a significant percentage of your profit away. The fact that you pay no tax on winnings becomes irrelevant if your chance of winning is significantly reduced.
I would like to hear someone who makes consistent money from spread betting play devils advocate on this.

 

[the blades]

Hi guys, im a newbie trader just reading up on the subject. First problem seems to be what to trade and which companys to use. firstly I was gonna try spread betting (IG INDEX) but when you are betting large amounts the spread seems very wide and expensive (IT CANT BE CLASSED AS GAMBLING FOR NO REASON SURELY??).

So How about futures trading? is this possible from home on a PC?? if so what UK companies are the best to use?? I notice that my stock broker (Selftrade) trades CDFs so will look into that.

But what are your opinions guys, i know very little about this stuff and would much appriciate a nudge in the right direction.

Thanks in advance

Sorry to disagree with the above posts, but spreadbetting is (for a small trader) cheaper than dealing direct in UK stocks.

The price you pay is directly linked to the underlying stock (just add 5% annual interest and take off any dividends, then apply 0.8% spread to market spread if using IG index, less (sometimes zero) if using CMC).

Stamp duty and broker fee's will outweigh the additional spread applied by the spreadbet company, for smaller deals. This is before the tax debate even begins.

Refer to the thread "cost of spreadbetting" for real life examples (not opinion) of spreadbet prices, including a calculator of costs. Use the latest spreadsheet at the bottom of the thread.

Good luck,
UTB

 

[mattbird55]

thanx for the input, will have a good look at that thread tomorrow