The Exchange Book Club – The Financial Spread Betting Handbook
Four years since the first edition of The Financial Spread Betting Handbook was published, experienced financial analyst Malcolm Pryor returns with an updated second edition. In those four years, a number of things have changed in the spread betting world, such as the number of firms offering spread betting services and the educational training that they provide, and the new edition has been revised to reflect these changes.
The Financial Spread Betting Handbook, 2nd Edition is structured as though the journey to spread betting success is like the ascent of a mountain; the mission for traders is to reach the summit. The first step on the climb is to establish a base camp; you then begin your journey up the mountain face, before finally attempting to reach the peak. Using this mountaineering model as a guide, Pryor splits the book into three distinct parts; the first looks at the various companies, software and types of trading available; the second outlines different strategies for trading, looking at trends, profit taking, re-entry and so on; and the third part is the attack on the summit itself, where Pryor examines the importance of the spread bettor, how to keep in control through planning and analysis, and then how to develop your trading further.
Let?s look at how the book is broken down in more detail:
Part One ? Base Camp
As Pryor states in the introduction to this section, ?getting to base camp means we will have the requisite background knowledge and resources to start spread betting.? This includes knowing how to select an appropriate firm to trade with, choosing hardware resources and an understanding of the various spread betting products available on the market. This part provides all of that information and more. For newcomers, it is an ideal introduction to everything you need to know before you begin trading, and for the more experienced trader it serves as an excellent checklist for those topics you may have long since forgotten. Another chapter in this section looks at ten common and very expensive errors that traders often make in spread betting. These are illustrated with case studies.
Part Two ? Climbing The Mountain
Next comes the time for beginning the ascent up the mountain. This is where traders will have to put all the equipment and knowledge from the first section into practice. Pryor begins by looking at how to find a strategy that suits you and firstly poses the question ?What do you like?? He looks at the length of bets, available time and resources, plus your discipline and experience. It is very important to make sure you know where you stand on each of these and how your stance affects the way you trade. The rest of this section is dedicated to trends, and Pryor uses examples to explore the identification of trends, selecting bets, bet size, when to exit and re-enter, and so on. He then moves on to looking at betting on reversals, and finally betting in and out within a day.
The final chapter in this section looks at more advanced spread betting techniques, for example arbitrage, pairs trading and hedging.
Part Three ? The Route To The Summit
In Part Three the book moves on to look at matching the strategy to the individual, planning, record keeping, more risk management concepts, performance reviews, psychology, how to develop a winning attitude, plus thoughts on continual development in order that a losing spread bettor can become a winning one.
Many traders take months or even years to settle down to a style of spread betting which enables them to produce consistent profits, and Pryor points out that each person is different and must find his own way of trading as it is actually very hard to successfully trade someone else?s system. He recommends looking at your own character ? you need to adopt strategies and techniques which fit your character and preferences, whether that?s sticking to commodities or trading a wide range of stocks.
Planning and staying in control are also key factors in the success of a spread bettor ? he says ?It is generally easier to achieve something if you know what it is you are trying to achieve beforehand.? Pryor splits this topic up into simple headings, such as ?Mission, objective, goals? and ?Strengths, weaknesses, opportunities and threats?, and these are ideal ways to make sure you are keep in mind what you are trying to achieve and your way of getting there. To illustrate this, the book features a couple of case studies, including a week in the life of successful spread bettor Robert, and this shows the effect these plans can have on a trader?s actions over a week.
Further chapters in this final section look at record keeping, risk management and monthly reviews ? again, all important topics to make sure traders measure their performance in order to improve.
In this revised second edition, readers benefit from refreshed and improved trading and risk management techniques incorporating four additional years of spread betting experience and changes in the markets, plus brand new advice on managing exposure, as well as updated analysis of spread betting firms’ behaviour, order types and other practical issues. As a result, The Financial Spread Betting Handbook, 2nd Edition is the essential guide to getting to the top of the spread betting mountain.
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