Financial Trading Tips
With the world in recovery mode, many people are still questioning how the markets got so out of control
. They are also questioning something a little closer to home; their own finances.
Some people will be looking for more tax efficient investments. Others will want to diversify their existing portfolios as well as look at new investment opportunities.
I dont think that there are many of us who wouldnt benefit from putting more thought and effort into these key areas.
The one thing you can see in the newspapers and financial websites is that more and more people are turning away from just having a pension and a few stocks and shares.
Spread betting, or spread trading, offers some interesting features and is worth considering.
There are downsides to all forms of investing and with spread bets you need to be especially careful because you can lose more than your original stake.
If there is a risk then why should you consider spread betting?
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.
There are several benefits. Spread Betting is Tax Free (no capital gains tax, stamp duty, income tax). Also there is no capital gains tax, no stamp duty or and income tax on spread bets*.
The simple breadth of markets makes spread betting an investment option. Spread betting companies tend to offer thousands of markets from UK and US Equities to
spread betting on Gold, Oil, Coffee and Dollar / Yen rates.
So whilst there are positives, it is important to understand the negatives. Spread bets carry a high level of risk so you should only speculate with funds you can afford to lose. Before trading, please ensure that spread betting matches your investment objectives, familiarise yourself with the risks involved and, if necessary, seek independent advice.
Are there other aspects that need to be considered? I have seen many trading tips over the years, some more useful than others. Here are three of the more common ideas.
Tip 1) Plan each trade. Ensure you are trading the markets you know. Understand at what point you want to close your trade if it goes wrong. Make sure you know the profit level you are looking for and close your trade when it hits that level. This will help you close your bet and also help you control any greed factors.
Tip 2) You should stick to the markets you know. If you know little about the US Stock Market but have a good understanding of the UK Stock Market then you are probably better off trading the FTSE 100 Index and leaving the Dow Jones. It is surprising how many investors ignore this rule and want to have a go' at another market.
Tip 3) 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 05 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.
So where to spread bet? Make sure the
spread betting company you trade with is Authorised and Regulated by the Financial Services Authority, this generally ensures a certain level of quality. It also offers a degree of customer protection.
* According to current UK tax law, if you pay tax in another jurisdiction this may vary.
by: Daniel Jones
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