Iron Condor

In such volatile times there will always be opportunities to make a profit and plenty of opportunities to lose more.One industry that has been thriving is the spread betting industry. Whilst there is currently a ban on shorting financial stocks, investors are still enjoying the ability to buy and sell indices like the FTSE 100, thousands of other stocks and shares, forex markets, crude oil, gold etc. etc. Naturally many investors like the fact that there are no commissions or brokers fees and that spread betting profits are tax free*. That is all well and good. Although at this point I should mention that spread betting is not a one way street, it carries a high level of risk to your funds. You can lose more than you initially invest. It does not suit all investors. In short, you should only speculate with funds that you can afford to lose. And, like the adverts say, ‘ensure you understand the risks and seek independent financial advice if and when necessary’.The above pros and cons are not the only considerations in today’s volatile market.For the investors across the world there are further important considerations:1) Am I trading on a stable platform? If I need to make a trade or close one now will the platform be up and running or down for ‘essential maintenance’?2) Are my funds safe? Or if the company in question goes bankrupt do I lose everything I have on deposit?3) What happens if I trade on a particularly volatile day? How can I reduce my downside?These are questions you should be asking yourself in order to help minimise your risks.Most of the big, established spread betting companies answer these questions quite well. For example, IG Index recently reported, “during one week in October we took over 700,000 trades in a period of high volatility, but our platform was 100% reliable with absolutely no downtime”What about my funds on Deposit? FinancialSpreads.com, IG Index and the other established firms segregate your funds in a designated account. The account is ring-fenced from trading activities and covered by the Financial Services Compensation Scheme to make sure your money is safe. What happens if I trade on a particularly volatile day? How can I reduce my downside?Again, the spread betting companies have moved on from the days of ‘if you lose, unlucky’. The firms now offer a variety of options. FinancialSpreads.com, for example, attaches a Stop Loss to every single opening trade you make. So if your trade goes wrong your bet will be closed out when the market hits the Stop Loss. It should be noted that Stop Losses are not guaranteed, eg if the market gaps then your trade will be closed at the next level the market trades at.One of the ‘relatively new’ companies, ShortsandLongs, has gone one step further and attached a Guaranteed Stop Loss to every single opening trade you make. I say ‘relatively new’ because ShortsandLongs is a new service but operated by Spreadex. Spreadex is an established operator that has been in the market since 1999.The Guaranteed Stop Loss works just like a Stop Loss. If your trade does not go according to plan it will be closed out when the market hits the Guaranteed Stop Loss. However, if the market gaps then your trade will still be closed at the level of the Guaranteed Stop Loss, not the next traded level.A number of companies, now offer Guaranteed Stop Losses. The trade off is often a slightly larger spread however that can be worth the peace of mind (and…reduced risk).In such volatile times there will always be opportunities to make a profit and plenty of opportunities to lose. Make sure you are not losing money for the wrong reasons.* Tax law can change and/or may be different if you pay tax in a jurisdiction outside the UK.

The Sub Prime problem arrived in an economy growing at over 3%. It is disturbing to speculate what will happen to the substantially weakened banks if there is a long recession and the vast bulk of medium rated mortgage risk and possibly even the huge Junk bond market come under, not just the current valuation problems but also, pressure from actual defaults.Whilst many home owners are clearly concerned about falling house prices there are a few interesting options out there both for investors and home owners who want to hedge against falls in the housing market.Spread betting firms like IG Index now offer markets on the Average UK House Price. Of course with any such speculation there are risks. However, trading the Housing Market is an interesting option.Sentiment is now falling and whilst mortgage approvals have been suffering this is not the end (or even beginning) of the story. Viewings and enquiries at Estate Agents have been recording ever lower numbers. The mortgage offer is generally one of the last factors in a house purchase, first comes the hunt. The real test will come if the employment outlook begins to seriously weaken. It must be something of a worry to policy makers that the current anguish is being felt when we have virtually full employment. What on earth will happen if (when) large numbers of high earning jobs start to be lost? Whilst people outside of the City of London like to smile at every misfortune felt by the absurdly overpaid bankers the fact is that in doing so they are laughing at themselves. Weakness in the City would mean an ever widening circle of misery. Looking at the housing market from a slightly different angle, Simon Denham of Financial Spreads recently commented on the current high cost of mortgages, “The ridiculous requirement for banks to mark to market every single asset they hold is playing havoc. Most investments are in very liquid easily priced holdings eg stocks, government bonds, cash etc. However many are in completely illiquid and still perfectly secure assets eg mortgage bonds, property etc. How do you value a product which has good solid worth but for which, temporarily, there is no buyer? Many are being forced to revalue at ruinous levels simply because the auditors, fearful of their own backs, are insisting that this is prudent. None of them would ever dream of selling at these valuation levels but this is academic.“It is this ‘mark to market’ requirement that is likely to hold back recovery. As soon as a mortgage is awarded the lender may have to mark the loan immediately at a substantial loss. You can understand the lender’s reluctance.”It is easy to let the current slowdown in housing to assume crisis proportions in many investors’ minds. However, in reality, a year ago it would have been difficult to find anyone who thought that prices were anything other than over heated. A period of cooling or at least stagnation is probably well overdue. Unfortunately, given that we live in a country where for many people the value of their house defines their wealth, it is easy for any slowdown to affect the national psyche. If we enter a five year slump as per 1989 to 1994 then the economy will find it very difficult to ignore.

Note that spread betting on UK House Prices like other forms of spread betting carries a high level of risk to your money and may not suit all forms of investor. You can lose more than your initial investment so make sure you only speculate with capital that you can afford to lose. Likewise make sure you understand the risks involved and seek independent financial advice where necessary.

So it looks like we have avoided a 1930’s style depression however the current forecasts still suggest slow growth and a difficult time ahead. So what should you do in a difficult environment with your own finances?If we were to be honest with ourselves, then we should probably accept that we can improve on at least a couple of the following; tax efficient investments, long term investments, actively reviewing our existing investments and looking at new opportunities that the financial markets are currently providingI am sure we all appreciate that we could benefit from planning more. That is not to say everyone is simply sitting on their hands. Many people actively trade stocks and shares.The increase in the popularity of spread betting is understandable. A few of the attractive benefits include the fast nature of placing a trade and the large variety of global trading options on offer.Naturally, as with all types of investment, be it on Stocks and Shares, ETFs, pensions etc, there is a negative side and with spread bets you need to be careful because you can lose more than you initially invested.If there is a risk to your capital then why should you contemplate spread betting as part of your investment strategy? Spread betting can be beneficial on a number of fronts, from tax efficient investments* to ease and speed of making a trade.There are many benefits. For example, spread betting profits do not incur capital gains tax*. You are not actually buying and selling any assets or stock or shares. You are simply speculating on the future price or value of a particular financial market.As discussed, investing does have its risks. Nevertheless, there are things you can do in order to reduce your downside. Adding a Guaranteed Stop Loss Order to your spread bet helps reduce your risks. If you start to lose on a trade and the market continues to move in the wrong direction but hits your Stop Loss then your trade will be closed and you won’t lose any more money.In order to spread bet you do not take possession of any assets or stocks. You are just speculating on the future value of a market. This allows you to place trades quickly and with little fuss, an important feature in fast moving markets.Where to trade? A number of spread trading firms offer the usual benefits of letting you trade thousands of international markets as well as letting you trade outside normal market hours. Companies, like Capital Spreads and FinancialSpreads.com, will also let you trade markets like Crude Oil, Gold, the German Dax and the UK FTSE from Sunday evening all the way through to Friday evening.So whilst there are a good number of positives, it is important to understand the negatives.Spread betting carries a high level of risk. You should only speculate with money you can afford to lose. Like the adverts say, before you trade, ensure that spread betting matches your investment objectives, make sure you familiarise yourself with the risks involved and, where necessary, seek independent advice.What else should you consider when trading?In the numerous chat rooms and internet forums there are many trading tips and theories. Some are fairly sensible, some less so. The following includes some of the more common principles.It is worth having a look at a spread trading practice account. These are free accounts with virtual funds. If you are less familiar with this form of trading then a little practice should help you understand the positive and negatives as well as the various types of bet you can place.Greed can be your worst enemy when trading. It can be tempting to trade lots of positions in lots of different markets. Personally, I tend to trade 0-5 markets at any one time. I have no idea how anyone can fully research and make informed decisions on 20 open trades, especially if they start moving against you.* Since you are placing a bet rather than buying an asset or share, it is treated like a bet by the UK and Irish tax authorities which means your profits are tax free. Tax laws can change.

With the world in recovery mode, many people are still questioning how the markets got so out of control. They are also questioning something a little closer to home; their own finances.Some people will be looking for more tax efficient investments. Others will want to diversify their existing portfolios as well as look at new investment opportunities.I don’t think that there are many of us who wouldn’t benefit from putting more thought and effort into these key areas.The one thing you can see in the newspapers and financial websites is that more and more people are turning away from just having a pension and a few stocks and shares.Spread betting, or spread trading, offers some interesting features and is worth considering.There are downsides to all forms of investing and with spread bets you need to be especially careful because you can lose more than your original stake.If there is a risk then why should you consider spread betting?Whether you have an existing investment plan or not, it always worth considering any avenue that offers quick, simple access to the markets and a range of tax-free* advantages. Spread betting is one such avenue.There are several benefits. Spread Betting is Tax Free (no capital gains tax, stamp duty, income tax). Also there is no capital gains tax, no stamp duty or and income tax on spread bets*.The simple breadth of markets makes spread betting an investment option. Spread betting companies tend to offer thousands of markets from UK and US Equities to spread betting on Gold, Oil, Coffee and Dollar / Yen rates.So whilst there are positives, it is important to understand the negatives. Spread bets carry a high level of risk so you should only speculate with funds you can afford to lose. Before trading, please ensure that spread betting matches your investment objectives, familiarise yourself with the risks involved and, if necessary, seek independent advice.Are there other aspects that need to be considered? I have seen many trading tips over the years, some more useful than others. Here are three of the more common ideas.Tip 1) Plan each trade. Ensure you are trading the markets you know. Understand at what point you want to close your trade if it goes wrong. Make sure you know the profit level you are looking for and close your trade when it hits that level. This will help you close your bet and also help you control any greed factors.Tip 2) You should stick to the markets you know. If you know little about the US Stock Market but have a good understanding of the UK Stock Market then you are probably better off trading the FTSE 100 Index and leaving the Dow Jones. It is surprising how many investors ignore this rule and want to ‘have a go’ at another market.Tip 3) Greed can be your worst enemy when trading. It can be tempting to trade lots of positions in lots of different markets. Personally, I tend to trade 0–5 markets at any one time. I have no idea how anyone can fully research and make informed decisions on 20 open trades, especially if they start moving against you.So where to spread bet? Make sure the spread betting company you trade with is Authorised and Regulated by the Financial Services Authority, this generally ensures a certain level of quality. It also offers a degree of customer protection.* According to current UK tax law, if you pay tax in another jurisdiction this may vary.