Financial spread betting

Paul d

Registered User
Messages
20
Can anyone recommend a good site (maybe one that includes a simulator) or book on the subject of financial spead betting?

What are etf's?

Thanks,

Paul d
 

markowitzman

Registered User
Messages
936
What are etf's?
does not inspire confidence if you are looking to go into spread betting and not know what etfs are.
Try doing searches on AAM. Hold off on the spread betting until then.
 

Paul d

Registered User
Messages
20
Not looking to inspire confidence in you Markowitzman!
Trying to learn about a new subject?
Have you ever done that?
 
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gonk

Guest
does not inspire confidence if you are looking to go into spread betting and not know what etfs are.
Try doing searches on AAM. Hold off on the spread betting until then.

The OP didn't say (s)he was looking to go into spread betting. (S)he asked for information on the topic. With that information it will be possible to make an informed choice one way or the other.

There's some basic information here, on IG Index's site:

http://www.igindex.co.uk/content/as_index.html

Their dealing handbook contains more detail on the different kinds of bet:

http://www.igindex.co.uk/content/files/dealing_handbook.pdf

Using the simulator would be a good idea too.
 
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Paul d

Registered User
Messages
20
Gonk,

Thanks for that. At least you read the question.
Saw the new simulator on the advertised in the delta site. Will give it a try.
 

Paul d

Registered User
Messages
20
Luckystrike,

Thanks for that, will have a read through the site. Have been reading like hell since posted the first thread. Also arranged a tutorial with delta index. Will be taking this whole thing very cautiously but would like to at least check it out.
 
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gonk

Guest
What he is probably suggesting is to try learning to walk before you run.

Indeed. Which is presumably why the OP asked for general information. What he did not ask was which is a good spread betting firm to punt his life savings with. Why do you think he's trying to walk before he can run?
 

hattrick_12a

Registered User
Messages
104
Her is a topic on Courses in investing & trading

http://www.askaboutmoney.com/showthread.php?t=52316

This's where I learnt about http://insightsupport.com/home.html

I am currently reading their tutorial, that you have to sign up for, which Ive learnt a good bit about spreadbetting, but I was a complete novice in this area. But it has raised some questions for me. The main one being that it seems more like gambling to me? Also it seems to be more for the short term, from what I can gather, whereas other investments are more long term i.e. the various ways there are of investing in shares. A plus that I have found is that no tax is paid on profits....But after what I have learnt so far I would deffo give it a shot but only on a simulator at first and then maybe a few euro on the real thing.
 
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gonk

Guest
Ive learnt a good bit about spreadbetting, but I was a complete novice in this area. But it has raised some questions for me. The main one being that it seems more like gambling to me?

All investments are to some extent a gamble. Even putting cash on deposit, you're gambling the after-tax interest will be enough to preserve the inflation-adjusted value of your money (and in recent years this has mostly been a losing bet . . .)

The main risk with spread-betting as distinct from other methods of investing is that it is possible to take highly leveraged positions. This is great if the market goes the way you want, but can wipe out your entire investment if it doesn't. As long as you bear this in mind and invest accordingly, spread betting is not unduly risky.
 
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Vodka_girl

Guest
Spread betting is just another form of gambling really. I wouldn't call it investing as you do not acrue any assets. It's a bit like betting on black or red on a french roulette wheel.
 
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gonk

Guest
Spread betting is just another form of gambling really. I wouldn't call it investing as you do not acrue any assets. It's a bit like betting on black or red on a french roulette wheel.

Well, of course it's gambling. That's one of its main advantages compared to other methods of investment, as any gains are tax-free.

The point remains though, that whatever way you invest, you take a risk. If you buy shares in a firm and the share price falls, you lose money just as surely as if you had taken a spread bet on the price rising. And if your spreadbet wins, you do accrue an asset - cash. To a lot of people, that's a more desirable asset than shares in a company which in the last analysis are only of value for the cash they can be sold for. You can't eat share certificates and you can't use them to pay your bill at Tesco . . .
 
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Vodka_girl

Guest
With spread betting it is a risk! all or nothing. Shares are not. They may go up or down but rarely totally wipe out.
 
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gonk

Guest
With spread betting it is a risk!

For the third time, all investments involve risk.

all or nothing.

This is a misconception. It is certainly true that it is possible to take seriously high risk positions using spread betting, but it is neither necessary to do so nor is this unique to spread betting. You can, for example, take a high-risk leveraged position in shares by buying on margin.

Mark Shipman who was on the Late Late Show a couple of weeks ago plugging his book and who attracted generally favourable comment on this forum (http://www.askaboutmoney.com/showthread.php?t=52942) makes all his investments as spread bets.

Shares are not. They may go up or down but rarely totally wipe out.

Companies wipe out all the time. How about Baltimore which was a FTSE 100 company and then lost 99% of its share price in two years? Or Elan? Still in business, but went from €73 at its peak to about €2, and is still, six years later, only one fifth of its highest price.

There are plenty of ways of losing money besides spread betting. It does not have to be particularly risky if you are prudent.
 

demoivre

Registered User
Messages
2,727
but can wipe out your entire investment if it doesn't.

..and often more along with it because you will be responsible for the total value of your open position. Anyone contemplating spread betting should know inside out what they are getting in to - read the terms and conditions. Some spread bet firms will not guarantee stop losses so if , for example , the market gaps overnight you could end up losing a lot more than your deposit.
 
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gonk

Guest
Some spread bet firms will not guarantee stop losses so if , for example , the market gaps overnight you could end up losing a lot more than your deposit.

Once again, this is not a risk that is unique to spread betting. And some spread bet firms do provide guaranteed stops in return for a very moderate increase in spread levels, so you always know that your maximum loss is limited to your deposit. Not many other investments are even capable of providing similar guarantees.

Compare two investors in the FTSE 100. One is in an index tracking fund and the other has a spread bet, with a guaranteed stop set at, say, 5% below the index's current level. Overnight, news of major conflict in the Middle East causes the FTSE to open 10% down. The spreadbetter's guaranteed stop kicks in at his 5% level and automatically closes his position. The fund investor is down 10%. Which of these investments is riskier?

Anyone contemplating spread betting should know inside out what they are getting in to.

I would have thought this was a given for any investment more complex than a deposit account.

The point I'm making and which I stand over 100% is that spread betting is not inherently any more risky than many other kinds of investment - including the above example of a unit-linked fund. It is possible to spread bet in ways which are very risky - but you don't have to.
 

CCOVICH

Registered User
Messages
8,831
gonk said:
The fund investor is down 10%. Which of these investments is riskier?

Surely that depends on your timeframe-there is every chance that the fund will recover any temporary/unrealised losses, whereas a spread bet 'investor' will have realised a loss.

In general, isn't it fair to say that a short-term equity investment/punt is riskier than a long-term investment?

If you were to compare spread betting to day trading, then I would agree that the risks are reasonably similar.
 
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