Stupid newbie question but bear with me please......

[Encantador]

I will probably get the terminology wrong too but here goes.

Imagine, you have £1000 to `invest`.
You `KNOW` that the Dow is going to go UP over the next few days by lets say 100-200 points.
You want to use your money to make the most profit from the rise.

Would you use as your vehicle.....

CFd`s
Dow Mini Futures
Spread betting

..... and why?

And, is there a GOOD UK based broker (you want to transfer the money from a UK debit card), that allows you to trade using any of these methods?

Thanks in advance.

 

[hdt]

forget about making money, you need to change your approach to manage risk, how much risk are you willing to take and what kind of loss can you sustain to stay in the game and came back from a few repeated lose

the profits will come when you learn to manage risk and stop counting paper profits.

also your comment about you KNOW the dow is going to go up seems to be alarming, all the profession will tell you they don't know what the market is going to do, all they can do is filter their trades and hope for the best and be very agressive as taking their losses early.

also when you try to max profit you also max your lose if you lose, so think minimize risk first....approach all your trades no matter how good they seem as they will turn out to be a loser and get agressive at protecting your working capital if this is what occurs

 

[euromex]

Encantador ..You didn't say if you tried paper trading first or not...if not... do so at least for a few months before risking your own dosh. Try and open a demo account and learn learn learn ..

Buy Low Sell High

 

[damianoakley]

Hi encantador,

If I KNEW that the DOW was about to rise by 100 points tomorrow, I'd risk everything I have on that one trade. But that's the point. Because you can never know exactly what the market is going to do, you should never risk everything.

Your question just seems to be about what instrument would be best to use to make the most out of the price rise. I think this is down to personal choice and depends on what instrument you understand the most.

If you manage your risk, you'll probably get similar results no matter what "vehicle" you use.


Thanks

Damian

 

[nickdd]

forget about making money, you need to change your approach to manage risk, how much risk are you willing to take and what kind of loss can you sustain to stay in the game and came back from a few repeated lose

the profits will come when you learn to manage risk and stop counting paper profits.

also your comment about you KNOW the dow is going to go up seems to be alarming, all the profession will tell you they don't know what the market is going to do, all they can do is filter their trades and hope for the best and be very agressive as taking their losses early.

also when you try to max profit you also max your lose if you lose, so think minimize risk first....approach all your trades no matter how good they seem as they will turn out to be a loser and get agressive at protecting your working capital if this is what occurs

Well said HDT. Spot on.

 

[bizmanny]

I will probably get the terminology wrong too but here goes.

Imagine, you have £1000 to `invest`.
You `KNOW` that the Dow is going to go UP over the next few days by lets say 100-200 points.
You want to use your money to make the most profit from the rise.

Would you use as your vehicle.....

CFd`s
Dow Mini Futures
Spread betting

..... and why?

And, is there a GOOD UK based broker (you want to transfer the money from a UK debit card), that allows you to trade using any of these methods?

Thanks in advance.

You say "imagine" so i assume you are doing paper trading. Why not try to do imaginary (paper trade) on all vehicle and see which one suit your trading style best.

 

[daytradingUK]

As a vehicle you can't go far wrong with CFDs, but your £1000 must be loseable. If you can't afford to lose a penny then stick it in an ISA or other high interest account as you may get stiffed.

I agree with the others on your comments about knowing what is going to happen to the DOW, I had a very good idea PRTY was going down the pan, but that doesn't mean I was guaranteed to get it right so I chose not to touch it (was going to short). Looking back it would have been great, but had the bill not been signed, or somebody found a loophole I would have been in deep trouble.

One thing to note, with CFDs you can loose more than you put in, for instance if you put in 5% margin and the price goes 6% against you then you owe them money!

Another thing to bear in mind, most companies will not offer you a brilliant CFD rate unless you have experience of trading (intermediate investor), so you may have to shop around a bit. I think there are a few that would offer you their services, but be careful.

Remember if I was as good a real trader as I was at paper trading I would own Canary Wharf!

 

[KIMMRUNNER]

As a vehicle you can't go far wrong with CFDs, but your £1000 must be loseable.!

Other things to consider in the "spreadbet vs CFD" argument: are -

--The tax benefits of spreadbetting.

--Consider the value of protection under FSA for your money. By and large spreadbet
accounts are protected as a separate client account and have ombudsman
protection, where CFD accounts lie outside that protection.

Totally agree that wherever you place it the £1000 must be losable, and also -
the overwhelming likelihood is that you will lose it, so expect to! - most traders blow their
accounts at least once before finding gaining the experience and a formula that works.

Though spreadbetting is much maligned by the trading community at large, and
does indeed have some drawbacks, it is a good way to cut teeth on small positions.

 

[coolshades]

i dont want to be moralistic here but dont think raising credit card money to spread bet is a good idea.. that money is costing you 24-26% interest.. you need to factor that cost to break even and start making money..

 

[damianoakley]

i dont want to be moralistic here but dont think raising credit card money to spread bet is a good idea.. that money is costing you 24-26% interest.. you need to factor that cost to break even and start making money..

Fully agree - I don't think it's a good idea, especially as a beginner, to borrow money to be used for trading.........certainly not if you want to trade seriously anyway.


Thanks

Damian

 

[roguetrader]

i dont want to be moralistic here but dont think raising credit card money to spread bet is a good idea.. that money is costing you 24-26% interest.. you need to factor that cost to break even and start making money..

Can't disagree with the sentiments you have expressed here, but a debit card is not a credit card, clue's in the name.

 

[damianoakley]

You're right......what a stupid clue to miss - sorry.


Damian