The Financial Spread Betting Handbook: A Guide to Making Money Trading Spread Bets

316 Pages·2007·1.07 MB·English

by  Malcolm Pryor

The Financial Spread
Betting Handbook
A guide to making money trading spread bets
by Malcolm Pryor
HARRIMAN HOUSE LTD
3A Penns Road
Petersfield
Hampshire
GU32 2EW
GREAT BRITAIN
Tel: [phone]
Fax: [phone]
Email:
For Karen
Contents
Preface xi
Acknowledgements xiv
Risk Warning xv
Introduction xvii
PART 1 – Base Camp 1
1. Choosing A Spread Betting Firm 5
Origins and growth of the market 7
Selection criteria 8
The 6-Stage Plan for opening an account 9
Directory of spread betting firms 10
2. Getting Set Up – Computer Hardware And Software 11
Hardware 13
Internet connection 15
General software 15
Backing up 16
3. Trading Resources 17
Trading software 19
Price data 21
Information 25
Web sites 26
4. What Do Winning Spread Bettors Bet On? 29
Markets 31
The 3 key tests 34
Differences between the spread betting firms 39
Summary 39
5. Choosing A Spread Betting Type 41
Types of betting 43
Differences between the spread betting firms 47
6. Timescales For Spread Bets 49
1. Extremely short timescale 51
2. Short timescale 51
3. Medium timescale 52
4. Long timescale 52
5. Very long timescale 54
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The Financial Spread Betting Handbook
7. Pricing and Hedging 57
Do they really want you to win? 59
How spread betting firms work out their prices 61
How competitive is the market? 63
Do they hedge? 64
Future developments – a wish list 65
8. 10 Common and Really Expensive Spread Betting Errors 67
1. No edge 69
2. No planning 69
3. Wrong bet size 70
4. No risk management 71
5. Mistiming exits 72
6. Out of control 74
7. Not in tune with the markets 75
8. Running before walking 75
9. Emotionally unstable 76
10. Not taking responsibility 77
9. Keeping Losses Small – The Stop Loss 79
Stop or no stop? 81
Near or far? 82
Automated or mental? 83
Instant or delayed? 84
Techniques for placing stops 84
One more useful approach – the time stop 87
Two tips 87
Moving stops 88
10. Spread Betting Order Types 91
Are some orders better than others? 98
What’s on offer in the market? 100
11. Practical Issues 101
Order placement 103
Automated stop orders 108
Dispute resolution 110
Funds transfers 112
Keep abreast of your margining position 112
Congratulations! 112
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Contents
PART 2 – Climbing The Mountain 115
12. Finding A Strategy That Works For You 119
What do you like? 121
Technical analysis is excellent for spread betting 122
The basic choice: trend or countertrend strategies? 124
Or delta neutral strategies 127
Master one strategy first 127
13. Spread Betting Strategy I – Betting On A Trend –
Trend Identification 129
Basic concept – using spread betting to ride a trend 132
Break outs or pullbacks? 134
How to identify trends 135
14. Spread Betting Strategy I – Betting On A Trend –
Selecting A Bet 147
Simplifying trade selection – the weekly shortlist 150
Simplifying trade selection – identifying daily set ups 152
Taking the trade – entry triggers 155
15. Spread Betting Strategy I – Betting On A Trend – Bet Size 157
Taking the trade – the right size of spread bet 159
16. When To Exit A Bet 165
1. The bet goes against us 167
2. The bet goes nowhere 167
3. The reason for the bet disappears 167
4. The bet goes our way 168
17. The Re-entry 175
18. Spread Betting Strategy II – Betting On Reversals 179
1. Buying support and selling resistance 181
2. Betting on candle patterns 183
3. Betting on gaps 185
4. Betting on divergence 185
19. Spread Betting Strategy III – In And Out Within A Day 189
You need the time to do this 191
Finding intraday bets 191
Betting on opening gaps 191
Betting as company results come out 194
Betting on false break outs 196
Betting on blow offs 198
Binary betting 199
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The Financial Spread Betting Handbook
20. Advanced Strategies 205
Arbitrage 207
Pairs trading 209
Hedging 213
PART 3 – The Route To The Summit 215
21. The Right Strategy For You 219
Character 221
Account size 222
Beliefs 222
Attitude to risk 224
22. Staying In Control – Planning 225
Annual trading plan 227
A week in the life of a successful spread bettor 229
23. Staying In Control – Record Keeping 233
24. Staying In Control – Regular Reviews 237
Monthly review 239
Quarterly review 240
25. Staying In Control – Risk Management 243
Staying in tune with the markets 245
Monitoring positions 246
Monitoring and controlling stops 247
Margin control 247
Managing total exposure and leverage 248
Net long/short 251
Diversification 251
Standing aside 252
Counterparty risk 252
Exceptional events 252
Contingency planning 253
26. Developing A Winning Attitude 255
Profile of the successful spread bettor 258
10 Rules for Profitable Spread Betting 260
27. Continual Development 263
Books 265
Courses 268
Magazines 269
Web sites 269
viii
Contents
Appendix 271
Examples of Basic Bets 273
Spread Betting Glossary 275
ADX 277
Support and Resistance 279
Betting via Exchanges 280
Index 285
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