Help. Looking for some Spread betting advice.

[Julie]

I'm thinking about day trading (spread betting) from home for a living and even though I have read books and know how to read charts I am a bit confused on what to do. Would be very grateful if anyine could give me some advice.

Could anyone recommend what is best to trade?
I had a dabble in the daily Dow in July/August and did alright, only problem was took a couple of big losses and wiped out all profits.

Am I being realistic, is it possible to earn a good living from spread betting? Would need to earn £40,000 - £50,000 pa to compensate for not going out to work.

How much capital would I need?

What company would you recommend to open an account with? At present I have an IG Index account.

Thanks to anyone who can offer any friendly advice. I live in a remote part of Scotland and don't know anyone who has heard of financial spread betting.

Julie

 

[TheBramble]

Julie, why spread-betting? There are better alternatives if you're serious about being a trader long-term.

Check out ALL the forums here on t2w. There are a lot, but they're free and they'll give you an education and information that would cost you £000s in books and seminars and probably save you ten times those amounts in potential losses.

Most newbies make the same set of mistakes - you don't have to - unless you really want to.

As a start, I recommend sticking with the SB firms - finspreads and capitalspreads have received recommendations.

As you've already blown your capital (once?) you're better of trading really small until you're consistently managing your risk and your money - and making profits.

You're in the right place - just don't jump in until you've spent your time soaking up what's on offer here.

As for expectations of earnings - that's probably going to mean you're trading with emotional money. If you can't afford to lose it - don't trade it.

As for the math - you can do it yourself, if you need £50,000/year and you have a system that produces x% gain/year - you know the rest. Sorry to be so obvious, but it's that simple - the calculation is anyway.

I have a feeling like most people when they begin trading you think you'll get up to speed first time within a few months. Possible, but the odds are against tit. Plan on years.

 

[Trader333]

Julie,

In my view you shouldnt even consider packing in a well paid income in the anticipation of being able to make a consistent income from either spreadbetting or other form of trading, before proving that you can do so.

The best way to be able to determine your competence to do this is to trade in the evening. If you make consistent money then you can consider a move to full time trading but not unless you can consistently make money.


Paul

 

[timsk]

Julie,
You've received good advice from Tony and Paul - in my view. If you do as Paul suggests and stick with the well paid job until your trading is generating CONSISTENT profits - you'll sleep well at night! I trade the U.S. market for a variety of reasons, but the prime one is that I can develop / practice my skills in a live market trading the evening session which closes at 9.00pm. Whatever trading is or isn't, one thing is for sure; it's not a race. It's not a first come first served type of competition. Patience is definitely a virtue in this game, so take your time, don't be in too much of a hurry and don't worry about what you don't know. There are more than enough members of this site who know most of what there is to know and are very willing to share their knowledge, skills and experience with you. When I started, I wanted success and I wanted it quick. Result: money flowed out of my account faster than I care to recall! Now I'm more sanguine and try to follow the road I've outlined here, with the result that I'm happier, learning a little every day and, touch wood, starting to make some real progress in my trading. The old cliche: 'success is a journey - not a destination' is, in my view, especially applicable to trading. The journey could be a long one, but well worth the effort. Enjoy!
Tim.

 

[rossored]

Julie - I will shortly be posting up the T2W First Steps Guide here on the website, so keep an eye out for that. Next 24 hours or so and it ought to be up and running.

(not trying to step on anyones toes, of course, just that the guide is aimed at exactly these kind of questions) :cheesy:

 

[Julie]

Thanks to everyone for your much appreciated advice. Especially looking forward to reading the T2W First Steps Guide as I have been reading quite a few postings and am struggling to understand everything I read.
Overwhelmed a bit with everyone being so helpful and willing to share there experiences.
Finding this site was a stroke of luck.
Thanks - Julie

 

[juanbyte]

Julie

If you are going to spreadbet on the Dow, consider changing from IG to Capital Spreads.

IG has a spread of 8 points for the Dow whereas capital spreads has a spread of just 5 points.

If you make just one £5 trade per day for 20 trading days per month, this will save you 3pts x £5 stk x 20 days = £300 per month.

 

[probookie]

As an IG Monkey, I feel honour-bound to point out that we do the dow on a 6 point spread (in hours), as well as offering it on a 4 point spread on an hourly basis, should you trade in a style where you only need to jump in and out quickly.

 

[juanbyte]

probookie

Is that via internet trading and does it include a stoploss

 

[olwenh]

Julie,

The line that jumped out at me was

"only problem was took a couple of big losses and wiped out all profits."

You HAVE to address this. ALL the decent books will tell you that the first step in being a trader is to control losses.

There is no point in doing really well most of the time and then letting 1 or 2 trades wipe you out (as you have already learnt). Have you now put a system in place to stop this from happening again?

Good luck.

 

[probookie]

juanbyte

Internet or phone, guaranteed stops cost an extra 2 pips.

We also do a ftse on an hourly basis for 2 pips (1 extra pip for a guaranteed stop).

 

[anley]

Julie

Sorry to be harsh on you but I feel that you've fallen into the classic trap of thinking that because the markets often move a fair amount during the day, one can make a living day-trading.

The odds are well against you because if the market doesn't get you then the cost of doing business will, especially with spread betting. Also if you're starting out then the last thing you want is tax-free profits, better to trade a taxable product that you'll be able to use tax-losses against.

Stay in your good job and realise that for most people the better and easier profits are earned by taking a view on something and holding that position for a week or indeed many months.

Of course there are always exceptions to the rules. But for most people making a decent living CONSISTENTLY (over a number of years) out of day-trading is a very tall order indeed although the market, the spread betting firms, the CFD brokers, CNBC etc will all continue to show people the carrot that it is possible.

 

[TheBramble]

juanbyte

Internet or phone, guaranteed stops cost an extra 2 pips.

We also do a ftse on an hourly basis for 2 pips (1 extra pip for a guaranteed stop).

Then why am I currently looking a controlled-risk of 11 points on the DOW...?

 

[sidinuk]

The odds are well against you because if the market doesn't get you then the cost of doing business will, especially with spread betting. Also if you're starting out then the last thing you want is tax-free profits, better to trade a taxable product that you'll be able to use tax-losses against.

What an incredibly sensible piece of advice! If you have at least £2000 then start out trading on ES futures. That way the first year or two's inevitable losses will at least be deductible against profits in future years. You'll also have the added advantage of not having to endure the frustration that is spreadbetting. You'll be able to concentrate on the process of trading rather than just trying desperately to stay ahead of the bookies.

 

[juanbyte]

TheBramble

Hi Tony

I have had a look at the IG website and telephoned them.

The hourly spreads are on the right-hand drop down menu of the trading platform.

If you have a controlled risk account the spread is still 6 points

You have to show liquid assets of £5000 to change the account and trade at 4 points.

Capital spreads have a automatic stop-loss in the 5 point spread

Chris

 

[anley]

What an incredibly sensible piece of advice! If you have at least £2000 then start out trading on ES futures. That way the first year or two's inevitable losses will at least be deductible against profits in future years. You'll also have the added advantage of not having to endure the frustration that is spreadbetting. You'll be able to concentrate on the process of trading rather than just trying desperately to stay ahead of the bookies.

But still on this point, what I should have said is don't start to trade a tax-free profit with big money.

Spread bets are and can be a great way to learn about this business if you keep your trades small. Pay say £500 into a SB account, risk 1-3% per trade and then even if you get things horribly wrong it won't hurt your pocket. And if you feel comfortable with what you're doing say after 6 months increase the bet size along with the size of the account.

 

[TheBramble]

Although SB do provide the 'benefit' of allowing those with small trading capital to play the markets, there is an associated down-side in that their spreads are far more expensive than with a broker.

And a £500 capital with a 1% risk isn't even going to cover your spread, let alone a stoploss.