Can you see the merit in getting out when the price crosses the lower trendline? The thing about charts and indicators is that you don't need to believe in them, you just need to understand that a lot of people do believe in them and that there is an inevitability that some things will happen, if only briefly. So, just by way of an example: when I observe that two of the faster moving averages cross the price can go some distance in the direction of the cross.
The reason that happens is that everyone in the city is taught that a bullish occurrence is the crossing of the 20 moving average over the 50 moving average it's called a golden cross. Therefore, something happens when those moving average cross. Whether there is any significance to the move is neither here nor there - the fact is that if everyone expects something to happen then it will. Nothing random about it. Trendlines are logical. If a price tests a level several times and doesn't go higher or lower depending on direction , buyers or sellers take a view that it's not going any further in that direction and buy or sell depending on their view.
Thus you see a price 'bouncing off' a trendline - all that's going on is that holders see the trendline approaching and have been told to sell if it crosses below it. Shorters are poised to short the breach and buyers have been told to buy if it bounces. What actually happens depends on who does what but everyone knows something is going to happen when you get to a trendline and that's the point. Disclaimer: This example is purely quoted for educational purposes only and is not a recommendation to buy or sell Vislink Security!
What I mean by bright in this context is that I'm not technically minded. That's not easy as it all works some of the time! My strategy has always been to find the people making money and find out what they are doing and then see if I can do same. Some things just don't work for me and others do. I'll talk more about it later perhaps. A nice book on technical analysis would be "Technical Analysis for Dummies" by Barbara Rockefeller - available from Amazon.
It is one of the better books I have read on charts and technical analysis for its simplicity and clarity. May I not be influenced by fear, greed or the ill-advised comments of others, which may be made in their interest and not mine. May I take into account the past history laid before me on this chart and may my assessment be based on facts and my knowledge and please, if possible, never on my emotions.
A: Response from Henry, an experienced technical analyst. I wouldn't bother with books on trading the bars. I use just the very basics and it works fine. John Murphy's guide to candle patterns on Barcharts. All I use are the trend reversal patterns. The problem for most of us is that a trend is the easiest thing in the world to follow but consolidations and range trading are what bugger us up.
I have devised a simple method to overcome this. I have taken a difficult section of the recent past FTSE chart where it moves from uptrend into consolidation. It then sets up a trap to the bear side and reverses back up into an uptrend. A trend starts with a candle crossing a moving average line but the bar must be CLEAR of the moving average line - no touching or chopping. For the next trend to start the candle must break a previous high or low. This prevents whipsaws in consolidations.
Avoiding consolidations is just as important as finding the start of a trend. In the chart example the initial trend closes at 'X'. Had they continued with a clear bar they would have started a new down trend but they didn't. This confirms we are in consolidation. As always nothing works all the time but this will stack the odds firmly in your favour. I then combine the above with support and resistance targets and an indicator. Hope I have explained clear enough. This approach works on all timeframes.
The size of your margin will depend on the market that you trade. Keep in mind that trading using margin can magnify both profits and losses, as they are based on the full value of the trade. Not ready to lay down your capital? We offer a demo account that enables you to practice spread betting in a live market environment, but without the risk.
Our demo account is very advanced, simulating the live trading environment as closely as possible. You can add drawings and indicators to your charts to assess the technical merits of the trade, gauge volatility levels and decide if the trade matches your risk appetite. Find out how a demo account differs from a live account or learn more about using a demo account for trading.
We have a range of tools and resources available to help you analyse these markets and identify spread betting opportunities, such as:. When you spread bet, you can take advantage of markets that decline in price known as going short, or short-selling , as well as those that increase known as going long.
The opposite would be true if you opened a long position. You can attach stops and limits to your open positions to help restrict your potential losses and secure profits. You can choose between basic , guaranteed and trailing stops. Limits do the opposite to stops — they close your position when the market moves a specified distance in your favour.
Learn more about how to spread bet. Your final profit or loss would be realised when you close the trade. You can also close your trading positions manually by taking the opposite position from your initial trade unless you force open the new position. So if you opened your position by going long, you would close it by going short — and vice versa. Read more about the different types of trading styles.
You can withdraw funds as a bank transfer, or get your money paid into a card or PayPal account. Depending on the method you choose, there may be a waiting period when you request to withdraw money from your live spread betting account. Plus, there are rules around minimum and maximum withdrawals. By having an effective risk management strategy, you can make a profit even if not all of your spread bets are successful. To manage risk effectively, you should always be aware of the potential downside of a trade, avoid emotional trading and diversify your portfolio.
The best place to start is by having a good trading plan, which will cover things such as your motivation for trading, your trading goals, your available funds and the markets you want to trade. Learn how to create a successful trading plan. Open an account now to start spread betting on over 17, markets. Tax law may differ in a jurisdiction other than the UK. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument.
IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.
Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary. We reveal the top potential pitfall and how to avoid it. Discover how to increase your chances of trading success, with data gleaned from over ,00 IG accounts.
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Contact us: Spread betting is a popular derivative product you can use to speculate on financial markets — such as forex, indices, commodities or shares — without taking ownership of the underlying asset. This gives you a much wider range of opportunities than traditional buy-and-hold investing. Ready to start spread betting? Open an account. Spread betting works by tracking the value of an asset, so that you can take a position on the underlying market price — without taking ownership of the asset.
There are a few key concepts about spread betting you need to know, including:. Going long is the term used to describe placing a bet that the market price will increase over a certain timeframe. So spread betting enables you to speculate on both rising and falling markets. You would buy the market to go long, or sell the market to go short. The loss or gain to your position would depend on the extent to which your prediction was correct.
If the market did decline, your spread bet would profit. But if the price of gold increased instead, your position would make a loss. Say you wanted to open a position on Facebook shares. As an investor that would mean paying the full cost of the shares upfront. Discover the benefits of spread betting. To manage your exposure, you should create a suitable risk management strategy and to consider how much capital you can afford to put at risk. When you spread bet, you put down a small initial deposit — known as the margin — to open a position.
Spread betting has three main features: the spread, bet size and bet duration. The spread is the difference between the buy and sell prices, which are wrapped around the underlying market price. For example, if the FTSE is trading at The bet size is the amount you want to bet per unit of movement of the underlying market.
You can choose your bet size, as long as it meets the minimum we accept for that market. Your profit or loss is calculated as the difference between the opening price and the closing price of the market, multiplied by the value of your bet. We measure the price movements of the underlying market in points.
Depending on the liquidity and volatility of your chosen market, a point of movement can represent a pound, a penny, or even a one hundredth of a penny. You can find out what a point means for your chosen market on the deal ticket. The bet duration is the length of time before your position expires.
All spread bets have a fixed timescale that can range from a day to several months away. If Apple shares did rise in price, you might decide to close your trade when the sell price hits If the market had fallen in value instead — down to a sell price of 11, — you would have ended up with a loss. Again, not including any additional charges.
Find out more about how to spread bet and see more examples. It is important to remember that all forms of trading carry risk. So, although spread betting provides opportunities for profit, you should never risk more than you can afford to lose. When you hedge using a spread bet, you open a position that will offset negative price movement in an existing position. This could be trading the same asset in the opposite direction, or on an asset that moves in a different direction to your existing trade.
For example, if you were worried that inflation might impact the value of your share portfolio, you might decide to take a long position on gold — an asset that typically has an inverse correlation with the dollar and can protect portfolios from inflation. If your shareholdings did decline, the profits from your spread bet on gold could offset any losses.
But if your shareholdings rose in value instead, this profit could offset any potential loss to your gold spread bet. Spread bets are not taxed. Discover more benefits of spread betting. Spread betting is a bet on the future direction of a market, while a CFD is an agreement to exchange the difference in the price of an asset from when the contract is opened to when it is closed.
There are a range of similarities and differences between these two derivative products. Take an in-depth look at spread betting vs CFDs. Discover more about risk management , including what leverage is and how it impacts your trades. Dividend payments have no impact on your spread betting position. Tax law may differ in a jurisdiction other than the UK.
New client: or newaccounts. Marketing partnerships: marketingpartnership ig. Professional clients can lose more than they deposit. Read my article on spread betting vs CFD for more information. Spread betting is a financial derivative product which traders do not take ownership of the underlying asset that they are betting on. Spread bettors are speculating on the rise and fall of the asset prices they are trading e.
Spread betting mimics the underlying asset and reflects the security that the spread bet is mirroring. As spread betting is technically a bet, it is tax-free so all profits from spread betting are ours to keep. However, many traders lose when trading spread bets, and this article aims to help you become one of the few winning traders of spread bets. The spread is the difference between the buy and sell prices, and we must pay the spread in order to open a position. For example, if we wished to buy a spread bet contract on Vodafone and the spread was p to buy and p to sell, then we would pay 1p for every contract we bought and the same if we were to take a short position too.
The wider the spread on a security, the more we must pay to open our position, and so when trading spread bets it pays to be aware of the percentage of the spread in the security. By choosing our bet size we are choosing our exposure. Spread betting movements are measured in points and these points can represent pounds, pennies, or even less than a penny.
By clicking on the dealing ticket you can find what unit the points are measured in. The bet duration in spread betting is the length of time before the contract or our position expires. Every spread bet has a fixed timescale, and these can be from either a day or several months in advance. You can close your spread bet positions whenever you wish provided the spread bet is open for trading.
In the below image we can see the daily funded bet DFB , and the quarterly bets ending in September and December , and March Notice that the spreads get wider as the timeframe becomes longer. We would need to check the points unit, and with shares the unit is always 1 penny. This gives us 10,, but because each unit of movement is 1 penny we need to divide by another This gives us We then take our amount per movement, 10, the pounds need converting into pennies , and multiply this by the share price in pounds.
Here is a dealing ticket from IG Index showing this in action below. Always remember that 1 penny is equal to 1 share. Enter your email to receive my free UK stock trading handbook, packed with professional techniques to manage risk and consistently profit. But by trading in a spread bet account any profits we can keep for ourselves, as spread betting is not subject to Capital Gains Tax. Tax-free profits and no stamp duty are two big reasons why traders should consider spread betting.
This is another big advantage of spread betting. When buying and selling shares, we only have the option to buy them and profit from them when the price rises. However, with spread betting, we can also position ourselves to go short and profit from falling prices. That means if you find a company that you believe is in trouble or may even go bust, you can take a spread bet short position on the stock and profit from the price going down. With spread betting we can also go long and short on indices, commodities, forex, and many other securities.
Another advantage of spread betting is that it allows traders to make their capital go further. Leverage is basically a magnifier, and means we can open positions larger than the capital we have in our spread bet account. When we open a spread bet position, we will only be required to put down a certain amount of capital to fund the whole position. This is called the margin. However, whilst leverage can magnify profits, it also works both ways and so the risk of loss is also magnified.
As well as stocks and shares, spread betting offers the versatility to trade other financial markets too.
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