Spread betting in the media: excerpts from a recent interview
: Spread Betting Opportunities
: About the Editor
As the popularity of financial spreadbetting continues unabated, there have been numerous requests for comments on the topic. Contrary to what those adverts in evening newspapers claim, it is practically impossible for you or anyone else to go from “debt to millionaire” in months by spread bet trading. Novice traders should ignore the get-rich-quick marketers and self-proclaimed “stock market millionaires” and instead focus on developing a solid grounding in the techniques of market analysis.
Could you give us good examples of big wins/losses e.g. concerning banking shares.
As a general rule, for ethical reasons and in order to avoid any potential conflict of interest between my own trading positions and research articles posted on my website, I focus exclusively on major markets and indices such as the FTSE 100, the Dow Jones Industrial Average, currency markets and commodities. I do not spreadbet on individual shares.
It is a common error for new private spread betters to focus on ‘big wins’ because that detracts from the fact that spread betting is not and must never be viewed as a get-rich-quick scheme. The focus of the small private trader should be on the development of analytical skills to aid consistency of gains and the minimisation of losses.
Having said that, my last two trades include solid gains in the Dow (exceeding £3000) over the three-day period between Monday 27th and Wednesday 29th of October from a low-risk £3 a point bet that benefited from a move of almost 11 percent in the US equity markets on Tuesday 28th. I risked a total of £600 on that trade so the profit was just over 500 per cent!
Also, as at the time of writing this (2.40pm on Wednesday 29th October) , I hold a position in the FTSE 100 which was entered into at £5 per point at an index level of 3960 on Tuesday 27th of October. The trade is currently in profit by over £1000 as the index currently trades at 4178 (by the way, I expect to hold this trade for a while longer). If the trade had gone against me, my maximum loss would have been £500. This means that at this point, I have made a profit of 200%. The crucial lesson for beginners is to focus on limiting the potential downside. If one gets the analysis right, then the market would take care of the upside.
Besides these are relatively small-sized trades which goes to show that you don’t need to start out with a huge amount of cash in order to make decent profits.
To control risk and protect my open profit, I apply a trailing stop loss which would ensure that irrespective of what the market does from this point, I will exit the trade with at least some of the current profit. This is the practical, professional approach to trading the markets that I espouse on www.spreadbettrader.co.uk
Whether the market goes up or down is not the issue of interest to the professional trader. It is whether such a move can be accurately anticipated and exploited.
What are your comments on the general boom in spread betting going on at the moment?
The ongoing ‘boom’ in spread betting is the result of a combination of greater awareness of the product by private investors (due to increase advertising by spread betting firms) and higher stock market volatility which has convinced more people of the potential for significant profits from short term trading as buy-and-hold investors have suffered substantial losses.
Furthermore, spread betting provides individual private traders with the opportunity to profit from up or down markets—just like professionals have been able to do for a long time.
Of course, it helps that spread betting carries the alluring feature of being free from capital gains tax. Indeed, this unique feature accounts for a large amount of the increase in popularity of financial spread betting. Unfortunately, a lot of private investors seem to consider that tax-free feature in isolation, ignoring the fact that a capital gains tax-free trading instrument is only valuable if one actually earns capital gains! As I mentioned earlier, the chief concern of private traders should be on the development of practical and effective analytical skills to enhance the consistency of gains and the minimisation of losses.
There is a lot of money to be made from the markets but not by those who go into financial spread betting with a get-rich-quick mentality fostered by the numerous adverts seen in newspapers touting ‘financial freedom’ and ‘stock market millionaire status’ for all comers!
Discuss your short term trading skills course for the benefit of our readers:
Well, it’s simply a trading workshop that is specifically designed for spread betters interested in identifying the precise moment to enter and exit trading positions in any financial market. The course uses lots of practical examples and case study exercises designed to take private traders from novices to skilled spread bet traders in easy steps.
Brief course outline:
Session 1: The essentials of short term trading and financial spreadbetting
Session 2: Advanced financial market analysis
Session 3: An analysis of my trading strategy
About the course presenter
Alexander Olah is a highly regarded investment analyst in the City of London. Studying and analysing the financial markets is his day job and trading the markets is his passion. He is an expert in the fields of financial economics, investment research and technical analysis.
Message from the editor, Alex
“What course attendees will get are the tools and techniques to reach the very best views on the state of the financial markets at any point in time. The techniques and approach are exactly the same ones that I use to reach decisions in my personal spread betting and wider investments”.
What Clients Say:
"You have practically rescued my trading over the past six months. I hold my hands up to say that I am one of those who have attended those phoney 'Stockmarket Millionaire' seminars. I regret it to this day! I just wish I had found your site before they got my money ... The accuracy of your analysis and the quality of your instruction on the course put them in the shade.
I'm still trying to get my head round why you charge so much less than they do...not that I want you to, mind you! Anyway, just wanted to say thank you. Thank you so much"
P.S: Places on the course are strictly limited so as to allow one-to-one focus. Therefore, places fill up fast so book early to avoid disappointment.
The November 1 course is now fully booked. The next course on which there are still places available is on Saturday, 22nd of November 2008.
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