Daily Express : STOCK UP ON BEST TIPS FROM A MARKET EXPERT By Alison Coleman
Millionaire Vince Stanzione made his fortune by spread betting on the stock-market and turning an ability to predict trends into a successful trading system, and he insists that he can teach others to do the same with his product Ten Top Trading Tips The Professionals Don’t Tell.
He said: “You don’t have to be an experienced investor or a high flyer. Anyone who has been in business, or been involved in any form of buying and selling, can learn how to do it.
Even up the odds
It would be difficult to deny that, here in the UK, we enjoy a flutter. Betting on horses, dogs, football and other major sporting events has been a long-standing hobby for generations. And, while it can be argued that the financial markets have always been a gamblers paradise, over the past 30 years they have become an attractive marketplace for speculation.
The idea of using spread betting techniques to gain exposure to the stock market, without having to take on the full risks of doing so, has for some time been growing in popularity. Financial spread betting dates back to 1974 when the IG Index was created to enable investors to trade the price of gold without incurring hefty premiums through the exchange controls applied if the actual metal itself was bought.
When it first hit the UK, financial spread betting was popular among institutional investors, city traders and high-rollers, but the process is now beginning to reach more widely and is used effectively even by smaller investors, particularly as a hedging tool to profit from falling markets.
Tony Celentano, head of sales and business development at E*Trade, points out that ‘A wide range of investors will use spread betting for hedging purposes. If they have, for example, a basket of FTSE 100 stocks or equities, spread betting can be a very cost-effective way of hedging that portfolio because there are no commission charges and also very low set-up fees.’
Comparing like with like
When it comes to the actual mechanics of spread betting, the easiest way to explain it is by making a contrast with traditional betting. For example, if you place a £10 bet on a horse at 6-1 and your prediction proves correct (the horse wins), you would then win your original stake multiplied by the odds (£70). However, if your horse loses, then you forfeit your original £10 bet.
Spread betting is different in that you do not actually have to predict the exact result and the odds are not fixed. However, it can unfortunately result in very large losses, so it is essential that those who are new to spread betting do their homework and start small, betting only with money that they can afford to lose.
‘Investors who choose to go down the spread-betting route must be very disciplined’, adds Celentano. ‘After all, it is a leveraged product. On going into any trade, all investors should always be working to a strategy. This could be based on pricing, fundamentals or risk exposure. Investors must also have their entry and exit levels in mind.’
Financial spread betting works primarily by predicting how financial market indices will react on a given day. For example, say you want to bet on the FTSE 100, which is currently trading at 6,150. You are given a spread of 6,140 to 6,151 by a market-maker.
If you believe that the FTSE 100 will rise higher than 6,151, you then place an ‘up’ or ‘buy’ bet, placing a certain amount per point. Let us say you bet £10. If you are correct and the FTSE 100 rises to 6,225, you would make £740 (6225 minus 6151 = 74 points). However, if you were wrong and the FTSE 100 actually fell to 6,100, you would then have lost £510.
When looking at the pros and cons of spread betting, investors tend to compare it with investing in shares, often coming to the conclusion that the latter is more ethically acceptable simply because spread betting has ‘down-market’ connotations.
Investors buy shares in a company because they believe that the price will rise over a period of time, resulting in them making a profit – hopefully a large one. What some fail to realise, however, is that spread betting is formed of exactly the same strategy, with the main difference being the reduced cost of trading shares as opposed to buying them.
But the main advantage of trading is the tax benefits. Because spread betting falls within the UK’s gaming laws, the ‘winnings’ are exempt from capital gains tax (CGT) and investors also benefit from not having to pay the 0.5 per cent stamp duty that they would otherwise have to pay with share transactions.
James Daly, investor centre representative at TD Waterhouse says, ‘Spread betting is a far more cost-effective option than buying shares. Making money, particularly in the present climate is hard enough.’
Another advantage, which also applies to contracts for difference (CFDs, see page 16), is the ability for investors to trade on margin – a particularly useful tool for those who have limited capital. This basically means that by trading shares you have the potential of far greater returns, and, of course, far greater losses, than if you were to instead buy shares.
Spread betting firms allow you to place a bet with a deposit that is known as the initial margin. The exact size of this margin depends on the type of asset you have chosen to bet on, but it usually works out at around ten per cent.
Daly explains, ‘This process is very similar to buying a house using a mortgage loan. In the worst-case scenario, your investment could go down to zero, but the whole mortgage would still be outstanding, not just the deposit that you originally put down when buying the house.’
He adds, ‘If you are trading BP shares at £3 per point, in terms of exposure, that would be the equivalent of buying 300 shares of BP. Normally that deal, not including any extra charges, would cost you £1,800. As a trader, in order to take out that position, you would only have to put down five or ten per cent of that. If you put down £180, the shares would only have to go down by 60p for you to lose your initial deposit or more. Similarly they could rise and you would make a profit.’
Many people are put off spread betting because of the large potential losses. However, there are ways to become an active spread better without any of the sleepless nights.
James Parker, head of spread betting at ODL Securities, says, ‘An investor can place a guaranteed stop-loss on their trade so that if the market goes against them, they would have no further exposure beyond that particular level. About 70 per cent of our traders use a guaranteed stop loss.'
Trading veteran Vince Stanzione points out that a good trader does not necessarily need to make money every single time. ‘You could get 80 per cent of your trades wrong and still make money. Let’s say you lose £100 on eight trades and then make £500 on two trades, you are still in profit. However sure you are that the market will crash or XYZ is going to soar, make your first trade a small one, and then, if you are correct, add more to that trade.’
Spread betting can be a very addictive form of investing, both for losing traders who want to get even and winning traders that are on a roll, so it is important that, from the outset, investors know when to cut their losses.
‘Trading comes down to psychology: everyone wants to win and nobody likes to be wrong. Most unsuccessful traders take profits quickly while letting losing trades run and run hoping things will improve. Traders can spend too much time planning, when in fact they should spend much more time on the exit strategy and how much they are going to trade,’ says Stanzione.
Following the trend
In volatile markets, such as we are currently experiencing, prices can vary widely on a daily basis, an unnerving prospect for many ordinary share investors. But spread betting thrives in this environment and the more the markets move, the more money can be made. According to Parker, ‘Spread betters look for quite sudden, sharp movements and we are seeing that in markets at the moment.’
The recent market turmoil has seen many trends come and go, with gold being one commodity that has dominated many a headline. Spread betting is a very diverse investment strategy, and Stanzione believes that the best trades are trends where a trade is entered long or short and is left to run with the trend.
He enthuses, ‘Some of the best times to buy are when the crowd is terrified and there is blood on the streets. Markets go down because of lack of buyers. For a bull market to continue you need new money to keep the party going. If everyone is bullish on the market, then it has no other way to go but down as everyone that wanted to buy has already done so.’
There is another way…
The possibilities facing the spread better are vast, and the newest addition to this form of investing is binary betting. This is similar to a fixed-odds bet, but where odds are quoted on a scale between zero and 100 rather than in a fraction such as 2-1.
Let us take the FTSE again as an example. You have noticed that the FTSE has fallen, but think it may rise later in the day. The binary price for the FTSE to rise before the markets close is trading at 33 to 48. If you think that the FTSE will finish up at the end of the day, then you buy at 48 for a certain amount per point, let’s say £10. Conversely, if you think that it will finish down then sell at 38.
Your profits are calculated by taking the closing price minus the opening price multiplied by the size of your bet per point. In the instance that you placed a £10 per point bet on the FTSE rising before close – if you were correct then you would win £520 (100 minus 43 multiplied by £10 = £520). However, if the FTSE finished down then your losses would be £480.
Arguably, one of the key advantages to using binary betting over established forms of spread betting is that it gives you the opportunity to take advantage of non-volatile markets, as well as those that are frequently rising and falling.
With spread betting, your potential profits can be restricted if there is a lack of movement in the underlying market. By diversifying your trading strategies and opting for binary betting during these quiet periods, you could add to your winnings.
Vince Stanzione is a self made multi-millionaire based in Europe. Started at a junior at the age of 16 for Nat West Foreign Exchange in London he worked his way up in before leaving to start up his company. He has been involved in various companies including mobile communications, premium rate telephony, Interactive gaming, publishing and television and financial trading. He now lives most of the year between Spain and Monaco and trades his own funds mainly in currencies and commodities. As well as trading he also teaches a small number of students and produced the best selling course on Financial Spread Betting. He is also the author of “How to Stop Existing & Start Living”
494 Midsummer Boulevard,
Milton Keynes MK9 2EA, UK
This release was published on openPR.
Permanent link to this press release:
Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.
You can edit or delete your press release Daily Express : STOCK UP ON BEST TIPS FROM A MARKET EXPERT By Alison Coleman here
News-ID: 154290 • Views: 952
More Releases from Vince Stanzione-Forex-Finbets
New Research – Over 50s Perform Best in Financial Markets
A new five year study of financial trading shows that the over 50s are by far the most successful, profitable traders and investors: a full 40% more profitable than their 20-something counterparts, ending the myth that risk and results are the stuff of youth. The research – conducted by financial trading coach and author Vince Stanzione ofwww.fintrader.net – studied the trading of 1000 UK individuals between October 2004 and October 2009, covering bull and
Meet a self-made millionaire Vince Stanzione
Josephine O’Donoghue chats with Vince Stanzione about his self-made wealth, trading on the stock market and the economy today With a huge mansion in Mallorca, millions in the bank and a dream lifestyle, you’d be forgiven for thinking Vince Stanzione was some sort of celebrity. In fact, he made his fortune by spread betting on the stock-market and developing his knack of predicting trends into a wildly successful trading system. We
Vince Stanzione: Advisers warned 'pile clients out of the pound'
Author: Laura Miller. Advisers should tell clients to get their money out of the pound before the currency collapses, urges a former City broker. Millionaire speculator Vince Stanzione says after the tragic decline of the Greek economy, analysts are looking to see which currency is next in line to fall, and the pound is "the ugliest of an ugly bunch". Speaking from his house in Spain, Stanzione says: "If you're an
Vince Stanzione: Buy and Hold is Dead – a Simple System Used by a Multi Millio …
Vince Stanzione: If you follow the advice of many financial professionals they will tell you that buying and holding quality shares over the long run is a sound investment. Whilst this may be true over 25 or 50 years, the last 10 years have been dead money for anyone tracking the markets. In fact cash on deposit would have produced better results with a lot less risk. Let’s use the S&P500
More Releases for FTSE
IdealRatings and FTSE Russell launch the FTSE IdealRatings Sukuk Index
San Francisco - London, October 2020 IdealRatings Inc. launched the FTSE IdealRatings Sukuk Index in June in collaboration with global index provider FTSE Russell, incorporating IdealRatings’ Sukuk Shariah compliance screening methodology into the existing FTSE Sukuk Index methodology. The FTSE IdealRatings Sukuk Index tracks the performance of US Dollar-denominated, investment-grade Sukuk that are issued in the global markets, providing investors with a transparent and objective measure of the market, enriched
Oxford Instruments plc enters the FTSE 250
The FTSE Group has announced that Oxford Instruments plc, the leading provider of high technology tools and systems for industry and research, has been promoted to the FTSE 250 index. Jonathan Flint, Chief Executive, says “Joining the FTSE 250 is an outstanding milestone for Oxford Instruments and something all our employees can be extremely proud of. It reflects the huge steps forward the Group has made during recent times, successfully
Real Estate Investment Drives Growth in FTSE 100 – AAA
The London-based FTSE 100 recent results illustrated perfectly how real estate is once again proving to be a lucrative investment market, claimed Alternative Asset Analysis (AAA). Boston, MA, May 21, 2011 -- The London-based FTSE 100 recent results illustrated perfectly how real estate is once again proving to be a lucrative investment market, claimed Alternative Asset Analysis (AAA). The alternative investment advocacy group said that property firms have seen extremely strong rises
Spread Betting: Goldman Sachs earnings trigger equity sell off - FTSE back below …
Financial spread betting expert and City Index (http://www.cityindex.co.uk/) Market Strategist Joshua Raymond looks at the financial headlines shaping trading on 19th January, including a sell-off triggered by a decline in earnings at Goldman Sachs “A surprising decline in earnings from major US bank and corporate bellwether Goldman Sachs triggered investors into defensive mode in late European trading, forcing the FTSE 100 lower by over 1% and back below the 6000 level.
Financial Spread Betting & CFD Trading: FTSE rallied 1% on strength in commodity …
Joshua Raymond is a spread betting expert and Market Strategist at City Index (http://www.cityindex.co.uk/). Here, he looks at the financial activity shaping trading on 18th January, including strong buyer demand for shares of commodities companies pushing the FTSE higher. “Strong buyer demand for shares of commodity companies such as energy and mining firms, aligned with hopes for an outperforming earnings season helped to power the FTSE higher by over 1%, with
Spread Betting News: Monday "quiet day", but FTSE 100 expected to rise at open
Financial spread betting provider City Index (http://www.cityindex.co.uk/) looks at the financial news affecting traders on 17th January, with the FTSE set to open robustly and a public holiday in the USA. Individuals with a spread betting account may have found today (January 17th) to have limited activity, although the FTSE 100 was set to open robustly. As of 06:24 GMT, Reuters reported the FTSE 100 was expected to open between one and