Keeping cool in Spread Betting: the Steady Eddie Approach
The reality is harsh and spread-betting isn’t for the fainthearted. Traders need not constantly face the front of the screen from the moment the UK opens and persist until the close of Wall Street toiling all say long to land the most profitable deal. That is the very reason why Spread-betting firms are certainly and gladly do it for the weary trader.
There is of course the “Steady Eddie” approach which is quite becoming popular these days. It’s really not that difficult and surprisingly has a rather straightforward approach; anyone can buy an ordinary FTSE 100 tracker and just sit back and have the rest take its course with an estimated 12 % return.
There are a lot of people who basically don’t have the patience and liking of having to sit and stare in front of a price screen all day long. There are a chosen few of spread betting clients; especially those who have the keenest of interest in the stock market will hold their positions for days, weeks, and even months searching for the best opportunity to make a bolder move on individual shares in the similar way if they held it in an average stock broking account. With the global stock markets looking bright, it isn’t really that hard to see the appeal of this doting approach.
When traders use spread betting, they receive a credit for the dividend they use and more importantly benefit from an increase in price.
Although there might be just a slight percentage of exotic markets such as commodities and currencies which are popular with the short-term traders, there are those who are patronising the stock market and individual shares since spread-betting on these items doesn’t necessarily mean involving the whole batch of additional query.
Stop losses are in place for traders to safeguard themselves against extreme losses if they find themselves at the very wrong end of the trading continuum. Although investors can also use and combine various tools of the trade to optimise their success and support their existing share holdings, specifically those searching for more income by effectively hedging their shares.
Therefore by taking hold of the shares and shorting those at the same time will guard them against the weakening effects of capital losses while they enjoy the dividends.
Spread betting can actually aid in hedge exposure to underlying equity assets. This can be done in a lot of ways, although most of the times it can only be short-circuited by monitoring interference in the form of short selling bans which compel investors to liquidate much of their physical holdings. One effective way might be to sell short a given sector of the stock to ease out a sell-off especially if the asset owned is a stock that is a potential income play.
Let us not forget that there are wider exposures to precious metals and oil which can help the investor maintain a well rounded portfolio. There is a growing awareness that every portfolio could lead to some element of gold to protect the impending currency debasement if left unchecked. Using spread betting accounts is one way to gain access to these markets.
Finally, it is really all about sensitivity and not purely intuitive guesses. As trading techniques continuously evolve be sure to think about the possibility of using the Steady Eddie approach.