Published byDarnell Sperling Modified over 2 years agoSimilar presentations Presentation on theme: "Understanding how to spread bet using the IG.com spread betting demo account Christopher Annett"— Presentation transcript:
1 Understanding how to spread bet using the IG.com spread betting demo account Christopher Annett (firstname.lastname@example.org)
2 Spread Betting Ticket If you are happy to deal at the current price you can deal there and then. Click into the product you wish to trade and then enter the size amount (amount per point). With shares, £1 per point is the equivalent exposure to owning 100 shares. You can place a stop which will reduce your margin, you can choose a guaranteed stop which will increase your spread by 1 point and you can choose a limit. In this example to buy EUR/USD, €1 = $1.24683. A pip is the 4 th number after the decimal place, in this example 8.3. A point move in currency trading is a pip movement. So if the sell price moves to €1 = $1.24693, then you make 1 point. At £10 per point, you would make £10.
3 Deal Stop and Limit A Stop is an instruction to deal at a less favourable level than the current price. A Limit is an instruction to deal at a more favourable level than the current price. Let’s say the current price for the FTSE100 is 6699 (sell) 6700 (buy). Go long at 6700 Sell stop kicks in at 6690 – lose 10 points Sell limit kicks in at 6710 – gain 10 points Buy stop kicks in at 6709 – lose 10 points Go short at 6699 Buy limit kicks in at 6689 – gain 10 points
4 It may be more convenient to leave an instruction to deal should a specified price requirement be met. A buy stop has to be above the current buy price and a sell stop has to be below the current sell price. A buy limit has to be below the current buy price and a sell limit has to be above the current sell price. You can then place contingent stops and limits.
5 Order to open Stop and Limit If you set a contingent buy stop when neutral (no open positions), then the stop will be below and the limit will be above the order level. If you set a contingent sell limit when neutral, then the stop will be above and the limit will be below the order level. If long or neutral Sell stop must be below current sell price Sell limit must be above current sell price If short or neutral Buy limit must be below current buy price Buy stop must be above current buy price
6 Margin Requirements The margin is always a fraction of what it would cost to buy the assets directly. Margins are calculated differently depending on the product and market. A 10% margin means that for just £10 you get the same exposure as a £100 investment. This represents a leverage of 10 times, or 10:1. So if the investment goes up by 20%, to £120, you have made £20 on a £10 investment or 100%. Margins are reduced by stops and by guaranteed stops (extra spread). No Stop Bet size x margin factor 10 x 23 = £230 With Stop (Deposit requirement for no stop x slippage factor %) + (bet size x stop distance from current level) (£230 x 0.20) + (£10 x 6) = £106
7 Maintaining Margin With IG if the account equity (cash balance +/- running profit/loss) doesn’t cover your margin requirement, they may partially or fully close your positions. In this case the equity (£14,462 - £5) easily covers the margin of £230.
8 Time Frames Under daily you can choose the candlestick time frame or choose tick data. Choose the time period you are interested in trading, say daily, and then use a shorter time frame, say 4 hours to determine when to place the trade.
9 Technical Tools Aroon is an indicator which that helps investors identify trends and their strengths. A 14 day Aroon looks at how long it has been since the 14 day high and 14 day low. If the number of days since the last 14 day high is zero, the Aroon up line (green) will be at 100. If it is 1 day it will be at 92.9. When the Aroon up line is above the Aroon down line the overall trend is considered up, and vice versa. FTSE 100
10 Average True Range (ATR) graphs measure the volatility of financial instruments. A high ATR indicates high volatility and a low ATR shows low volatility. The ATR is the moving average of the greatest of the following: current high minus the current low; the current high minus the previous close; the current low minus the previous close. Periods of low volatility are usually followed by periods of high volatility. Traders should use larger stops and profit targets as ATR increases. FTSE 100
11 The Awesome Oscillator compares market momentum over a 5 period moving average and 34 period moving average. Buy saucers occur when there is a temporary reversal of 2 bars and then the trend continues in the same direction. A nought line crossing can be bullish (if above 0) or bearish (if below 0). Two pikes sell signal occurs when the second peak above the zero line is below the first peak. Two pikes buy signal occurs when the second peak below the zero line is higher than the first peak. Saucer Peak 1 Peak 2 Germany 30
12 Bollinger bands are envelopes based on a moving average and a standard deviation. In a ranging trend, Bollinger bands represent support and resistance. If the bands squeeze and the price is hugging the bottom band, this is bearish and vice versa. If the price significantly penetrates the upper or lower band this could signal overbought or oversold. FTSE 100
13 Chaikin’s volatility indicator calculates the volatility as the trading range between high and low prices for each period. This calculation does not take trading gaps into account when quantifying volatility. Very high volatility can be associated with trend reversal. FTSE 100
14 The Commodity Channel Index (CCI) is a technical indicator which measures an asset’s current price in relation to its average over a given period of time. CCI values of above 100 typically mean that prices are unusually high compared to the average and vice versa. In a ranging trend this can signal overbought or oversold. Alternatively it can signal a strong upwards trend or a strong downward trend. FTSE 100
15 The Detrended Price Oscillator (DPO) attempts to filter out long term price trends in order to highlight the underlying cycles of price movements. Go long when the price crosses above the zero line and go short when the price crosses below the zero line. When the oscillator shows a higher trough expect an upturn and when the oscillator shows a lower peak expect a downturn. FTSE 100
16 The Directional Movement Indicator (DMI) indicates when a definable trend is present. When the ADX line is increasing, it indicates the trend is strengthening. When the ADX line (black line) moves above the +DI (green line) and –DI (red line) it signals that the market is becoming overheated. +DI rising above –DI is bullish when the ADX line is increasing and –DI rising above +DI is bearish when the ADX line is increasing. FTSE 100
17 The Exponential Moving Average (EMA) is similar to the simple moving average, except that more weight is given to the latest data. EMAs help confirm the trend – short, medium and long term. A simple strategy is to buy when the price closes above its EMA and vice versa. A bullish crossover strategy occurs when a shorter term EMA moves above a longer term EMA and vice versa. FTSE 100
18 The Ichimoku Cloud is a versatile indicator that defines support and resistance, identifies trend direction, gauges momentum and provides trading signals. Bullish signals occur when the price moves above the cloud and when the red line crosses above the blue. A purple line above all other indicators is bullish confirmation. FTSE 100
19 The KDJ indicator is essentially a stochastic indicator with an extra line, marked J. A negative value of J (green) with K (black) and D (red) on the bottom range indicates an over sold condition. A value of J above 100 with K and D on the top range indicates an over bought condition. K moving above D is bullish and vice versa. FTSE 100
20 Moving Average Convergence Divergence (MACD) is a trend indicator. A bullish signal occurs when the MACD (blue line) crosses above its signal line (red line) and vice versa. A divergence is bearish when the stock price makes new highs while the MACD fails to make new highs. Germany 30
21 The momentum indicator is a speed of movement indicator, used to detect trend weakness and likely reversal points. The indicator shows trends by remaining positive while an uptrend is sustained and negative while a downtrend is sustained. A bullish signal occurs when momentum crosses above zero (goes green)and vice versa. FTSE 100
22 Drawing Tools Use drawing tools to help plot support and resistance. Trend lines are support in an uptrend and resistance in a downtrend. Fibonacci is plotted at the beginning and end of a trend and shows potential retracement levels. Gann fan’s are plotted from a pivot point and provide major areas of support and resistance.
23 Alerts For many indicators you can set an alert which tells you when a condition has been met.Similar presentations
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If you are intending to commence trading the spread betting markets, then you will need to register with a suitable broker and open an account. This article is intended to inform you about the account choices that you will have available whenever you decide to commence this process.
There are numerous brokers providing spread betting services. All you need to do to register with them is visit their website and investigate how to open an account. This process is normally extremely easy enabling you to launch a new trading account on-line in a matter of minutes. Your selected broker will then send you securely a unique account number and password, which you can choose to alter at any time, if you deem fit.
A number of spread betting brokers will even provide you with a substantial credit line if you can demonstrate that you have the financial means to support such a facility. In order to do so, you will normally have to submit evidence confirming that you possess sufficient cash funds that are at least ten times the size of the credit amount that you are seeking. However, always confirm the precise details of such packages with you selected broker before proceeding further. An alternative approach is simply to deposit some cash in your trading account, which will then be referred to as your ‘margin‘.
Where can you Spread Bet?
You have an extensive list of brokers that you can select from in order to commence trading. You are specifically advised to register with only those ones that are fully regulated. By doing so, you will then provide maximum protection for your trading capital should your chosen broker incur any serious financial calamities, such as going bankrupt.
Also, bear in mind that not every spread trading broker offers a comprehensive choice of assets that you can use to activate spread bets. One firm may offer a market index for example while another may not. However, the range of markets that you can utilize to initiate spread bets is escalating significantly nearly every month.
Once you know what you want to trade and assuming that your preferred assets are not popular choices, then you should check that your brokers of interest support your selections before launching a new account. Even markets, such as small cap companies and foreign currencies pairs, are not serviced by all brokers.
This account needs you to deposit funds in your spread betting account before you can start trading. The balance will then be utilized to fund your margin requirements whenever you activate spread bets. The profits and losses from your spread betting activities will then be added or subtracted respectively from this balance. This balance is referred as either the equity or cash balance.
>> You can compare all of our recommend spread betting accounts here.
A demo account is practice account that allows you to trade on the platform using demo money. Most spread betting demo accounts will give you £2,500 – £10,000 in virtual money to trade with. The main advantage of using a demo account is that it allows you to accustom yourself with the trading platform and features without risking any money.
These accounts are usually reserved for the more experienced traders. No deposit is necessary. If you are successful in registering a positive credit status then you should be aware that you will be issued with a limit. Any losses causes your account balance to exceed this specified value must be resolved promptly. Brokers who offer this account type will generally demand proof that you possess sufficient cash reserves capable of covering excessive losses exceeding your account limit. Without this evidence, you will not be permitted to open such an account.
Limited Risk Deposit Accounts
This type of account is similar to the standard account but requires that you will only be able to execute new spread bets if they are backed by ‘Guaranteed Stop Loss Orders’ (GSLO). This means that Limited Risk Accounts can only be operated if an instruction, i.e. a GSLO, to close a trade at a pre-agreed price is specified at the time when each spread bet is initiated. In other words, when opening a spread bet, you must issue a stop-loss order in order to limit the size of your maximum possible loss.
This type of stop-loss order will be guaranteed by the spread betting company under all conditions. In addition, limited risk accounts may only allow access to a limited range of markets and may impose a maximum stake size. Depending on your level of experience and financial situation, you may well be steered towards the limited risk account initially for your own safety. Once you have acquired some experience and skill at spread betting trading, you can always request a free transfer to another account type.
How to Open a Spread Betting Account
The process to fully activate an account with a spread betting broker will take a few days to complete. Once accomplished, you will then often be sent detailed instructions on how to operate your account together with an account number, user name and password, which you will need to access on-line trading. If you have deposited funds by check, you may have to wait an additional day or two for your funds to clear. As a rough guide, you should allow two weeks as a maximum from the moment you submit your application to activating place your first spread bet.
Opening a Spread Betting Account at CityIndex.co.uk
Launching a spread betting account is similar to opening a personal bank account. You will need to provide your chosen spread betting broker with your personal details, such as name, address, contact number, employment and banking details. As processing your application form can take 24 hours or more, you certainly will not be able to start trading immediately. Your spread betting company will want to check your credit history (in the case of a credit account) and verify the information you have supplied them.
Some spread betting brokers, however, may allow you to start trading before the verification process is complete. This can happen if you have applied for a cash account (i.e. the standard account as opposed to the credit account) or if you are looking at starting with a small amount of capital, e.g. £100. Either way, a one or two day difference is inconsequential compared to the important task of selecting an ideal spread betting broker.Related Posts
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Spread Betting Guide and Free Spread BetsSpread Betting Account Types
These accounts offer you the thrills and excitement of spread betting with the benefit of a safety net. All bets are subject to a maximum 'stop-loss', this is a specific level at which certain trades are closed to prevent open-ended losses or profits. This means that when trading on a Shield account you have the knowledge of the maximum you can lose on each bet. Lets take the following example:
Stop Loss Example: New Zealand v England - 1st Test (Christchurch - March 2002)
At 106 for 5 in their second innings, England were precariously positioned. Sporting Index predicted that England would score 30 or so runs before the next wicket fell. . and as a result their Fall Of Next Wicket quote was 135-140:
Now say you were expecting on of England's spectacular collapses and you SOLD £2 per points at 135. Graham Thorpe and Andy Flintoff surprisingly stunned the Christchurch crowd as they smashed shots all around the ground on their way to a 6th wicket partnership of 281 Flintoff finally left the crease with England on 387. With a credit account you would have lost (387 - 135) x £2 = £504.
Now say you were expecting one of England's spectacular collapses and you SOLD £2 per points at 135. Graham Thorpe and Andy Flintoff surprisingly stunned the Christchurch crowd as they smashed shots all around the ground on their way to a 6th wicket partnership of 281 Flintoff finally left the crease with England on 387. With a credit account you would have lost £504. However, if you had BOUGHT £2 per point at 140, with a credit account you would have won (387 - 140) x £2 = £494.
The stop win/loss for this market is 100 points. Therefore with a limited exposure account you would have minimised your potential losses and winnings to 100 x £2 = £200.
The Sporting Index Shield Account also allows you to operate your account directly from your bank account, meaning the balance is settled on a weekly basis via your debit card.
With a Credit Account experience the thrill of unlimited gains / losses of spread betting.
The key difference between spread betting and fixed-odds betting. Profits, and losses, are made in proportion to whatever unit stake you choose, but the stake is not the limit of your financial risk. With a £10 bet with a High Street bookmaker, that £10 is all that can be lost. A £10 per run bet on cricket can win, or lose, many times more than the £10 unit stake.
So remember, you have no safety net with a credit account. Be careful and don't gamble with money you can't afford to loose.
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Spread Betting Accounts – Comparison and Reviews
Financial Spread Betting has gained considerable traction in the past few years and consequently, the number of such brokers has burgeoned considerably to the benefit of the market speculator. However, with mushrooming has come forth the problem of plenty, and it is often confusing and somewhat demanding to compare spread betting accounts and select the best one. After considerable deliberation, we have selected the best brokers on the basis of reputation, regulation (FCA-regulated) and other advantages.
ETX Capital – One of the best brokers in the betting domain, ETX Capital provides its traders with access to over 5,000 markets. The firm will provides its traders with award-winning platforms, ETX Trader and ETX Trader PRO, which work seamlessly on mobiles and tablets too. The firm welcomes its new traders with a bonus of up to £6,000 and offers tight spreads at very low margins. ETX Capital is regulated by FCA (Financial Conduct Authority) and established in 2002.
Capital Spreads – Capital Spreads a highly reputed company, is known for offering tight spreads across a range of markets. The broker provides the award-winning trading platform, LCG, which is also compatible with phones and tablets. A welcome bonus of £100 in deposit or 10% top up bonus (up to £5,000) also provides its traders various ongoing incentives. Capital Spreads is regulated by FCA (Financial Conduct Authority) and established in 2003.
IG – IG Group is among the few spread betting companies listed on the London Stock Exchange and has a market cap of $2.51B. IG has offers traders a proprietary trading platform and provides access to over 10,000 markets along with extremely thin spreads. Traders can also take advantage of the innovative AutoChartist worth $49.95/month for free. IG Group is a stalwart in its domain and has maintained its strong credibility since its establishment in 1974. The firm is also regulated by the FCA.
City Index – City Index is another firm that has been around for quite some time now. Established in 1983 and regulated by the FCA, the broker covers thousands of markets with extremely low deposit rates starting at just 1%. The spread quotes are regularly updated to offer the best betting levels. The company has a proprietary trading platform which is also usable on phones and tablets and is considered a great option for the professional market participants.
Core Spreads – One of the newest entrants in the spread betting business is Core Spreads. The firm is new to, however is already receiving abundant positive coverage. The broker offers its new traders a welcome bonus of a whopping £10,000, which is significantly more than what its competitors are offering. Core Spreads uses the simple and intuitive Swan platform and offers extremely tight spreads (EUR/USD 0.7 points). Traders can also access the free demo platform with a single click. It is also regulated by the FCA.
In the event a broker is unable to provide tight spreads in a particular market, say commodities, you may wish to find a broker that will provide it. With the nature of spread betting and margins, it is imperative that the broker you select be regulated by the FCA and follows their strict guidelines. The brokerage should also have an excellent reputation and provide traders with top notch support. Unregulated spread betting accounts may put your deposited fund towards illegal use.
Please use caution when spread betting, as your money is at risk, and you may lose more than you initially invest
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