Spread Betting Q&A

On this page we invite you to send us trading questions. We cannot guarantee to have answers for you, but we will try to help. Some of the questions asked will be listed here, if we think that the questions and answers are of sufficient general interest.

Q.	I thought that whether trading or spread betting one is exposed to currency fluctuations in the same way?
Q.	Can I buy a spread bet as a substitute to a shares holding?
Q.	What are the differences between buying stocks versus betting on them?
Q.	What are the differences between spread betting and fixed odds betting?
Q.	Is spread trading the same as spread betting?
Q.	What is Gapping?
Q.	What happens if the market gaps through my stop?
Q.	What is the difference between Gapping and Slippage?
Q.	My FTSE short was closed after-hours but during market hours the index had got nowhere near the stop?
Q.	Have you ever noticed that when you have a small-cap position with them, the price to close is significantly adrift from the market price?
Q.	How does the stop-loss thing work? I've read the website but don't get it. I mean, if you buy a stock at €1.00 and set your stop-loss at 99c, then, surely we'd all be doing it and making a killing!
Q.	My first spread bet is now -£151. Not liking it so far...but its a December bet anyway so a few months to go.
Q.	I was badly hurt by the market over the last 2 weeks. But when should I sell?
Q.	You mentioned a tactic whereby you nip losses in the bud but make the most of profits. How exactly is this implemented?
Q.	You speak about taking lots of small losses and letting your profits run...
Q.	What does 'averaging down' mean?
Q.	You mention that you may average a long trade if it's going against you but not a short one? Why?
Q.	Why should you disregard providers flaunting low deposit requirements?
Q.	The big plus with spreadbetting is the leverage - but it can work for or against you. So the big plus can be a minus?
Q.	If I open a trading account with £1000 and trade 1p/point, and then move up to 50p/point (which I can through Finspreads spread bet account), won't that go some way to prolong my 'longevity' even if I hit a to-be-expected, losing streak initially?
Q.	I notice that you recommend Capital Spreads, but how do you cope with their charts being delayed...
Q.	How do you use spread betting to trade currencies?
Q.	Yes, but isn't spread betting considering gambling while forex is trading?
Q.	Why would anyone in the UK trade forex when they can spread bet instead?
Q.	Just realised that spread betting companies don't use all the digits. For EUR/USD Tradefair uses 4 decimal places instead of 5 for a broker. So is it better to go with a broker?
Q.	Is spreadbetting currencies more risky?
Q.	Trading forex but becoming very frustrated. Spreads are wide and I keep getting stopped out by my 30 point stop only for the pair to trade up by 40 points from my initial trade.
Q.	What is a carry trade?
Q.	How do I bet on the Pound recovering?
Q.	Do you have any suggestions as to how the small investor might get exposure to the Yen?
Q.	For spread betting purposes, is a change in the gold price calculated in cents, or tens of cents?
Q.	Is that the same as quoting gold to one decimal place?
Q.	Gold: Do the decimals count? That would mean £1 bet would be the equivalent of £90,000 worth of real money invested in gold!?
Q.	Please explain to me the technicalities of taking on a spread bet with Capital Spreads?
Q.	Can you trade spread bets on Gold? If so what is the deposit needed to cover the worst adverse case scenario?
Q.	What is a Pairs Trade?
Q.	Could you go long and short on a stock or index at the same time and trade the waves?
Q.	I have been trading the relationship between the FTSE and the Dow by shorting one and going long on the other...
Q.	If I go short and long by equal amounts on two highly correlated stocks shouldn't my account be the same?
Q.	Can you tell me how to open up a pairs spread bet in two companies that are quoted on different exchanges?
Q.	How do you measure/trade correlation between two stocks?
Q.	If I'm bullish on UK stocks and bearish on German stocks can I trade the spread, i.e. go long FTSE and short Dax?
Q.	What is a Rolling Daily Trade?
Q.	What is a rollover?
Q.	I just thought that if you open a spread trade it is linked to a particular month. eg. Rio March, and I thought that there would be a deadline (March) when you had to close the bet?
Q.	So is there a fee charged by the company for placing the bet/rolling it on? Or is the only 'cost' in the spread?
Q.	What are the differences between the Daily Cash Indices and Daily Rolling?
Q.	If I buy a 'rolling' contract and leave it overnight for a few days, when does interest get charged, if any?
Q.	What reasons would one have for choosing a FTSE 100 Apr (say) over a FTSE 100 Year end (say) or even FTSE 100 Rolling?
Q.	What if I'm bullish on BP for a 6 month period, do I have to buy the front month spreadbet and then have to roll it over?
Q.	Rolling Dailies - do companies close and re-open bets held overnight settling profits/losses or do they do this at the end of the bet?
Q.	I have a spreadbet account with IG and their daily rolling bet is closed each night for settlement and opened immediately again...
Q.	What are the advantages and disadvantages between using Daily in relation longer contract trading?
Q.	Is there a quick way to work out if it's better value to open a daily spread bet or a forward spreadbet on, say, a liquid FTSE share...?
Q.	I'm trying to understand why there can be a 30 point difference between the FTSE 100 Daily and the FTSE 100 Daily Future...
Q.	I've just bought a FTSE 250 daily bet at 3 ppp. I can't however understand why I'm sitting on a £200 loss just immediately after opening...?
Q.	Am I right in thinking that buying a spread in, say, the FTSE 100 is similar to a tracker...
Q.	About the FTSE can't you simply go long at £1 a point and leave the position open - eventually its bound to go over 6000 isn't it!?
Q.	'Mostly spreadbetting is for speculating or hedging and trackers are for investing...'
Q.	'You DO still get the benefit of dividends.' With a FTSE Bet?
Q.	Suppose I short index spread bets using the rolling daily - is there anyway of knowing how much dividends will be paid on a certain day?
Q.	Is it normal to open a longer term position at a price which is actually lower than the current price?
Q.	'Certainly spreadbet charges are (generally) higher and you pay interest over time' - what interest!?
Q.	What is technical analysis and who are chartists?
Q.	Is technical analysis the holy grail that will make the difference?
Q.	But what exactly is Resistance and why is it useful?
Q.	But how do you find Resistance and Support levels?
Q.	But do indicators work?
Q.	What are positive and negative divergences?
Q.	I heard someone saying that he uses 45 indicators. Can these all be useful?
Q.	Do you absolutely need to use technical indicators to trade successfully?
Q.	What is a moving average?
Q.	One book suggests using a combination of 5, 20 & 200 moving averages, whilst another book suggests using a combination of 20, 50 & 200 moving averages...
Q.	But what is MACD?
Q.	What is a Double Top and Double Bottom?
Q.	What is the Volume Indicator?
Q.	Are there any indicators which could help me trade price reversals?
Q.	What would be the best indicators to use to catch the large market moves with strong trends?
Q.	What indicators would you use to find out when market is just zig zagging and I should stay out of it?
Q.	What's the difference between a 1 day 5 min chart and 1 day 1 min chart?
Q.	I'm a bit confused as to how to perform the Relative Strength Analysis for Shares?
Q.	Do you see any problems with me using a daily chart, SMA 100 day, 40 day and 20 day, MACD and RSI as the only indicators?
Q.	What is a Correlation Indicator?
Q.	What are Stochastics and how can they be useful?
Q.	Have you ever used the Dow Indicator and can you make some comments about success or otherwise with the signals it generates?
Q.	Do candlestick patterns actually work in practice, or are they just a load of superstitious, eastern-mysticism hooey?
Q.	What is the Head-and-Shoulders Formation?
Q.	I've been trading head and shoulders patterns, however my trades get missed on the breakout...
Q.	What are Trading Channels or Bands?
Q.	Any recommendations for reading the CCI (Commodity Channel Index)?
Q.	What is your opinion of Elliott Wave Theory and Gann Theory? Do these methods work?
Q.	What is the TED Spread and how can it help you make investment decisions?
Q.	How do you measure the daily fluctuations or volatility of a share?
Q.	What is IG Index's Autochartist?
Q.	What about Penny Stocks?
Q.	What is AIM?
Q.	I'm fairly new to investing and am trying to find a website that will allow me to go short on the AIM. Any ideas?
Q.	Why do some some shares go in to auction during the day?
Q.	So is it possible to trade penny stocks and options derivatives using spread betting?
Q.	I've just tried to open up another spread bet on PCI via IG index only to be told that the 'market is only open for closing deals' when attempting the transaction online!
Q.	CGT changes and AIM shares
Q.	Small Caps don't seem to follow technical analysis rules?
Q.	I've noted that spread betting firms will not offer guaranteed stop losses on certain companies like RPT. Why is that?
Q.	What is the cheapest way of holding a small cap (outside FTSE 350) share through a spreadbet for a period of at least six months but possibly up to a couple of years?
Q.	A question apart; can any dual listed AIM share be held in an ISA?
Q.	I've asked some questions regarding small caps to some of the big guns. Here are their responses...
Q.	What is the ISDX market (formerly PLUS market)?
Q.	So I can actually spreadbet AIM and SMALL CAP shares right?
Q.	I have noticed that some shares on AIM and SMALL CAP have a very wide SPREAD (about 50%)...
Q.	Why is a spread on a US stock sometimes much wider than that of a UK stock?
Q.	I took a position in STP, after a recent good 1/2 year report and a new acquisition, I have tried to buy more but now cannot buy online...
Q.	Do you ever use a 30 min chart to trade FTSE?

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