By Vince Stanzione
More and more people are taking charge of their own destiny and trading the financial markets. Unfortunately, many are unprepared for the self discipline, focus and commitment needed to become a successful trader. My advice to those taking the plunge is to take a focused approach to trading and seriously look at the various strategies and tools available, like "Fixed Odds" financial betting offered at BetOnMarkets.com.
Fixed Odds betting has some big advantages over financial Spread Betting especially for those starting with smaller accounts. With Spread Betting you're paid by the number of points you are correct by, with Fixed Odds you can make a large return with the market moving just a few points in your favour. With Fixed Odds betting you can limit your risk, as you don't need to worry about using Stops.
Here are 8 Top Tips for Fixed Odds Trading
1. You can make money from Up, Down or Sideways movements
With fixed odds you can make money from markets moving up, moving down or staying in a sideways range, a concept that even professional traders find hard to grasp, as they are conditioned to want to buy low and sell high.
Remember that markets fall faster than they rise so down bets can make quick profits. With fixed odds you can back currencies, shares and indices to fall all with limited risk and the most you can lose is your stake which can be as low as £10.
Sideways markets can be backed using Barrier Range bets. Until Betonmarkets.com introduced these it was very complicated to make money from range bound markets and you would have had to use options strategies such as selling options. Now you can do it with a simple bet and with strictly limited risk.
2. Learn to love volatility
Fixed Odds allows you to place an Up/Down bet which basically means "I don't know what the market is going to do but I think it's going to move."
As long as the market moves Up or Down and breaks above or below your predicted barrier you will be paid out.
3. Use One Touch bets
Markets tend to be like lightening, they look for the path of least resistance. When a market breaks above a resistance (ceiling) level you will find the market will carry on in the same direction for at least a few more days. Just as a market breaks down through a Support (floor) the market carries on falling until its next support.
Using a One Touch bet traders can back these events, remember you're saying the market just needs to touch the given level and that would be enough to payout.
Gold is a perfect example. It started building momentum and broke over the $1400 an oz level, looking at the chart I could see $1450 was the next potential target, so I placed a "ONE TOUCH" bet that Gold would touch $1450 within the next 14 days. Gold went on to hit $1460 within a few days, so the bet paid out. Of course, if Gold did not touch $1450 during the 14 days then my bet would have expired worthless.
If a bet is going against you, there is always the option to sell the bet back and look to salvage some of the stake.
4. Balance Risk and Reward
Everyone likes the big payouts; however, you have to remember there is a reason why you're being offered a 300% return, that's because there is a fairly slim chance that the bet will not payout. On the opposite end a 1% return is hardly going to make you rich and should the bet go wrong you would lose a large stake.
The simple answer is to look for a balance and mix and match trades.
5. Be a disciplined trader not a reckless gambler
After a good run many become over confident and start taking stupid risks. After a poor run many try to play catch up and want to make their losses back fast, both actions are the easiest way to lose your trading capital. Many books have been written on "Money Management" with complicated formulas. The key is not to risk what you can't afford to loose.
6. Run two bets together, trading a pair
Trade two different markets that have a negative correlation. For example, Gold and the US Dollar. Gold is priced in US$ so if the dollar weakens then Gold tends to rise. Gold is also used as a hedge against falling currency values. So you could look to have a Bear bet on the US$/Euro and a Bull Bet on Gold.
7. Seasonality – History does repeat itself in many markets
Technical analysis is used widely however seasonality is not as well understood. Seasonality is using the calendar and past results to forecast the likelihood of the same happening again. For example, Gold tends to be strong in September where as stock markets tend to be weak. Periods around market holidays such as Christmas, Thanksgiving, Independence Day and the first few days of the month tend to be stronger. The well known saying, "Sell in May and go away," whilst not perfect, has worked as a good base for a trading system. You will also find seasonality in commodities and some currencies.
Watch the Yen strengthen around March time as large Japanese companies close their financial books and tend to put Yen back on their balance sheet.
8. Combine Spread Bets and Fixed Odds
The FTSE100 is going down and you have placed a spread bet to back this idea. After a week or so the FTSE100 starts going up or sideways, you could close your spread bet or you could leave it open and look to place a fixed odds bet to run alongside it, maybe a barrier range, so whilst the market is going sideways your spread bet will not be making money but at least your fixed odds bet will make a profit.
Are you missing out?
Whether you're a beginner, who wants to obtain some stock market exposure with limited risk, or you're an experienced trader who uses fixed odds trading to hedge other strategies, there is a lot to be said about the benefits of Fixed Odds trading. Why miss out? Log on to www.BetOnMarkets.com today and quote GBFR in the Bonus code field during signup and get a £20 FREE trade.