Day Trading With Real Leverage

in #trading3 years ago

A lot of people are very apprehensive when it comes to investing into anything with the stock markets, currencies, foreign exchanges commodities etc. They become even more apprehensive when betting is mentioned, because they assume that betting implies risk without knowledge and suckers putting in their money on a random result.

They are right.

But only in the sense that conventional betting, or betting on sports, casinos, is purely a game in which money is won by only chance.

Now comes to the real topic of this article, and that is Financial Spread Betting.

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But please take a moment and make up your own mind whether betting is the right word, by comparing two traders, one buying shares in the conventional way, and one using a financial spread betting platform.

Situation A) John has read his FT, read countless financial blogs, and read on investment forums that with everything going on at the moment, and all indicators point that BP, has so much oil in reserve, from even before the oil spill, that it will make a slow and steady incline back to close to its original share price.

The shares are £3.45 per share at the moment. He buys 1000 shares, investing a total of £3450. Over the next couple of months, the share price increases to £4.28, an increase of 83p, therefore his initial investment is now worth £4550, which is a £830 profit (excluding broker's fees and other associated fees if he should decide to sell).

Situation B) Simon has read the exact same materials but decides that leveraging on BP instead of buying the shares themselves will give a greater return. So he see's that the share prices is £3.45 a share, and BUY's, with a stake of £20 a point.

After the two months have gone by, the share price is at £4.38, an increase of 83p, or 83 points. At £20 a point, that is a profit of £1660.

NB: But before this, Simon had a Stop Loss on his investment at the point he was on £1000 profit, i.e. when the price was at £3.95.

£830 vs £1660 is a no-brainer.

So would you still call financial spreadbetting a bet? The research for of these was the same, and more importantly, the RISK was the same, with the inclusion of a stop-loss. With this specific financial spread betting example, the stop loss meant that there'd always be a certain amount of profit, even if the share price dropped. THIS is the beauty is financial spreadbetting, and the reason why I believe anyone, with enough knowledge, can make a living out of financial spreadbetting. All the risk is mitigated, and any potential losses are all controlled, so too much is never lost, and a LOT LESS is invested, because with financial spreadbetting, you don't actually own the share.

And the final aspect that will finally bag it for you? NO taxes are liable for profit on financial spreadbetting in the UK as it is deemed a wager. For now.

Imagine the situations I gave you, but with 10 point rises in stocks, with and £2, £5, £10, ad £20 stakes per point. This means £20-£200 per stock, and in one day of day trading, three or four investments may be undertaken.

So you see, day trading, and making a very real daily income is possible, it is just about doing the right research, and always, always, having a stop-loss to mitigate any losses.

Go open a spreadbetting simulator account with a fake £10,000 and try it, and I promise you that you will finally see the real way to make real money using real, free and open knowledge to make educated decisions and substantial profits.

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