Spread Trading beginner - Looking for trading platform

[FormulaOneFan]

Hello everyone,

I'm a Beginner to Spread betting. Early this week I was thinking about doing something out of my regular work and was thinking about share dealing. I came across Shares, Options, Forex, CFDs and Spread betting. Spread betting looked very risky but at the same time if you do your home work and do proper research and analysis then you could reduce the risk and increase your chances of earning respectable income. I'm thinking I could start small and if I make (£25 - £100) profit a day I would be happy.

I have written down set of rules and here is the top 3 rule:

Rule 1: Always set a stop loss.
Rule 2: Don't be greedy.
Rule 3: Do your homework and do your research before you start.

I'm currently doing my research regarding which Spread betting site should I register and use.

1. Spread Betting | Financial Spread Betting
2. City Index UK - Spread betting and CFDs on financial markets

are the top two sites I came across. I also came across Spread Co - Financial Spread Betting | CFDs | Forex.

May I know which site would you advice? I'm planning to open 6 week educational account with IG first and then slowly move up.

Please let me know which one would you advice?

thanks

 

[timsk]

Hi F1fan,
It's down to personal choice at the end of the day. If any of the SB Co's were streets ahead of the others, then everyone would migrate to them - or, conversely, away from them if they're much worse than the others. So, suck em' and see! If you're planning on trading futures, then you might like to include ProSpreads | Professional Spread Betting on your shortlist.

Re. your rules - No. 1 is good, very good. Try and ensure that your stop loss doesn't exceed a fixed percentage of your equity. 5% max', 1-2% is preferable. Rules 2 and 3 are too vague to be of any real value as they can't be measured. With rule 1 - you either set a stop loss or you don't, so you either adhere to the rule or you break it. It's black and white. Where as, how much research is too little - or too much? What's being 'greedy'? The successful traders I know eradicate as many of the vague, imprecise grey areas from their trading as possible so that, in the heat of battle, they can make fast decisions that are consistent with their trading plan. Consequently, when they review their trades the next day, (especially the losing ones) they never throw their hands up in despair and, looking to the heavens ask; 'why oh why the **** did I do that!'
Good luck,
Tim.

 

[No one Knows]

whats your risk capitol like? your expecting to make 25-100 per day based on some reasearch into the markets i presume?

regards

mark

 

[FormulaOneFan]

whats your risk capitol like? your expecting to make 25-100 per day based on some reasearch into the markets i presume?

regards

mark

I'm looking at risk capital of upto 10K. I'm still doing my research and haven't completed yet. The expected earning is what I would like to have (if that is possible). I will stop for the day when I achieve my target for the day. That's the plan.

 

[No one Knows]

I'm looking at risk capital of upto 10K. I'm still doing my research and haven't completed yet. The expected earning is what I would like to have (if that is possible). I will stop for the day when I achieve my target for the day. That's the plan.

Just thought id ask as 25-100 per day is alot if you only had 1-2k in the bank, 1% per day is a more realistic aim.

regards

mark

 

[ibex666]

not so easy

Hello everyone,

I'm a Beginner to Spread betting. Early this week I was thinking about doing something out of my regular work and was thinking about share dealing. I came across Shares, Options, Forex, CFDs and Spread betting. Spread betting looked very risky but at the same time if you do your home work and do proper research and analysis then you could reduce the risk and increase your chances of earning respectable income. I'm thinking I could start small and if I make (£25 - £100) profit a day I would be happy.

I have written down set of rules and here is the top 3 rule:

Rule 1: Always set a stop loss.
Rule 2: Don't be greedy.
Rule 3: Do your homework and do your research before you start.



I'm currently doing my research regarding which Spread betting site should I register and use.

1. Spread Betting | Financial Spread Betting
2. City Index UK - Spread betting and CFDs on financial markets

are the top two sites I came across. I also came across Spread Co - Financial Spread Betting | CFDs | Forex.

May I know which site would you advice? I'm planning to open 6 week educational account with IG first and then slowly move up.

Please let me know which one would you advice?

thanks

Your rules are too simplistic. Takes many years backtesting, paper trading, researching etc etc etc. MOST accomplished spread traders will tell you they were stung and burned initially. Ideals of £100 a day profit. It just doesnt happen that way. Plus youve then got the games the sb firms play against you to take your money. It just doent happen overnight

 

[TAjammy]

i suggest you read trader dante's journal, and the james16 thread, half way through for me !

 

[luckystrike23]

Which Spread Betting firm to use?

 

[FormulaOneFan]

i suggest you read trader dante's journal, and the james16 thread, half way through for me !

I did a google and searched this forum and can't find the journal. Can you provide some links please?

 

[Xeno]

I did a google and searched this forum and can't find the journal. Can you provide some links please?

I think he means this one. It's one method, but you'll pick up a lot of good ideas and tips

http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html

 

[FormulaOneFan]

I think he means this one. It's one method, but you'll pick up a lot of good ideas and tips

http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html

Thanks for the info. Sorry I have a stupid question to ask: That thread seem to have been closed now. It was closed June 2008. It has been nearly two years since that thread was created. Has anything changed since then? We are in 2009 now and things change quickly. Is there any new that I need to be aware of?

 

[Xeno]

Thanks for the info. Sorry I have a stupid question to ask: That thread seem to have been closed now. It was closed June 2008. It has been nearly two years since that thread was created. Has anything changed since then? We are in 2009 now and things change quickly. Is there any new that I need to be aware of?

No, the markets have been the same for decades now. ;-)

Seriously, not particularly, since S/R is still relevent as are the principles of how to take trades and manage them.

But you need to take things from the thread, test things yourself, discard or change things that don't work for you, and make it your 'own' method that works for you. Then once you've done that, you'll have a good feel about how to develop your own methods, which is where most if not all successful traders end up.

One way of learning is to take existing published methods, test them and work out why they don't work. See how you could improve them. (Hint: it isn't add an indicator)

 

[gadgetguy]

Advice

FormulaOneFan

I'm going to help you out with a few truths as you're new to trading, and I wish someone had told me all this when I was in your shoes, no I'm not trying to be something I'm not, just hear me out and hopefully take it on board.

First, forget about making a 'living' from trading (with that £100 per day target thing) - I was the same, I can spreadbet as I'm in the UK, thought I would make few hundred a week tax free, sit back and laugh while the world worked hard everyday. Forget about a living, NOT BECAUSE IT CAN'T BE DONE (it can I'm sure), but because you should aim for a pot of wealth instead - aim to work for your bills, trade in the background to create wealth, then in 5,6,7 years you can sit back and enjoy being richer than you are now, who knows, in 10 years you may have a ferrari and a nice house all paid for. Create a lump sum, not wages. Trust me, you can't compund wages you spend along the way - you can compund a lump sum in a broker account that you NEVER WITHDRAW FROM.

Plus, the moment you hit a losing streak... ouch, your dream is broken, you wont be earning your wages anymore. Forget it, don't quit your job, just aim to be rich within 10 years and under - then sit back and smile.

OK, now as for spreadbetting, I recommend it simply due to tax reasons, you don't have to pay those b*stards at the inland revenue a thing, which means our pathetic Labour government cannot rob you to fund the workshy louts of our once great nation. However, be warned, the spreadbetting companies DO play games in that they con you with prices and stop hunt. Con you say? Yes, when something is trading at 133.80 and moving up, you'll be quoted 133.77 - 133.87.... because they are skewing the prices as the prices are rising. They make more money that way. Plus spreads are normally awful compared to real markets. HOWEVER, I do recommend prospreads as they are tight and fair in their spreads and hedge your bet which means the more you TRADE (win or lose) the more they make... so why would they want you to lose? They don't. You win, they win. Now, as for stop hunting, this is when firms just see you stop, see the price "close" to it and say "what the heck, lets stop him out to make cash" - the guys that do this are NO hedging your bet (not all spread firms do) so its more like a bookie: you win they lose, they win you lose. So your stop will magically get it and they will play dumb whilst counting your cash. Make sure you go with people who hedge your bet, not trade against you.

Now, as for the market method you trade, here's my advice: NEVER EVER TRADE DISCRETIONARY!! That means don't sit there, watch the charts with whatever indicators you fancy and say "that looks good to me" - that's just gut feeling and wont help. Trade mechanical systems. HANG ON HANG ON DON'T SHOOT ME EVERYONE! HEAR ME OUT! System trading removes all emotion and gives you your best chance of winning long term. Discretionary means you go on your instinct, armed with a game plan, but you then have to suffer the emotions. Emotions will kill you. Forget the news, forget fundemental data, forget research except one kind: build systems using trading platform programming (whichever you want, plenty out there) and backtest them on huge amounts of data, then chop the data up and backtest over smaller chunks. If your output is profitable, you potentially have a winner. Optimise if you must, but only in a very small way (eg if you have a moving average of 25 you think should work, optimise using a range of say 22 - 28 periods). This way you are not curve fitting into data.
PICK JUST ONE OR TWO CHARTS AND NEVER TRADE ANY OTHERS! If you like FX, trade the EURUSD and maybe GBPUSD, forget the small high spread high noise crosses and non-USD crosses. The world watches the dollar, things move heavy against the dollar - like gold and EUR. Trade those 2 only and you can make a fortune. Forget commodities, stocks etc.... i would trade just those 2. That way, you do not search charts every day looking for opportunities. Let your system method wait for the setup, tell you, you trade, full discipline, no second guessing. This time in 10 years you will have done as well as you can expect to do. Simple.
One last thing, money management isn't scary or boring, its a MUST and forget about that 2% stake nonsense, forget risking up to 5%, it will get you rich in a thousand years maybe. You said you have up to 10k to trade with? Fine, but do this: research money management methods (there's not huge amounts of them) and spend MORE TIME LEARNING THEM THAN LEARNING INDICATORS OR SYSTEMS. Systems are 2-a-penny and they can all mostly make you money over time, money management is PRICELESS.

God, i wish someone had told me this 8 years ago.

 

[alex2006]

I must admit that gadgetguy's post is one of the best and honest posts I have not see for a long long time. Well done!

 

[gle101]

Except, one shouldn't be against paying taxes on your profit (you can also have tax deduction in case of losses). If you still would like to have it tax free, I would consider going for a lower entry level, with Prospreads it would be too high a stake involved for a newbie. If you are ready for Prospreads, you are probably ready for the futures (Prospreads is very expensive). Don't be afraid of SB, instead, learn the pitfalls and risk management (such as trading during news releases), and as correctly pointed out, the most important part of trading, adopt a proper money management strategy.

 

[FormulaOneFan]

FormulaOneFan

I'm going to help you out with a few truths as you're new to trading, and I wish someone had told me all this when I was in your shoes, no I'm not trying to be something I'm not, just hear me out and hopefully take it on board.

First, forget about making a 'living' from trading (with that £100 per day target thing) - I was the same, I can spreadbet as I'm in the UK, thought I would make few hundred a week tax free, sit back and laugh while the world worked hard everyday. Forget about a living, NOT BECAUSE IT CAN'T BE DONE (it can I'm sure), but because you should aim for a pot of wealth instead - aim to work for your bills, trade in the background to create wealth, then in 5,6,7 years you can sit back and enjoy being richer than you are now, who knows, in 10 years you may have a ferrari and a nice house all paid for. Create a lump sum, not wages. Trust me, you can't compund wages you spend along the way - you can compund a lump sum in a broker account that you NEVER WITHDRAW FROM.

Plus, the moment you hit a losing streak... ouch, your dream is broken, you wont be earning your wages anymore. Forget it, don't quit your job, just aim to be rich within 10 years and under - then sit back and smile.

OK, now as for spreadbetting, I recommend it simply due to tax reasons, you don't have to pay those b*stards at the inland revenue a thing, which means our pathetic Labour government cannot rob you to fund the workshy louts of our once great nation. However, be warned, the spreadbetting companies DO play games in that they con you with prices and stop hunt. Con you say? Yes, when something is trading at 133.80 and moving up, you'll be quoted 133.77 - 133.87.... because they are skewing the prices as the prices are rising. They make more money that way. Plus spreads are normally awful compared to real markets. HOWEVER, I do recommend prospreads as they are tight and fair in their spreads and hedge your bet which means the more you TRADE (win or lose) the more they make... so why would they want you to lose? They don't. You win, they win. Now, as for stop hunting, this is when firms just see you stop, see the price "close" to it and say "what the heck, lets stop him out to make cash" - the guys that do this are NO hedging your bet (not all spread firms do) so its more like a bookie: you win they lose, they win you lose. So your stop will magically get it and they will play dumb whilst counting your cash. Make sure you go with people who hedge your bet, not trade against you.

Now, as for the market method you trade, here's my advice: NEVER EVER TRADE DISCRETIONARY!! That means don't sit there, watch the charts with whatever indicators you fancy and say "that looks good to me" - that's just gut feeling and wont help. Trade mechanical systems. HANG ON HANG ON DON'T SHOOT ME EVERYONE! HEAR ME OUT! System trading removes all emotion and gives you your best chance of winning long term. Discretionary means you go on your instinct, armed with a game plan, but you then have to suffer the emotions. Emotions will kill you. Forget the news, forget fundemental data, forget research except one kind: build systems using trading platform programming (whichever you want, plenty out there) and backtest them on huge amounts of data, then chop the data up and backtest over smaller chunks. If your output is profitable, you potentially have a winner. Optimise if you must, but only in a very small way (eg if you have a moving average of 25 you think should work, optimise using a range of say 22 - 28 periods). This way you are not curve fitting into data.
PICK JUST ONE OR TWO CHARTS AND NEVER TRADE ANY OTHERS! If you like FX, trade the EURUSD and maybe GBPUSD, forget the small high spread high noise crosses and non-USD crosses. The world watches the dollar, things move heavy against the dollar - like gold and EUR. Trade those 2 only and you can make a fortune. Forget commodities, stocks etc.... i would trade just those 2. That way, you do not search charts every day looking for opportunities. Let your system method wait for the setup, tell you, you trade, full discipline, no second guessing. This time in 10 years you will have done as well as you can expect to do. Simple.
One last thing, money management isn't scary or boring, its a MUST and forget about that 2% stake nonsense, forget risking up to 5%, it will get you rich in a thousand years maybe. You said you have up to 10k to trade with? Fine, but do this: research money management methods (there's not huge amounts of them) and spend MORE TIME LEARNING THEM THAN LEARNING INDICATORS OR SYSTEMS. Systems are 2-a-penny and they can all mostly make you money over time, money management is PRICELESS.

God, i wish someone had told me this 8 years ago.

Thanks for wonderful post. I have few questions about some of things you have mentioned but first I will google those and try to find it myself. If I can't find it I will come back and post it here.

 

[timsk]

. . . One last thing, money management isn't scary or boring, its a MUST and forget about that 2% stake nonsense, forget risking up to 5%, it will get you rich in a thousand years maybe. .

Gadgetguy,
Can you clarify what you're advocating here please, as the implication is that you recommend risking in excess of 5% of capital per trade?
Cheers,
Tim.

 

[gle101]

Gadgetguy,
Can you clarify what you're advocating here please, as the implication is that you recommend risking in excess of 5% of capital per trade?
Cheers,
Tim.

Yes, that was my exactly my thought on the part regarding money management.

 

[gadgetguy]

Hi all

OK, this is what I meant: I'm not saying 5%/2% or whatever is a NO-NO, what I'm saying is that a fixed amount of like 2% or whatever is way too rigid and unforgiving. What's the answer? Well, systematical (and sometimes complex) money management solutions are the key to making wealth, not non-adaptive set-in-stone approaches like "just stake 2%". Nobody gets rich that way unless you have a fortune to play with already. If you are a retail trader with a modest account, you need to supercharge your returns to make wealth. This can not happen with a set % money management technique. Put it this way: your MM technique should be more complex and more tested and mor thought about and more adored and more cried over and more wonderful than your trading system ANY DAY OF THE WEEK! Forget complex systems: if your system has more than 1 indicator then it's probably heading for a fall. I know people who trade system with NO indicators, who have programmed the simplest piece of code based on basic price action... then backtest thoroughly... and produce results that would put a smile on anyone's face. No, not epic, unsustainable gains, but consistent moderate nice gains that produce an equity curve you could set your watch by. Guess what? That's a holy grail right there and there are thousands of them... pick one. Try to aim for 40%+ (ideal is closer to 50%) and profit factor 1.75+ (ideal closer to 2). Get a system that can give you these numbers time and time again over fair chunks of back data... and that is all you need from a system BUT THEN COMES MONEY MANAGEMENT WHICH IS THE SUPERCHARGE YOUR SYSTEM NEEDS... AND IT AIN'T RISKING 2% BELIEVE ME! So what is it? Well, any of the others that work for you. Classic example, fixed ratio. Many hate it, many love it. I LOVE IT! It takes an ordinary system result like I said above and turns it into a wealth creator. The key, the grail, the main factor of creating wealth is not in the trading system, it's in the MM system. Apart from fixed ratio, there are other MM systems. and some are good some are terrible. My fav is fixed ratio. Its made for the little guy with a couple of thousand to trade. You want to get rich? Get that 40+%/1.75+ mechanical system up and running, apply a touch of fixed ratio or whatever other MM system you like best, and you will have the best ever chance you can every expect from the markets to make your fortune.

Think of it like this: on a farm you have 2 machines: one to plough the field, one to process the crop. The idea is to make a profit from the produce. The mechanical TRADING system is the field ploughing machine, the thing that goes out there and crops the markets, taking on all the crops, good and bad. Now, when the crops (good and bad) are in, the processing machine is the MONEY MANAGEMENT machine. TWO DIFFERENT MACHINES, EACH WITH THEIR OWN JOB, BOTH HAND IN HAND FOR THE FINAL PRODUCT. Do not confuse the two. Using a processing machine like fixed ratio (or any other MM system that sits right with you) processes the good and bad crops, enhancing the good and limiting the damage of the bad. The result? A great harvest. The ploughing machine on its own may have given an OK harvest, but when the processor sorted it all out, you had a fantastic result. So it is with trading. Your ploughing machine will NEVER NEVER NEVER be perfect, far from it... what's perfect about 40%+ winning trades? But with a Profit Factor of around 1.75+, ideally a bit closer to 2, then the maths work themselves out: you will make profit but nothing to write home about on it's own.... until the processor does it's jon (money management system). The two together will get you where you want to be.

So my point on the money managment issue was not to run anyone down, if I did then I am sorry, and if you are trading 2% fixed amount or whatever and sleeping well at night, then I hope it works out for you forever. But I don't want newbies thinking that's the best way to play coz it isn't - it really can be a lot better than that.

Hope you all make cash - and lots of it.

 

[gle101]

I thought I read it all. One thing is for sure, I wouldn't buy your system.