For a “plain vanilla” retail speculative trading account I would think that a spread betting account is suitable due to its tax advantages and simplicity. But if the trading account is also used in conjunction with other investments including hedging positions then it would be wise to check with your tax office first.
Perhaps @tommor would have more to say on this topic?
Sure.
Basically, for SB -
simple - no lots etc.
low capital deposits required
very small positions possible - e.g. 10p per each 0.00001 on major pairs
tax - No matter how much you make through SB, you will never pay a penny of tax on it. There is no requirement to even record trades, profits n loss. Purpose for using SB won’t matter, other investments, other income etc. won’t change this.
scalping - is permitted
FCA-regulated exactly like a broker
Against SB -
tax - you can’t off-set losses against a tax bill
spreads - I’m not a scalper but its said SB spreads are usually too wide for scalping. But all new scalpers lose anyway, regardless of market access.
I have literally no clue why anyone would bother with CFD’s to trade forex in the UK. Except, maybe some people have a mistaken ideological belief that CFD trading is morally more justifiable than SB.
Cheers men I was kindve just thinking spread betting accounts sounded too good to be true with the no tax
Could someone mind telling me why their worse for scalping?
Its the width of spreads they offer. Scalping originally started with a profit target of 1 single price movement: as soon as the position went into net minimum profit, it was closed. But you have to allow for the spread: on a buy, you pay the ask price, which is higher than the sell or bid price. If you’re opening a position and looking for a profit of say 3 pips, but the SB firm charges a spread of 3 pips, you need price to rise by 6 pips before you can exit with your profit. Another type of broker might only charge a single pip, you would only need a price rise of 4 pips for your target to be reached.
In theory, overheads like that can make lots of winners losers and damage your account. But in practice, whatever the spread, it makes no difference, new scalpers wipe out anyway…
This is gold!
@SovoS
The funny thing about this is that we have our strategies to help us figure this out. The problem is when we lie to ourselves and justify an entry, because of the “well, what if I win?!”
Oh right okay so there spread is just more than normal accounts. Right well cheers for the help
Sorry one last thing I see your against scalping to start but what are you thoughts on aiming for smaller profits from trades lasting maybe a few hours as a beginner or would it be more beneficial aiming for like day long trades. I know I prefer the shorter trades but if it would be more beneficial to go longer term I would go with that
That’s just about what I do every time ahahaha
I always say to all traders, start on the dailies. If you can make money on them, you might wish to drop to lower time-frames. Then again, by that time, you might not need to.
D1 TA is generally more visible and dependable. Its obvious you have more time to do TA, plan and research. It is less intense, less urgent, less scarey.
Remember that 80% of traders’ accounts open today have lost money. Learn the assumptions these new traders make and do something else than what they do. Mostly they assume trading means daytrading. And that if price has been going up the smart thing to do is get short asap. And that a loss of 25 quid per trade from a £500 account is an affordable risk. Don’t be in their gang.
Yeah I’ll just keep going with the demo and try and work out what I’m good at
Daryl Guppy says the same thing:
“The challenges in trading are more than just finding the right advice, trading system or method. Our capacity for self-sabotage should never be underestimated, and traders should always be alert for the first signs of this destructive personal behaviour.”
“Trading is difficult because we complete accurate analysis and then distort the entry decision to match our own particular biases and fears. Often the entry decision bets against, or discounts, our original analysis. As a result we miss out on profitable trades, or buy into unprofitable trades. This error is magnified with increases in trend volatility and the speed of rally reversals.”
Daryl Guppy, Guppy Trading
Hello it’s been a few days since I’ve been here I’ve just been doing my day to day stuff and trying to learn abit more ive taken your advice and am going to take a step back and go with some swing trades I think that for my level short term trading is more of a guessing game now that I’m actually looking for the right entry points it’s just how quick can you get in and I don’t think I want to do that
I’ve been looking and ichimoku seems to keep coming up as one of the better indicators I was just wondering would anyone have any advice if this is the right sort of thing to go for, or is there more basic stuff to start with? Cheers
you should concentrate on one technique (for example moving average crossover) and papertrade it on short time frames for example 5 min charts, to get as many trades experience as possible, and make notes on every trade that you take. Use your gut feeling or other confirmation signal to decide which signals to take or skip.
Always have predetermined stop loss. Take profits with your gut feeling or at same or higher money amount than your stop loss.
After 30 trades see how well you are doing.
Try next technique.
Start trading small real money with the one technique that works best.
Better knowledge on candlesticks and market indexes is needed because it helps us understand the price flow.
To make a concrete decision, you have to be a good market analyst first. Trading decision-making ability plays a significant role for traders.
Yes, find your strategy and take time for so. Pass your time in market analysis more and more.
Make your own trading strategy by your experience. You may spend some time in this field but hopefully it will carry a good result for you.
You have to invest most of your time in finding out a good trading strategy. A good trading strategy paves the way for success.