sb Vs Forex Vs CFD for GBP 'insurance'

[rmckeown]

I want to protect my GBP in a deposit account from further losses against the USD.

Basically I suppose I want to short the pound and go long on the dollar until I see a reversal of the current trend.

What do I use - Spreadbetting, Forex trading or CFD.

I am a UK citizen if that make s a difference.

thanks

 

[Magos]

I want to protect my GBP in a deposit account from further losses against the USD.

Basically I suppose I want to short the pound and go long on the dollar until I see a reversal of the current trend.

What do I use - Spreadbetting, Forex trading or CFD.

I am a UK citizen if that make s a difference.

thanks

use forex and trade small don’t get over leveraged!!!!!
If you don’t listen you will get liquidated

 

[rmckeown]

trading small

use forex and trade small don’t get over leveraged!!!!!
If you don’t listen you will get liquidated

thanks for that. would I not be better to make one large trade and let it sit, hoping to reflect the market, rather than trade small and often?

Appreciate your point about overleveraging

 

[Magos]

thanks for that. would I not be better to make one large trade and let it sit, hoping to reflect the market, rather than trade small and often?

Appreciate your point about overleveraging

Some choices:

(1) Identify market cycles (TA) and use S/L and T/P

(2) Trade the figures (go big)

(3) Do a trader and let it run more than 1 week (don’t over leverage)

 

[Pippy5000]

You have a 95% chance of losing all of your money by using leveraged accounts.. If you're not a trader then you'd be far better off letting professionals manage your money for you. It's unfortunate that you waited this long to get in the game because the GBP does have a bottom and it is fast approaching.. Unfortunately, my crystal ball is in the shop so I don't know when or where the bottom will be but we almost surely are not there yet. For the most part the damage has already been done so the wisest move might be to ride it out. The UK won't cease to exist. You guys do have gold as a backup don't you??

I read that the UK is considering joining the Eurozone.. I couldn't tell you why as the Euro isn't doing any better. It's not a good sign however when the people at the BoE start to panic.. It's a frightening feeling to see your currency dying.. I was right where you are earlier this year with the dollar sliding and sliding and sliding off into hell..

 

[rmckeown]

Hi Pippy

I dont know if Sterling has a bottom - lots of soverign funds have it in their vaults and I cant see why they would not start to sell it off sometime soon. £1 = $1.... Then we'll join the euro if they'll have us

Roy

 

[MrGecko]

It's been a while, granted, so excuse me if I missed the point, but if your looking to hedge your GBP exposure to dollar strength, then I wouldn't worry too much about the trading / money management points raised (although relevant to trading, not here...)

some starting points:

* Calculate your USDGBP exposure, but bear in mind other pairs - if you are really keen, use a trade weighted index of Sterling strength, and hedge accordingly (much like the Dollar Index). For the sake of argument we will stick to USDGBP exposure, but the reality is that EURGBP (EURUSD by proxy) is something to ignore at your peril.

* Derive some measure of how much your position changes per 100 pips (this is why I mention the EUR point and GBP baskets. Relying solely on cable for this is leading yourself up the garden path) - I guess we are talking about Net worth, not just your Barlcaycard bill. After you are satisfied with the figure, simply take an opposing position in the spread bet market. If you do it correctly, you are securing your trade weighted index net worth - it will neither go up nor down.

* Be aware that you may have to fund your hedge position with additional margin.

* minimum Variance hedge ratio's are something to look into - if you can find a third party GBP index, you might get a better hedge by hedging this with two positions in EURUSD and Cable. It does involve regressions, the whole correlation/causation factors, awareness that correlations change, and so on...; but if it is a HEDGE that you really want, it's an improvement on simply shorting cable.