Trading The Financial Markets After The Recession
As the major economies start to stabilise and the risk of a depression thankfully
fades into the distance many people are reflecting on a few important points. Firstly, how did it all happen? Secondly, how can they better protect themselves in the future?
Tax efficiency, opportunities in fluctuating markets, diversifying existing investment portfolios and planning investments for the future are all priorities.
I would imagine that most readers would benefit from putting more thought and effort into these key areas.
However, there is an increasingly large group of people who are taking advantage of some of the newer, and still highly regulated, forms of investments.
It seems that a lot of people are turning to spread trading. The number of trading opportunities, easy access to world markets, like US Shares, Currencies, Gold and Oil, plus the speed at which you can trade make spread betting worth considering as part of your investment strategy.
With any form of investment, such as property investment, stock trading, or investment funds, there is a possibility of losing money. Spread betting is no exception. With this style of trading it is possible to lose more than your initial stake.
Having said that, with this form of trading there are a variety of things that you can do to reduce your financial risk. For example, you could add a Stop Loss to your spread bets. If you did that then, when a market moves against your opening trade, the stop loss will close your bet. This stops you from losing any more funds.
Lets not forget that there are many advantages. The fact that no assets or ownership rights are exchanged, and that you are simply betting on the future price of a market, means that spread trading is not liable to capital gains tax, stamp duty or income tax*.
Also a number of financial
spread betting companies offer free financial information to help their account holders. Some offer free technical analysis as well as Company Heat Maps which show the stocks and shares that are going up / down. Investors can also gain access to Calendars showing when Economic Indicators and Company Data is being released.
Whilst spread betting offers a wide range of benefits, it is also important to remember the potential drawbacks.
Spread bets carry a high level of risk to your capital so you should only speculate with money you can afford to lose. Like the adverts say, before trading, please ensure that spread betting matches your investment objectives. Make sure you familiarise yourself with the risks involved. If necessary seek independent advice.
What else should you consider?
Many investors have developed their own strategies for trading and are often happy to share these tips. Here are a few of the ideas that are more commonly employed.
Put a trading plan together before you start. I tend to include the markets I am going trade, how much I am prepared to lose and the level of return (profit) I am looking for.
Practice makes perfect. Well not always perfect but if you are new to a particular market it is worth having a look at trading it via a Demo Account first. Demo accounts like the one offered by
Financial Spread are generally free and often have the same functionality as real money accounts. Trading via a Demo account can help you focus on new markets as well as help you understand their behaviours.
* Based on current UK tax law, if you pay tax in another jurisdiction then tax law may vary.
by: Robert Thomas
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