Your First contact with Forex

What Is Spread Betting Forex?

What Is Spread Betting Forex?

Foreign exchange, or just forex, in one type of trade currency to another. Forex spread betting is not possible without risk. Like all other types of investment, people can lose money. Many people consider spread betting just that, a gamble.

But not quite the game because you need to have traded in the forex market and you need to have an idea of the technical analysis principles, such as forecasting future prices from the study of past market data. You can find many information about that here or in any spread betting forum. You also should search for spread betting indices and spread betting shares.

You also need to have the money you can afford to lose. If you do, forex spread betting using an online account, your profit is tax-free in UK for example. You can open an account with as little as £ 300 ($ 400).

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Bet

To start let’s see some financial spread betting examples. With spread betting your first step should be, take a decision on how much you want bet. For example, the price of GBP / USD spread is 1.2230 to 1.2233; you can choose to bet £ 1 for each pip – the smallest fraction of a price and 1/100 of 1 percent – the price drops below 1.2230 and going short. On the other hand, you can choose to bet £ 1 for every pip the price moves above 1.2233 and go long.

Spread betting trading

The spread is the difference between the left hand value (bid) and the right hand price (supply). In Section 1 the price / USD GBP is 1.2230 to 1.2233 with a spread of 3 pips. You decide to go short in sterling then you have to use the price of 1.2230. (Selling price) You break even when you can buy back the pound at 1.2230, then the purchase price has to move 3 pips from 1.2233 to 1.2230.

Sell 

On June 9, 2010, the EUR / USD price is at 1.2019 to 1.2021. Do you think the euro will fall against the dollar in the short term and decide to $ 2 per point for a purchase price of 1.2019.

Sell Surprisingly

The euro rises against the dollar in a few hours. The quote is now 1.2025 to 1.2027 and you decide to cut your losses. You $ 2 per point at 1.2027 to close your position with a loss of $ 16 (less 1.2027 1.2019 = 8 pips is equivalent to US $ 2 x 8 pips = $ 16)

Buy

On 9 June 2010, the EUR / USD price is at 1.2019 to 1.2021. Do you think the euro will rise against the dollar in the short term and decide to $ 2 a point to offer price of 1.2021.

Buy

As you predicted, the euro rises against the dollar. The quote is now 1.2015 to 1.2017 and you decide to make your profit. You $ 2 per point at 1.2015 to close your position with a profit of $ 12 (less 1.2021 1.2015 = 6 pips is equivalent to US $ 2 x 6 pips = $ 12)

Stop Loss

You can control your losses if a goes against you, employing a bet stop loss.  If, for example, you sell US $ 2 per point, at an offering price of EUR / USD 1.2010 in the hope that the euro will fall against the dollar may stipulate a price of stop loss 1.2015. If you are wrong and the euro rises against the dollar, since the supply rate reaches 1.2015 your trade is closed out, limiting your losses to $ 10.

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Trailing Stop

If you do not pay attention to the rates continuously, you can make a large profit, but lose it if the market turns and your profit is chopped. The next time you look at the prices trade is damaged. To prevent this by specifying a price-trailing stop, which will follow the market price of 20 points or how many points you want below it. If the market price suddenly changes direction when it hits your trailing stop of 20 pips below it, the trade is closed and you protect your profit.

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