Iron Condor

The advantage of spread betting, as opposed to buying shares, is that it offers one of the simplest ways to bet on markets moving downwards, as they have in recent months. Moreover, bets are free of stamp duty, while any gains are not subject to capital gains tax (CGT).
Most regular readers will be fully aware that the best way to enhance their trading account is to trade with leverage. In days gone by, the only way to leverage an equity position in the UK market was to buy or sell individual share futures or take on a call or put position with options. These days it would seem that the undisputed heavyweight for the trading community are the fantastic derivatives like spread betting and cfds. That is all well and good for short-term traders and spread betting is certainly an instrument that most of us can use to great success with the speculative part of our portfolios, but every individual should have a multi-faceted approach to wealth creation – above and beyond solely trading.
Spread betting is a useful vehicle for the occasional down-bet although I have to admit I am not an advocate of short-selling. I feel that the very high profile loudly shouted aggression with which some ’shorters’ hit a completely undeserving share these days is destructive and its effects are sometimes very long-lived, long after the short-sellers have taken their profit and gone. Folk get frightened, and if a stock has just been hit, won’t buy for fear it will happen again. In the medium term, a company can be so severely damaged that it can’t raise funds other than at fire sale prices, and suffers even more because investors have lost confidence in it.
However, there are situations where a stock gets so far ahead of itself that it’s daft. A down-bet can be useful here if you are convinced that the share is about to be re-rated in a downward direction. I have tried it numerous times and in most cases it has worked a treat!
Also, one can use spread bets as a way of adding to an existing long-term holding at a lower cost than buying more shares, rather than betting on short-term stock market movements, let alone ex-divs…
So popular have these products become that they have been estimated to account for more than one third of total trading volumes on the London Stock Exchange. CFDs and spread bets are deals between the client and his or her broker so do not themselves go through the exchange, but the hedge that the dealer puts in place to cover his position does result in an exchange trade.
This shift away from share trading to dealing in derivatives concerns some observers as it takes takes liquidity out of the cash market, particularly for smaller stocks. Gavin Oldham, chief executive of the Share Centre, a retail stockbroker says ‘They say it is backed up by the [hedging] business that goes through the stock market but the volumes are netted off.’
At the retail level spread betting is growing faster than CFDs. Anyone who spread bets thinks they are going to win so they don’t want to pay the tax and in the UK there is no capital gains tax on spread betting gains. Because you do not hold a contract (share) but bet on the outcome makes it a gamble. Otherwise the procedure is very close to trading via a futures broker. All firms are regulated in the UK (unlike Forex). People that fail at spread betting will most likely fail trading via a conventional futures broker. If you live in the UK and are not into scalping for ticks, then spread betting can be a lot more beneficial due to favourable tax laws, which indeed can change tomorrow, next year, after 10 years, etc.
There has been a move among retail investors over to spread betting from CFDs but few go the other way. Among institutions no-one uses spread bets because the corporate pay tax.

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!

With the world in recovery mode, many people are still questioning how the financial markets got so out of control. They are also questioning something a little closer to home; how to better look after their own money and finances.If we are being honest with ourselves, we would probably admit that we can improve on at least one of the following; long term investments, tax efficiency, actively reviewing our existing investments and looking at new opportunities that the markets in 2009-2010 have provided / will provide.Also, I don’t think that there are many of us who wouldn’t benefit from putting more thought and effort into these key areas. Having said that, there are a growing number of individuals who are making use of a newer, and highly regulated, form of trading.One type of trading, namely financial spread betting, has a range of attractive features and is an option worth considering as part of your portfolio.When speculating though you must always remind yourself that the markets can go down as well as up. With spread betting you can lose more than your original stake or investment.But why trade if there is a risk?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.Of the many other advantages, 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 financial market.A boon for many spread bettors is the sheer convenience of trading over the phone and online, even after the main stock markets and futures exchanges have closed.Another plus point is that there may be occasions when an investor wishes to close a spread bet early. This can work in two ways. It can help you limit a losing position or it can also help you lock in profits on a winning trade.The Financial Services Authority regulates the spread betting companies. This helps to ensure a certain level of quality or, more importantly, financial protection. With regulated companies like paddypowertrader you can trade some markets 24 hours a day, including key Forex and Stock Market Index markets. Naturally, you can also trade Crude Oil, Gold, UK and US shares and so on.So whilst there are a good number of positives, it is important to understand the negatives.Spread bets do carry a high level of risk so you should only speculate with money you can afford to lose. Before you trade, please ensure that spread betting matches your investment objectives, make sure you familiarise yourself with the risks involved and seek independent advice where necessary.* Based on current UK Tax law. If you pay tax in a jurisdiction other than the UK then this may be different.

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.

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.

There are a lot in common with CFD’s and spread betting, but also lots of different. There is one clear thing; both CFD’s and spread betting are very exiting ways to invest capitals and also high risks ways.

The CFD’s as we all know are traded on margin, the bets you are taking are much higher than you actually invest, and this is why your share from the future profit is usually small. The long term users of the CFD’s traders made them look around for similar options to trade online and they have found the financial spread betting opportunities.

While trading financial spread betting, you place the bet on the spreads of the market values and you do not really hold any stocks or commodities. The bets are only or the market movement and just like the CFD, spread betting online firms are gathering high risk and high potential for revenue. The spread betting firms are got to understand the linking between CFD’s trading and spread betting and you can now find software’s with the two options, working together for the users.

In the forums, you can find talks about the advantages and disadvantages. Both are related to the CFD’ trading systems and the Spread Betting firms. For the UK residents, for example, the spread betting is much more benefit since they have to pay no taxes while betting, in CFD’s there is a government tax. On the other hand, with CFD’s you can trade the smallest amount and lower your risks, with the spread betting there is a limit, how low you can go and many beginners are losing their deposits too fast.

For new member to either CFD / Spread Betting systems, the best suggestions is to focus on one of the above and try to make the best with either CFD’s and Spread Betting. After a while, investigating the other options is another good suggestion

As the major economies start to stabilise and the risk of a depression fades into the distance many are reflecting on a few important points. Firstly, how did it all happen? Secondly, how can they better protect themselves in the future?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:1)    Tax efficient investments2)    Long term investments3)    Actively reviewing our existing invests, and4)    Looking at new opportunities that the financial markets are currently providingOf course, not everyone is sitting on their hands. Many actively trade stocks and shares. Whilst others regularly review their banking and mortgage arrangements.A more common form of trading that people are turning to is spread trading or spread betting. It offers a good number of benefits compared to traditional share trading and the ease of access, speed and number of trading opportunities make it an attractive option.Before we proceed though, it should be pointed out that, as with all forms of investment, there is a downside and you can lose more than your initial stake. So why spread trade?Put simply, there are many advantages.One key advantage is the wide range of financial markets on offer including forex, shares and commodities. You can trade the Euro/Dollar, you can trade US, European and UK shares you can trade both Oil and Gold.Note also that, as spread betting does not involve the transfer of ownership rights and it is simply a bet, it is not liable for stamp duty, income tax or capital gains tax*.Being able to ’short’ a market provides interesting opportunities. You do not have to speculate on markets to go up. If your research suggests that the Dollar/Yen exchange rate will go down you can speculate on it to go down. If your research indicates that Crude Oil will go up you can still spread bet on it to go up.So whilst there are a good number of positives, it is important to understand the negatives.Spread bets carry a high level of risk to your capital, you should only speculate with funds you can afford to lose. Like the adverts say, before trading, please ensure that spread betting matches your investment requirements. Familiarise yourself with the risks involved. Seek independent advice where necessary.The Financial Services Authority regulates the UK spread betting firms. This helps to ensure a certain level of quality or, more importantly, client protection. There are a number of regulated companies that offer thousands of international markets including companies like FinancialSpreads.com and PartyMarkets. Naturally, they both offer the normal benefits of spread betting including; tax free trading*, trading outside market hours, no brokers fees and no commissions.* Based on current UK tax law, if you pay tax in another jurisdiction then tax law may vary.

Are you looking for a safer entry route in the capital markets? In the last few years there has been a lot of innovation in the financial markets; some good, some not so good. So what markets to trade and, more importantly, how to trade them?One option is spread betting, in the past this form of trading has had a reputation of letting you make quick profits and even quicker losses. It was always a bit of a rollercoaster. The leading spread betting companies have now introduced a number of ways to help to restrict your losses. Spread betting is a quick and tax free* method of trading and, therefore, it does have its appealing aspects. These days though, with financial spread trading, you can limit your downside. Of course, as with all investments you should exercise more than a little caution.Spread betting on the financial markets offers more than just tax based advantages. For example, you can enter into a trade to buy or sell shares without actually owning them. So if you think a share will perform poorly you can speculate on it to go down. This is also known as ‘shorting’.You can also bet against a wide range of other markets eg you can spread bet on Gold, Crude Oil, the FTSE 100, Dollar/Euro, Pound/Yen etc to go down. Naturally, you can also speculate on these markets and thousands of others to go up.Personally, I also like the fault that the whole process is regulated in the UK by the Financial Services Authority. This helps ensure your funds remain safe.If you financial spread bet, the range of possibilities is quite impressive and growing by the day. As you can see from the above, you can trade shares, forex, commodities and indices. More recently you have been able to trade bonds, interest rates and even house prices. Financial spread trading is based on speculation of the future movements of the markets. Hence there is an inherent risk associated with the decisions you may undertake. However, there are various methods available in order to reduce your risk. One such option is the Guaranteed Stop Loss order. This is an automated order that ensures that your losses are limited. It can also be wise to trade in small stakes as this is a simple way of reducing your risk.Note that spread betting carries a high level of risk and may not be suitable for all classes of investor. Only trade with money that you can afford to lose. Make sure you fully understand the risks involved. If necessary, seek independent financial advice.* Tax law is subject to change and may differ in jurisdiction outside Ireland or the UK.