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.

Spread betting is a risky business, and depending on who you believe, leaves most traders on the losing side. As a form of trading, it is a relatively new concept, having been introduced into the London markets for professional and city traders to hedge their trades. With the growth of on line investing and day trading, spread betting has now become a retail investor activity. Setting up an account is very simple, and trades can be as small as a penny a point.

As you will see we use betting jargon, as this aspect of trading has more to do with gambling than investing. It is called spread betting for a reason and not spread investing. It is a dangerous tool, since it uses leverage to allow you to control large blocks of shares with very little cash in your account. Most companies work on a highly geared, or leveraged account, which will allow you to work on a ratio of at least one to ten, if not more. This means in effect that with a small amount of capital in your account, you can control a large amount of real money in the market.

The concept of spread betting in principle is very simple. The company quotes a spread of two prices for a particular instrument. The instruments covered include shares, stocks, commodities, and even the major indices. Increasingly most companies now offer spread prices on on all major sports, political events and television shows, as well as all the major financial and currency markets. If you think the price is going up you buy at the higher price, and hope that the underlying instrument goes up, allowing you to sell at the lower price and make a profit. In short selling where you believe an instrument is falling in value, then the reverse is true. In this case you sell at the lower price, and buy at the higher price to close the trade, and hopefully make a profit.

Spread betting is also about trading a derivative. As the name implies, this is something that has been derived from another market. The primary market is called the cash market. This is where stocks and shares are traded daily and real money changes hands. In owning a share, you become a shareholder in the company, receive dividends and are able to vote. With a derivative, the spread price quoted is derived from the cash market price, so any movement in the price will always be dictated by a change in the cash market. You are not a shareholder, have no voting rights and do not receive any dividends. The company will then quote the spread based on this underlying price. All companies offer different spreads on different instruments, depending on the liquidity and volatility of particular markets.

There are therefore no dividends and the derivative has a contract life much the same as in the options market. These periods vary, but can be anywhere from a day to several months. Some contracts expire, but others are rolled over into following periods. Before you open a trade, be sure to understand the type and length of contract, and also the expiry and rollover dates.

All these companies offer starting stakes which are very small. You can trade with some of them for as little as 1p per point which effectively means you are trading one share. This is an excellent way to learn and you will not burn your fingers. I actually think this is better then paper trading, (pretend trading) as it is real money, even though it is only small amounts. As I have said before, when you start in a new market or a new trading tool, start small while you learn. Build up a track record and gradually increase your stakes. If you try to break the bank, it will break you first – you have been warned!

WorldSpreads.com prides itself on offering unbiased, accurate and up-to-the-minute spread betting information to all its investors. Whether you are experienced at spread betting in the UK or are starting to learn the basics through spread betting online, we offer you the chance to benefit from our years of expertise and experience in this method of trading.The aim of the WorldSpreads Group is to provide high quality sports and financial betting services to a global audience. In order to ensure the highest standards of service, and to drive its expansion to an international audience, the Group has assembled a team with an envious track record in the industry. Its international expansion is geared around finding the best business partners in new territories who can ensure that the product offering is adapted for the needs of the local customer bases.We offer spread betting information to our investors from the moment they choose to open an account with us. Initially this takes place in the form of a tutorial designed to familiarize a new account-owner with the many financial products there are to choose from, such as CFDs and Futures and Options. The tutorial can take place at our offices or by telephone, if this is not convenient. The tutorial lasts as long as the account-owner desires and once it has taken place, they should then be in possession of all the knowledge they require to begin spread betting online.For those who have been spread betting in the UK for six months or more, we offer more detailed spread betting information in the form of our Advisory Services. Here we pass on market insights and advice that are taken from a team of Independent Analysts. This information can then be used to develop spread betting strategies that are designed to maximise an investor’s profit potential.For further spread betting information, of whatever level, contact us today – either through our website or via our Trading Desk hotline. We look forward to working with you.

Worldspreads.com offers professional spread betting in the UK with experienced and expert advice on spread betting in all its forms. We also have a variety of products available, including online spread betting, and offer tutorials in all our services for the less-experienced spread trader. We offer a range of services for spread betting in the UK, including Financial Spread Trading, CFDs, Futures & Options and Foreign Exchange. What sets us apart as a company is our hands-on approach; we know that many of our products can appear complicated at first. To ensure that our clients get the best and the most from their spread trading, we not only invite you to our offices for an introduction to our methods, but we also host fortnightly seminars on all aspects of trading, including online spread betting. Spread bets are high-risk products; you need deposit only a small percentage of the value of the bet. However, your losses may substantially exceed that deposit very rapidly and thus require you to make additional deposits at short notice to maintain your bets. These seminars are hosted by one of the leading private investors in the UK: Alpesh Patel. Worldspreads is a specialist spread betting company that trades under two names: ‘Worldspreads’ deals with financial spread trading and our sister company, ‘SportsSpread’, is dedicated to sports spread betting. Any profits made from trading with either of these companies are exempt from betting tax and capital gains tax. Both companies can be contacted either by telephone, or by using our fully interactive website. To see how you can benefit from over ten years experience at the leading edge of this industry, contact us today.