Making a Fortune From Fixed Odds Financial Trading
-
Upload
betonmarkets -
Category
Documents
-
view
2.412 -
download
0
description
Transcript of Making a Fortune From Fixed Odds Financial Trading
![Page 1: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/1.jpg)
![Page 2: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/2.jpg)
Making A Fortune From Fixed Odds Financial Trading
Vince Stanzione
![Page 3: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/3.jpg)
Information and strategies contained in this guide are intended as educational
information only and should not be used as a sole trading guide. International
currency, stock index or commodity prices can be highly volatile and
unpredictable. The past is not a guide to future performance and strategies that
have worked in the past may not work in the future. Fixed odds financial trading
involves a high level of risk and may not be suitable for all customers. The value of
any trade, and income derived from it can go down as well as up and your capital
is at risk. Although due care has been taken in preparing this document, we
disclaim liability for any inaccuracies or omissions.
Published by: First Information
Email: [email protected]
All rights reserved. No part of this book may be reproduced or transmitted in
any form or by any means, electronic or mechanical, including photocopying,
recording, or by any information storage and retrieval system, without the written
permission of the Publisher, except where permitted by law. For information of
the reproduction rights contact: First Success Publishing at the above address.
Copyright © 2009
By Vince Stanzione
![Page 4: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/4.jpg)
Contents
Introduction 1• Breakingdowntheestablishment–Outwiththeold
andinwiththenew 2
Chapter 1: Getting started 3• Startingwiththebasics 3• What’sthedifferencebetweenSpreadBetting/Futures
andfixedodds? 5• OpeninganAccount 7
Chapter 2: Ways to back the market 12• Betsoffered 12• WhatcanItrade? 16• Howarebetspriced? 20
Chapter 3: Making Money with Fixed odds 29• UsingCharts 29• UsingaMovingAverage 32• MoneyManagement 41
![Page 5: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/5.jpg)
iv|Making A Fortune From Fixed Odds Financial Trading
Chapter 4: 8 Top Tips for Fixed Odds Trading 45• YoucanmakemoneyfromUp,DownorSideways
movements 45• Learntolovevolatility 46• UseOneTouchbets 47• BalanceRiskandReward 48• Beadisciplinedtradernotarecklessgambler 48• Runtwobetstogether,tradingapair 49• Seasonality–Historydoesrepeatitselfinmanymarkets 49• CombineSpreadBetsandFixedOdds 50
Conclusion 51
About Vince Stanzione 52
![Page 6: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/6.jpg)
Welcometo“MakingAFortuneFromFixedOddsFinancialTrading”.MynameisVinceStanzione.Forthe
past23years,Ihavebeeninvolvedinfinancialmarkets.IhaveworkedforvariousbanksandbrokersintheCityofLondon,bothinEquitiesandForeignExchange.
Forthelast18yearsIhavesuccessfullytradedmyownmoneyaswellasteachingothershowtotrade.Thishasgivenmethefreedomtoliveand“work”,ifthat’stherightword,fromanywhereintheworld,withnobossortheusualhasslethatnormalbusinessesface.
DuringmycareerIhavetradedmillionsofdollarsbothformypreviousemployersandwithmyownmoney,usingfinancialinstrumentssuchafutures,options,warrants,swaps,CFDsandintheUK,financialspreadbetting.TheaimofthisbookistogiveyouanintroductiontotradingwithBetOnMarkets.comusingFixedOddsFinancialBets.
Introduction
![Page 7: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/7.jpg)
2|Making A Fortune From Fixed Odds Financial Trading
Inmyview,fixedoddsbettingoffersanexcellentwaytotrademarketswithsmalllimitedstakesyetwithbigpotentialgains.Today,thousandsofmenandwomenfromallovertheworlduseBetOnMarkets.comtoplacetradesoncurrencies,shares,indicesandeventhepriceofgold.
Breaking down the establishment – Out with the old and in with the newUntilthelast5to10years,itwasverydifficultforprivateclientstostarttradingastheyhadtousethesamestrategiesaslargebanksandfinancialinstitutions.ManyofthesestrategieswouldrequireyoutolodgelargedepositsandtakeriskswhichyouorIwouldnotwanttotake.Mostclientswouldbeencouragedtojustbuysharesormutualfundsandengageinbuyandholdtypestrategies.ThankstotheinternetandBetOnMarkets.com,themoneymaking“club”isnowopentoeveryone,regardlessofwheretheylive,whattheydoforalivingorhowmuchtheyearn.WithnothingmorethanaBetOnMarkets.comaccountandinternetaccess,thefinancialmarketstodayallowyoutotakeonandbeatthefinancialbigboysattheirowngame.Justthinkofhowyoucanbesittingonabeachandstillbetrading,becausemanyPDA’ssuchastheiPhoneandmobilephonesarepowerfulenoughtotradefrom.
![Page 8: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/8.jpg)
Likeanynewsubject,atfirstitcanallseemabitstrangeanddifficult.Myaimistokeepthejargondowntoabare
minimumanduseasmanyexamplesaspossiblefrommyowntradingexperiencetohelpexplainthevariousbetsandstrategies.
Don’tworryifyoudonotunderstanditafteroneread.Iencourageyoutore-studyanduseaVirtualTradingAccounttopracticebeforeyoutradewithrealmoney.ThisgreatfeatureisofferedfreebyBetOnMarkets.com.Soastheoldsayinggoes“youcaneatanelephantifyoutakeonebiteatatime”,youtoocanlearnhowtotradeprofitablyusingfixedoddsbetsifyoutakeitstepbystep.
Starting with the basicsMostinvestorsareconditionedintomakingmoneybybuyingsomethinglowandsellingithigh.Thismaybewellandgoodinthelongtermbutastradersweneedmoreflexibility.
C h a p t e r • 1
Getting started
![Page 9: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/9.jpg)
4|Making A Fortune From Fixed Odds Financial Trading
WithBetOnMarkets.comyoucanprofitfromamarketgoingup,downorevensideways,aconceptthatnotevenseasonedtradersunderstand.Solet’stakealookatthebasicsandthenIwillshowyouthespecificbetsoffered:
• BullLongUp Formanythisistheeasiesttounderstand.You’rebuyinglow
andsellinghigher.Youcanbetforthemarkettomoveupoverthenextfewminutes,daysorevenmonths.
• BearShortDown Thisisalittlestrangetonewcomersbutsomethingyouwill
soongrasp.ABearBetallowsyoutoprofitfromsomethinggoingdown.Soyou’resellingfirstandthenbuyingbacklater.
Inthestockmarket“shortselling”isnotrecommendedasitcarriesrisksandinfact,mostbrokerswillnotletyousellshort.HoweverwithBetOnMarkets.comyoucanaseasilyplaceaBearBetasyoucanplaceaBullBetandstillhavelimitedrisk.SoifyourviewthattheWallStreetIndexisgoingtoplummetturnsoutwrongthenyoucanwalkawaywithalossofnomorethanyourstake.
ThelargefallsinglobalstockmarketsinSeptember/October2008wereexcellentopportunitiesforthoseusingBearBets
![Page 10: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/10.jpg)
Chapter 1: GettingStarted |5
• SidewaysRange Thisisanotherconceptwhichmaysoundalittlestrange
butcanbeveryprofitable.Again,unlessyouhaveaccesstoatradedoptionsaccountandaheftybankbalance,makingmoneyfromarangewasnearlyimpossibleuntilnow.WithBetOnMarkets.comyoucanplaceabetthatsaysineffectthatamarketwillstayinarange.Let’ssayyouexpecttheEUR/USDtostaybetween1.50(high)and1.30(low)inthenext10daysusingaRangeBet.AslongasattheendofyourbettheEUR/USDiswithinthatrangeyouwillbepaidoutinfull.
• AbreakoutBet Let’ssayamarkethasbeenconsolidating(goingsideways)for
awhileandyouwanttobetthatthemarketwillbreakout,eitherupordown.Thisispossiblewithafixedoddsbet.Sowhatyouarebackingisthatthemarketwillmakeamove,thedirectiondoesnotmatter.
What’s the difference between Spread Betting/Futures and fixed odds?Someofyoumayhaveheardoffuturestradingorfinancialspreadbetting.Youmayalsohaveheardaboutthehighrisksthatareinvolvedinthesetypesoftrading.Spreadbettingallowsyoutoprofitfromamarketgoingupordown.Themorecorrectyouarethemoreyoumake,themorewrongyouarethemoreyoulose.Mostspreadbetshaveastoploss,soifthemarketmovesacertainamountofpointsagainstyou,youwouldbestoppedout.
![Page 11: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/11.jpg)
6|Making A Fortune From Fixed Odds Financial Trading
Thisprotectionmakessense,butwhathappenstomanytradersisthattheyhavetherighttradebuttheyarestoppedoutduetoashorttermcontramovement.Let’ssayyouthinktheGBPwillstrengthenagainsttheUSDanduseaspreadbetwithastoplossof100pointsaway.ThetradestartsoffgoinginyourfavourbutduetoanunfavourableeconomicreleasetheGBPdropsjustbelowyourstopbeforerebounding.Thismeansthatyourbetisoverandyouhavelost.Themainadvantageofafixedoddstradeoveraspreadbetwithastopisthatthepositioncannotbestoppedoutearly(apartfromaOneTouchbet),whichmeansthatitcouldgowrongbutthenreboundandfinishinprofit.Anotherdifferencebetweenafixedoddsandaspreadbetisthatyoucanstillmakeabiggainwithjustasmallmarketmovement.Taketheexampleofaone-dayDoubleUptradeongoldatBetOnMarkets.comandasimilardurationspreadbet.TheobjectiveineachcaseistowinGBP100clearprofit.Thefixedoddspositionwouldpayoutifthepricefinisheshigherthantheentrypointplusthespread.WiththemarketatUSD833andaspreadofUSD1,thismeansthatabetcostingGBP100wouldgiveGPB100inprofitaslongasgoldendedthedayanywhereaboveUSD834.Adoublebetpays100%returnlessasmallfactorwhichisthefinancialbookmakersmargin.
![Page 12: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/12.jpg)
Chapter 1: GettingStarted |7
Anequivalentone-dayspreadbetwithastakeofGBP3perpointwouldrequireastop33pointsbelowthecurrentpricetolimitthepotentiallosstoGBP100.ThisrunstheriskofbeingstoppedoutearlyandwouldonlymakeGBP100profitifthepricefinishes33pointshigher.
FormyowntradingIusefixedodds,spreadbetting,coveredwarrants,marginedFXandoptions.Likeamechanicwithatoolboxthatusesdifferenttoolsfordifferenttasks,weastradersmustusedifferentproductstobackdifferentscenarios.InmanycasesIwillhaveafixedoddsbetandaspreadbetrunningtogether.WhatIamcertainofisthatmanynewtraderswithsmalleraccountsusingspreadbettingtotrademarketssuchastheDowJonesIndustrials,FTSE100orS&P500wouldbefarbetteroffusingafixedoddsbetthanaspreadbet.
Opening an AccountBeforewegointotheinsandouts,nowwouldbeagoodtimetoopenanaccountwithBetOnMarkets.comifyouhavenotalreadydoneso.
Theprocessisfairlysimpleandyoucannormallygetitdonewithinaround5minutes,sodon’tworry:it’snotlikegoingtoseethebankmanagerorthedentist!FromthefrontpageyouwillseeaSIGNUPbutton,youwillthenseeabuttontoselectREALorVIRTUAL,Isuggestyou
![Page 13: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/13.jpg)
8|Making A Fortune From Fixed Odds Financial Trading
signupforboth,soyouhaveavirtualaccounttotestideasonandarealaccounttodoyourrealmoneytrading.
Herearethetop5frequentlyaskedquestionsduringaccountopening:
1. Ismymoneysafe? Intoday’sfinancialenvironmentthatisavalidquestion,solet’stake
alookatwhomwearedealingwith.BetOnMarkets.comisowned
Note:Whilst virtual accounts are good to start with, I advise moving to trade
with real money within a few weeks. I have seen many new traders
spending months with virtual accounts and never start making real
trades.
![Page 14: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/14.jpg)
Chapter 1: GettingStarted |9
bytheRegentMarketsGroupwhichisamulti-milliondollargroupofcompanies.BetOnMarkets.comhasbeeninbusinesssince1999andhastradedover15milliontransactionswithover100,000clientsworldwide.BetOnMarkets.comhasnodebtandiscashpositive.Thecompanyhaswonvariousawards,mostrecently“BestFixedOddsFinancialProvider”in2007and2008bySharesMagazineand“BestFixedOddsFirm”in2008byInvestorChronicleFT.ThecompanyislicensedintheIsleOfManandMalta.BetOnMarkets.comdoesnotextendcredittoclients.Allbetsarepaidwithcashupfront.WhenyouaretradingusingtheBetOnMarkets.complatform,BetOnMarkets.comisthecounterparty.
2.WillmyaccountbecloseddownifImakemoney? Ihavemadeaconsiderableamountofmoneywith
BetOnMarkets.comandyouwilloftenseemynameappearinthetop10biggestwinnerslistandIhaveneverhadaproblem.WhatyouneedtounderstandisthatBetOnMarkets.comstillmakesmoneyevenifyouwin.ByusingsophisticatedhedgingtechniquesBetOnMarkets.comcanoffsetrisk.ForexampleifalotofclientsarebullishontheGermanDAXthenBetOnMarkets.comcanpurchaseDAXFuturesinthemarkettooffsetallorpartoftherisk.Clientsalsooffseteachother,sooneclientmaybettheDowJonestogoupandanotherclientmaybetdown,BetOnMarkets.comactsasthemiddlemanandmakesasmallmarginonboth.
![Page 15: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/15.jpg)
10|Making A Fortune From Fixed Odds Financial Trading
Unliketraditionalbanksandbrokers,BetOnMarkets.comisaninternetbasedplatformthatrunswithfarlowercosts.Thebusinessisbasedonhighvolumeswithsmallprofitmarginswhichisgoodnewsforusastraders.
3.DoIneedacreditcardtotrade? No,notatall.ABetOnMarkets.comaccountcanbefunded
invariouswaysthatdonotrequireyoutouseacreditordebitcard.Forthosethatdowishtouseacreditordebitcard,restassuredthatthesitehasthehighestlevelofencryptionandanti-fraudmeasuresthatprotectboththeclientandBetOnMarkets.com.
4.HowdoIgetmywinnings?
Whenabetsettlesyouneedtojustclickabuttonfromyouraccounttoclosethetradeandtakeyourwinnings.ThissumisthencreditedtoyourBetOnMarkets.comaccount.Ifyouwishtowithdrawmoney,thiscanbedoneonlineviatheCashierbutton.Fundscanthenbepaidbacktoyourcreditcardorbankaccount.
![Page 16: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/16.jpg)
Chapter 1: GettingStarted |11
5.Currency YoucanchoosetotradeinGBP,EURorUSD.Youcan
alsoeasilytransferfundsfromonecurrencytoanotheratcompetitiverates.
Note:The way you are paid back may depend on how you funded your
account.
![Page 17: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/17.jpg)
InthissectionIwilllookatspecificbetsofferedbyBetOnMarkets.comRemembertocheckthewebsiteoftenas
newbetsareaddedregularly.
Bets offeredThereisawidevarietyofbetsavailableatBetOnMarkets.com.Herearesomeexamples:
1.Flashtrades/short-term Theseareavailableovershortdurationsofafewminutesand
willpayoutifthemarketrises(upbet)orfalls(downbet)overthattime.Theyallowtraderstotakeadvantageofveryshort-termtrends.
ThesetypeofbetsworkwellonUSmarketssuchastheDowJones,S&P500andNASDAQ,especiallyaroundmarket
C h a p t e r • 2
Ways to back the market
![Page 18: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/18.jpg)
Chapter 2: Waystobackthemarket |13
2. Intra-daydoubles/trendmultipliers Thosewhocanspotstrongerandmorepersistenttrendscan
capitalizebyusingthesebetstobackariseorfallinsuccessive15-minutetoone-hourperiods.
movingnewseventssuchastheFOMCinterestratemeetingannouncements.
DURATION30 seconds to 4 minutes
![Page 19: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/19.jpg)
14|Making A Fortune From Fixed Odds Financial Trading
3.Bull/bear Theseexposurespayoutifthemarketiseitheraboveorbelow
acertainspecifiedlevelattheendofthebet,whichcouldbehours,daysorevenmonthslater.Theyaresuitablefortakingadirectionalviewofthemarketorhedginganinvestmentportfolio.
4.Expiryrange/expirymiss Chartistscanusethesetomakemoneywhenthemarket
eitherfinishesbetweenahigh(resistance)andalow(support)barrieroroutsidethisrangerespectively.
![Page 20: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/20.jpg)
Chapter 2: Waystobackthemarket |15
5.Onetouch/notouch AOneTouchpaysoutifthemarkethitsthespecifiedlevel
withinthechosentimeframe,whiletheNoTouchistheexactopposite.Theycanbeusedinanumberofways,includingbackingabreakoutfromsupportorresistance.
6.Barrierrangetrade/notouchrange Thesecanbeusedtomakemoneyfromrange-boundmarkets
bystipulatingthatthepricewillnothiteitherthespecifiedhigherorlowerlevelduringthelifeofthetrade.
![Page 21: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/21.jpg)
16|Making A Fortune From Fixed Odds Financial Trading
7.Theupordowntrade Thisisapurevolatilityplay,whichpaysoutifthemarket
toucheseitherthehigherorthelowerlevelwithinthelifetimeofthetrade.Sometradersuseitwithwideboundariesaheadofanimportanteconomicannouncementinanticipationofanextrememoveineitherdirection.
What can I trade? Newmarketsarealwaysbeingaddedbutthemainmarketsare:
1.Currencies,FXorForeignExchange ForeignExchangeortheFXmarketasitisknownas,is
oneofthebiggestintheworld,notradingfloorexists.Banks,brokers,companiesandgovernmentstradebetweenthemselvesusinghi-techcomputernetworkssuchasthoseofferedbyReutersandBloomberg.
![Page 22: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/22.jpg)
Chapter 2: Waystobackthemarket |17
Itishardtocomprehendtheamountofmoneythattradesinaday,around$3.2trillionaday(BankforInternationalSettlements(BIS)inBasel,Switzerland).Outofthis,around10%arecompaniestradingoverseasthatneedtoconvertcurrenciessuchasimport/exportbusinesses,therestispurespeculation.Sowhatistradingcurrenciesallabout?Manyofushavetradedcurrenciesinasmallway.Ifyouhavebeenabroad,youwouldhaveboughtSwissFrancs,Euros,USDollars,etc.
Nowwhenyouarelookingtobuyacurrency,sayEuros,youarelookingforasmanyEurostoyourPound(orhomecurrency)aspossible,soyouwouldratherhave1.40tothePoundratherthan1.10,soyouarebuyingHIGH.
Whenyoucomebackwithyourun-spentEurosandyouwanttochangethembacktoPounds,youarelookingforthelowestfiguresoyouaresellingLOW.
IntheForeignExchangemarketsnoactualnoteschangehands,it’sallpapertransactions.Theactualprincipalamountofmoneyneverchangeshands,youareonlytradingonasmallpercentagechange.
WithBetOnMarkets.comyoucantradetheFXmarket24hoursadaywithverysmallstakes.
![Page 23: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/23.jpg)
18|Making A Fortune From Fixed Odds Financial Trading
Tip:
Themaincurrenciesare:
•AUD/JPY AustralianDollar–JapaneseYen•AUD/USDAustralianDollar–USDollar•EUR/AUDEuro–AustralianDollar•EUR/CAD Euro–CanadianDollar•EUR/CHF Euro-SwissFranc•EUR/GBP Euro–BritishPound•EUR/JPY Euro–JapaneseYen•EUR/USD Euro–USDollar•GBP/AUD BritishPound–AustralianDollar•GBP/CAD BritishPound–CanadianDollar•GBP/JPY BritishPound–JapaneseYen
•GBP/USD BritishPound–USDollar
Currencies are a good place to start. They trade 24 hours a day and
because the market is so large you always have buyers and sellers.
This means that the spread (difference between the buying and
selling price) is extremely tight, which in turn means your breakeven on a
bet is low. Also there is always something going on in the currency market.
2. Indices BetOnMarkets.comoffersarangeofworldindices.Due
tocopyright,thenamesofthemarketsmaylookslightlydifferentbuttheyarebasedonthesameindex.ForexampletheWallStreetIndexistheDowJonesIndustrialAverage.
![Page 24: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/24.jpg)
Chapter 2: Waystobackthemarket |19
SomeoftheIndicesyoucantrade:
•BelgiumIndex •DutchIndex •Euro100Index •Euro150Index •FrenchIndex •GermanIndex •HongKongIndex •IrishIndex •ItalianIndex •SpanishIndex •SwedishIndex •SwissIndex •UKIndex •USSP500Index •USTechCompositeIndex •WallStreetIndex
3.Gold BetOnMarketsoffersa24hourpriceongold,pricedinUSD.
4.UKShares AselectionofleadingUKsharesincludingBarclaysBank,
TescoandMarks&Spencer.
5.USShares AselectionofmainlyUStechnologysharesincludingIntel,
EBAYandGoogle.
![Page 25: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/25.jpg)
20|Making A Fortune From Fixed Odds Financial Trading
How are bets priced?TheaimofthisbookisnottogointoadvancedmathematicssoIwillkeepthisisassimpleaspossible.Earlier,wementionedfinancialspreadbetting.SpreadbettingwouldliveintheFinancialFuturesfamily.
FixedoddsbetsliveintheOptionsfamilyandmanyofthepricingmodelsusedcomefromtradedoptions.
Whenafixedoddstradeexpires,thepositionwilleithersucceedandpayoutthepresetwinnings,orfailandpaynothing.SomeBetOnMarketsfixedoddsbetsmaybesoldbackbeforeexpiryjustasatradedoptionmaybeboughtorsoldbeforeexpiration.
Fixedoddsbetsareallbasedonoptionspricingmodels.Themostimportantinputsintothesecomplexformulaearethetypeofbet,predictedvolatility,timetoexpiry,andthepriceoftheunderlyingmarketcomparedwiththeboundarycondition.
Insimpleterms:thegreaterthelikelihoodofabetsucceeding,thehigherthepricethatBetOnMarketswillchargeforagivenlevelofwinnings.
Thisalsomeansthatthepotentialprofitasapercentageofthecostiscorrespondinglylower.Beforeplacingthebetyoucanpricedifferentscenariosandseetheeffectontheodds,allinrealtime.
Ifyouaskforabettobepricedandthereturnis900%youhavetowonderwhyBetOnMarketsisbeingsogenerous.Whatitmeansisthatthechanceofapayoutisveryunlikely.
![Page 26: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/26.jpg)
Chapter 2: Waystobackthemarket |21
Ontheotherhandifyouaskforabettobepricedwhichissopredictable,theBetOnMarketssystemmaynotgiveyouoddsortheoddsmaybejustafewpercent.
TheBetOnMarketswebsiteincludesthepurchasepriceofthebetinthewinningsfigure,sothepotentialprofitisactuallythepayoutminusthecost.Forexample,ifatradetowinGBP100costsGBP25,thepotentialprofitisactuallyGBP75,whichrepresentsapotentialgainof300%.
Oneofthesecretsofbeingaprofitabletraderisbalancingtherisksandrewards.Taketoomuchrisk(outsidechancesofapayout)andyouwillendupwithveryfewsuccessfultrades.Ifyoutaketoolittlerisk(highchancesofapayout)youwillendupwithmorewinningtradesbutwithlowerreturns.
TheoddsthatBetOnMarketsareofferingcanbeinferredfromthecostofthebetrelativetothepotentialwinnings.Forexample,abetpricedatGBP38.50towinGBP100impliesthattheprobabilityofsuccessis38.5%.Ahighercostwouldmeanagreaterchanceofsuccess,hencethelowerpotentialreturn.Thissameinformationcanalsobepresentedasfractionalodds,decimalodds,orabinaryprice.
Fractionaloddssuchas3/1meanthat,foreveryGBP1staked,GBP3inadditiontotheonebeingriskedwillbereturnedifthebetwins.
TakethepreviousexampleofatradeofGBP38.50thatwouldwinGBP100includingthereturnofthestake.Thefractionaloddsinthiscasewouldbe8/5,asmultiplyingthestakebytheoddsgivesthenetwinningsofGBP61.50.
![Page 27: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/27.jpg)
22|Making A Fortune From Fixed Odds Financial Trading
Thesesameoddscanalsobeexpressedindecimalformat,whichinthiscasewouldbe2.60.Thisisworkedoutbyconvertingthefractiontodecimals(8/5=1.6)andaddingonetotheresult.MultiplyingthedecimaloddsandthestakethusproducesthetotalpayoutofGBP100.
Example of Pricing a Bet
Theexampleshowsaonetouchbet.
Example:• Firstly,selectthecurrencyandamountyouwishtowin,inthiscase
GBP 1000.
• Thenselectthedays,inthiscase8days.
• Thenselectthemarket,inthiscasetheUSTechCompositeIndex
alsoknownastheNASDAQComp.
• Andthensetthelevel,inthiscase1600.
• Oncedone,clickPRICETHISBET.
![Page 28: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/28.jpg)
Chapter 2: Waystobackthemarket |23
AsthisisaOneTouchbet,thepriceonlyhastotouch1600onceandthetradewillbepaidout.
Atthisstageyouarenotcommittedtomakethebet,soyoucanpriceabetbutyoudonothavetotakeit.Youmaywishtogobackandchangeoneormoreoftheparametersandseehowthisaffectstheodds.
ThepriceofthisbetisGBP682.95.IfIwishtoplacethisbetIwouldrequirethisamountinmyaccount.TheprofitonthebetisGBP317.05whichrepresentsa46%return.
Ofcourseifitdoesnottouchmytarget,inthiscase1600,within8daysthenmybetwillexpireat0.
Selling back a betWithBetOnMarketsitispossibletosellbackmostbetsbeforeexpiration.SoifIseeabetisnotgoingmyway,Icouldlookto
Remember:TheGBP1,000whichwouldbepaidbackifthetradewinsis
GBP682.95plusGBP317.05,itisnotGBP682.50andGBP1,000.
![Page 29: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/29.jpg)
24|Making A Fortune From Fixed Odds Financial Trading
sellthebetandsalvagesomeofmystake.IcanalsomakeaprofitifIsellthebetbeforeithaspaidout.Ifthebethasmovedinmyfavor,itispossiblethatmysellbackpriceishigherthanmypurchaseprice.
Whilstagoodfeaturetohaveonthewhole,betsshouldberuntoexpirationtoobtainmaximumreturns.
Double BetsDoublebetsofferaverygoodreturnandareidealforbetslasting1to7days.
ADoubleUpbetisusedwhenyouthinkamarketwillgoupandaDoubleDownwhensomethingfalls.Justincaseyouarethinking“Whydon’tIplaceanUPandDOWNbetonthesamemarket,Iamboundtowin?”Noyouwillnot!Whilstthereturnis100%thepriceismodifiedslightlytoreflecttheBetOnMarketscommission,sothemarkethastomoveafewpointsbeforeoneofyourbetsmakeaprofit.
Youcouldhavetwo(ormore)doublebetsrunningatthesametimeondifferentmarkets.ForexampleaDoubleUponGoldandaDoubleUponEUR/USD.
AstheEurostrengthensagainsttheUSD,GoldnormallygoesupasGoldispricedinUSDandthatmakesitcheaperforthoseholdingEURtobuyGold.
Warning:It is not possible to sell back Double bets before expiration.
![Page 30: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/30.jpg)
Chapter 2: Waystobackthemarket |25
So let’s look at an example on Gold
TheGBP1000ishowmuchIwishtowin.IcanchangethisfromGBP10toGBP25,000.
Ithenselect“falls”(down),theotheroptionbeing“rises”(up),andtheIpressPRICETHISBET.
ThepriceisGBP500somyreturnis100%.ThecurrentspotpriceisGBP817.81,howeverthepricewhichisbeingoffered(below)isGBP816.99.
ThismeansthatIwillneedGoldtodropatleast0.82forthebettopayout.Comparethistootherformsoftrading:it’sanexcellent100%returnforaverysmallmove.
![Page 31: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/31.jpg)
26|Making A Fortune From Fixed Odds Financial Trading
So, just to be clearThisisaDoubleDownbet.Itwillsettleatthecloseoftradingonthegivenexpirydateandwillpaydoublethestakeifthemarketpriceisloweratexpirythanatpurchasetime.
Nowfortheoppositebet:
ThisisaDoubleUpbet.Itwillsettleatthecloseoftradingonthegivenexpirydateandwillpaydoublethestakeifthemarketpriceishigheratexpirythanatpurchasetime.
![Page 32: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/32.jpg)
Chapter 2: Waystobackthemarket |27
Short term BetsYoumaywishtotradeinshorterintervalsthan1day.IntraDaybetsarebasedonasimilarconceptastheDoublesexceptthatyoucanbetbetween10minuteintervalsorhours.Forexample:
IwishtowinGBP100iftheEUR/USDislower(Icanswitchthistohigher)andIcanthenselectthetimes;inthiscase18h00and19h00.
Thereturnonthisbetis90%.
Thesebetsareidealfortradingaroundnewsitemssuchastheannouncementsofinterestratesandunemploymentfigures.
FlashBetsFlashbetsareuniquetoBetOnMarkets.comandoffershorttermprofitopportunitieslastingfrom30secondsto4minutes.Flashbetsarenotavailableonallmarkets;theyarecurrentlyofferedmainlyoncurrencies.
![Page 33: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/33.jpg)
28|Making A Fortune From Fixed Odds Financial Trading
InthisexampleIwishtowinGBP100iftheGBP/JPY(UKPoundagainstJapaneseYen)fallsoverthenext1minute.Thereturnis99%.
Thisoffersanotherexcellentprofitopportunityforaveryshorttermbetwithstrictlylimitedrisk.Remember,thestakeofGBP50.18ismymaximumexposure.
![Page 34: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/34.jpg)
Asmentionedearlier,Fixedoddsallowyoutoprofitfrommarketsmovingup,downorevensideways.Youcanalso
backyourviewfrom1minuteto365days.
InthissectionIwillcoversomeverysimpletradingsystemswhichcanbeusedtoprofitfromusingfixedoddsbetswithBetOnMarkets.com
UsingChartsOneofthemaintoolsIusearepricecharts.Chartsofferavisualrepresentationofwherethepriceofamarkethasbeeninthepast.BetOnMarketsoffersexcellentfreechartsonallthemarketstheytrade.Additionalchartsandnewscanbefoundfreeonvariousinternetsites.
Therearevarioustypesofchartsbuttokeepitsimple,Iwillconcentrateononewellknownformatcalledcandlestickcharts.
C h a p t e r • 3
Making Money with Fixed odds
![Page 35: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/35.jpg)
30|Making A Fortune From Fixed Odds Financial Trading
Iwillnotgointothedetailsofthevariouspatterns.Iwilljustconcentrateonthebasics.
Candlestickchartsaresaidtohavebeendevelopedinthe18thcenturybythelegendaryJapanesericetraderHommaMunehisa.ThechartsgaveHommaandothersanoverviewofopen,high,low,andclosemarketpricesoveracertainperiod.Thismethodofchartingpricesprovedtobeparticularlyinteresting,duetotheabilitytodisplayfivedatapointsinsteadofone.ThemethodwaspickedupbyCharlesDowincirca1900andremainsincommonusebytoday’sfinancialmarkettraders.
High
Uppershadow
Lower Shadow
RealBody
Open Open
Close Close
Low
CandlesticklayoutCandlesticksareusuallycomposedofthebody(blackorwhite),andanupperandalowershadow(wick).Thewickillustrates
Thebasiccandlestick
![Page 36: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/36.jpg)
Chapter 3: MakingMoneywithFixedodds |31
thehighestandlowesttradedpricesofastockduringthetimeintervalrepresented.Thebodyillustratestheopeningandclosingtrades.Ifthestockclosedhigherthanitopened,thebodyiswhite,withtheopeningpriceatthebottomofthebodyandtheclosingpriceatthetop.Ifthestockclosedlowerthanitopened,thebodyisblack,withtheopeningpriceatthetopandtheclosingpriceatthebottom.Acandlestickneednothaveeitherabodyorawick.
Examplechart
Thisisadailychart,soeachcandlerepresentsoneday.Otherchartscanbeselectedrangingfrom1minuteto1month.
Thegreencandlerepresentsanupdayandtheyellowcandleadownday.
![Page 37: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/37.jpg)
32|Making A Fortune From Fixed Odds Financial Trading
UsingaMovingAverageThisonetoolhasmade(andsaved)memoremoneythananyother.It’shardtotracetheorigins,however,oneofthepioneerswasRichardDonchianwhowasagreatpioneerofsystematictradinginthe1950’sand60’s.Thesystemshecreatedover40yearsagoarestillcommonintoday’stradingworldandarethebasisformanyofthecomplexsystemsusedbytheworld’sbesttraders.
Thedictionaryquotesanaverageas“thequotientofanysumdividedbythenumberofitsterms”soifyouwereworkingouta10daymovingaverageofthefollowingnumbers:10,20,30,40,50,60,70,80,90,100,youwouldaddthemtogetheranddividethemby10,sotheaveragewouldbe55.
Nowwhentomorrow’spricecomesin,let’ssay105,youremovetheoldestnumberand105isadded,sotheaverageis64.5.
Everychartingsoftwarepackagecarriesmovingaveragesasitisthegrandfatheroftrading.Youwillalsofinditonthevariouschartsoninternetsites.Youdon’tneedtoworryaboutworkingitout.
Therearefivepopulartypesofmovingaverages:• simple(alsoreferredtoasarithmetic)• exponential• triangular• variable• weighted
Movingaveragescanbecalculatedonanydataseriesincludingasecurity’sopen,high,low,close,volume,oranotherindicator.
![Page 38: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/38.jpg)
Chapter 3: MakingMoneywithFixedodds |33
Myfavouriteisnosurprise,it’stheSimpleMovingAverage.Whilesomehavetriedtobecleverbychangingthecalculations,sticktosimple.
Insoftwareorontheinternet,itisoftenabbreviatedto(SMA).
IfthepriceisbelowitsMovingaverage,thenit’sseenasbeingweak;ifit’sabove,it’sstrong.Thechoiceofdaysyouselectwhenusingamovingaveragemakesadifferencetotheresults.Ifyouuseashorttermmovingaverage(Icallshorttermanythinglessthan10days)youwillgetalotofsignals.Ifyouusealongtermmovingaverage,yoursignalswilllag.
Somegoodmovingaveragestostartwitharethe20dayand50daymovingaverages.
ThisisachartoftheUSD/JPYwitha50daySimpleMovingAverage.Whenthepricebreaksbelowthis,ittriggersasellsignal.Some
![Page 39: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/39.jpg)
34|Making A Fortune From Fixed Odds Financial Trading
tradersalsoallowsomeleeway.Theywaitfor3or4daysaftertheMAbreaksbeforemakingthetrade.
Ifthepricemovesabove,youwouldbelookingtoplacebullishbetsandifitbreaksbelow,youwouldplacebearishbets.
Movingaveragesdohavetheirlimitations,however,theycanbeagoodplacetostartinyourquesttobuildawinningsystem.Usingatechnicalsystemalsotakestheemotionsoutofyourtradingdecisions;ratherthanbasingyourtradesonwhatyouthinkshouldhappen,yourtradesarebasedonwhatisactuallyhappeningwiththeprice.
Amovingaveragecanalsostopyoufrommakingstupidmistakessuchasbettingagainstatrend.Ifwerefertothecharts,wecanclearlyseethattheUSDisweakeningagainsttheJPYanditwouldbefoolishtotradeagainstthistrend.
Support and Resistance• Supportlevelsoccurwhentheconsensusisthattheprice
willnotmovelower.Itisthepointwherebuyersoutnumbersellers.
• Resistancelevelsoccurwhentheconsensusisthatthepricewillnotmovehigher.Itisthepointwheresellersoutnumberbuyers.
• Thepenetrationofasupportorresistancelevelindicatesachangeininvestorexpectationsandashiftinthesupply/demandlines.
![Page 40: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/40.jpg)
Chapter 3: MakingMoneywithFixedodds |35
Tip:
HereweseetheEUR/GBPstayingwithinarangeof0.6679and6880.Thislastedforaround5monthsandwasanidealtimetotradeusingaBarrierRangebet.
NothingstaysinarangeforeverandtowardstheendofAugustweseethepricebreakoutoftherange.Thebreakmeansthatinvestor’sexpectationshavechanged.
When a market breakouts of a range the previous resistance
(top) now becomes support (floor)
Shares,IndicesandcurrenciescanremaininarangeforlongperiodsoftimeandbouncebetweenSupport(bottom)andResistance(top).Thesetypesofsituationsareidealforbarrierrangebets.
![Page 41: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/41.jpg)
36|Making A Fortune From Fixed Odds Financial Trading
ExampleofaBarrierRangeandanExpiryRangeBetIt’simportanttounderstandthedifferencesbetweenthesebets.
BarrierRangeisahigherrisk,buthigherrewardbet.WhatwearesayinghereisthatthemarketwillstaywithintherangeatALLtimesduringthebet.So,ifthemarketjusttouchesthehigherorlowertarget,thenyourbetwillcloseoutatatotalloss.
ThisexampleisontheWallStreetIndex(DowJones)for9dayswitharangeof7900to8900whichisalarge1000pointrangeandispayingagoodreturnof83%.Noticethatitstates“never”.
AsaferoptionwouldbeanEXPIRYRANGE.
Asyoucansee,ithasexactlythesamedetailsbutthe“never”hasgone.Thereturnhascomedownto14%,causesohastherisk.
![Page 42: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/42.jpg)
Chapter 3: MakingMoneywithFixedodds |37
Withthisbet,itdoesnotmatterifWallStreetgoesbelow7900orabove8900,aslongasattheendofthebet,WallStreetislowerthan8900andhigherthan7900.
TechnicalIndicatorsTheBetOnMarkets.comchartingsoftwareoffersaround27differentindicators.Whilsttechnicalindicatorscanoffersomevalue,Iwouldwarnagainstovercomplicatingmattersandtryingtousetoomanyindicators.
ThisexampleshowsalistoftheindicatorswhichcanbeaddedtochartsatBetOnMarkets.com.
Twoofthewellknowindicatorsinclude:
![Page 43: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/43.jpg)
38|Making A Fortune From Fixed Odds Financial Trading
MACD - Moving Average Convergence DivergenceMACDisanoscillatorthatiscalculatedbytakingthedifferencebetweentwoexponentialmovingaverages.Youcansetthetimeperiodsfortheseyourself.Asignallineisalsoplottedtohelpwiththeinterpretation.
Traditionally,whentheMACDisbelowtheorigin,themarketisconsideredtobeoversoldandwhenit’sabovetheorigin,themarketisconsideredtobeoverbought.AMACDbelowtheorigin(i.e.themarketisoversold)crossingabovethesignalgraphisgenerallybelievedtobeasignaltobuy.
AMACDabovetheorigin(i.e.themarketisoverbought)crossingbelowthesignalgraphisgenerallyconsideredtobeasignaltosell.Thefurtherfromtheorigin,thestrongerthesignal.Typicalsettingsare9,12and26days.
AnexampleoftheEUR/GBPwiththeMACD:
![Page 44: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/44.jpg)
Chapter 3: MakingMoneywithFixedodds |39
Relative Strength Index (RSI) TheRSIindicatormeasuresashare’sperformanceagainstitself.Itisoftenusedtoidentifybuyopportunitiesinmarketdipsandsellopportunitiesinmarketrallies.ThevalueoftheRSIisalwaysanumberbetween0and100.
Alownumberindicatesamoreoversoldmarket(30),whileahighvalueindicatesamoreoverboughtmarket(70).Thehigherandlowerhorizontallinesonthegraphareat30and70-thelevelsatwhichmarketsareoftenregardedasoversoldoroverbought.
How to trade the RSI with fixed oddsAsyoucanseefromthechart,Gold’sRSIdoesnotstaybelow30orabove70verylong.
![Page 45: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/45.jpg)
40|Making A Fortune From Fixed Odds Financial Trading
WhentheRSIisbelow30,looktobuyBullbets,whentheRSIisabove70,looktobuyBearbets.
UsingPriceChannels-DochianChannels
BetOnMarkets’chartsallowyoutoaddpricechannels.DonchianChannelsplotthehighesthighandthelowestlowoverthepreviousperiod.InthisexampleIamshowingaDonchianChannelwithaperiodof20days.
Theaimhereistotradewithtrendingmarkets.Ifyouseeabreakofthe20daylow,thenyouwouldbelookingtobetwithBear/Downbets.Ifthepricebreaksthe20dayhighyouwouldbelookingtobetwithBull/Upbets.
Youcanselectotherperiodssuchas10,50oreven100.
![Page 46: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/46.jpg)
Chapter 3: MakingMoneywithFixedodds |41
MoneyManagementWhilstmostnewtradersstartwithgoodintentions,justaspeoplemakingNewYearresolutions,mostendupbreakingthemfairlyquickly.
MoneyManagementdoesnothavetobecomplicated;insimpletermsitmeansthatwehavetodecidetheamountofmoneywewishtoriskonagiventrade.
“ Risk too much and a few bad trades will make you lose your trading bank.”
“ Risk too little and it’s going to be a long time before you see any decent profits.”
Summary:
My course, Making Money From Financial Trading covers much
more on this subject. This introduction is to get you thinking
about using a technical trading system rather than just relying
on news, fundamentals, or even worse, trading on hunches.
Most people trade on emotions or what they read in the newspapers or
see on a business channel; that’s not the way to make money. Having a
systematic way to enter and exit a market may sound a bit boring but
that’s the idea; you need to take away the human emotions from your
trading decisions.
![Page 47: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/47.jpg)
42|Making A Fortune From Fixed Odds Financial Trading
Thegoodnewsisthatfixedoddsbettinghasstrictlylimitedrisk,soifyouriskGBP50,thenthat’sthemostyoucaneverloseonthetrade.
Whilsttheultimatechoiceofriskandrewardisyourdecision,foraccountsoflessthan10,000(dependingonyourhomecurrencyUSD,EUR,GBP)Iwouldgoforaround3%maximumriskpertrade.Foraccountsabovethat,Irecommend2%.
IfyouraccountisUSD3,000orbelow,thengofor4%.
Solet’ssayyouraccounthasUSD5,000,thenyoucanplaceUSD150pertrade.Astheaccountgoesupordown,thebetsizewillvaryaccordingly.
“ The Power of compounding – How to turn small bets in to big profits.”
A Grain of Rice
The daughter of the Chinese Emperor was ill, and he promised
riches beyond compare to whoever could cure her. A young
peasant named Pong Lo entered the palace. With his wit and
bravery he restored the Princess’ health and won her heart. As a reward,
Pong Lo asked for her hand in marriage. The emperor refused and
asked the peasant to think of anything else he would like.
![Page 48: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/48.jpg)
Chapter 3: MakingMoneywithFixedodds |43
After several moments of thought, Pong Lo asked a grain of rice. “A grain
of rice! That’s nonsense! Ask me for fine silks, the grandest room in the
place, a stable full of wild stallions - they shall be yours!”
“A grain of rice will do” said Pong Lo, “But if his Majesty insists, he may
double the amount every day for a hundred days.”
So on the first day a grain of rice was delivered to Pong Lo. On the
second, 2 grains of rice were delivered, on the third day 4 grains, and
on the fourth day 8 grains. On the fifth day 16 grains, on the sixth day
32 grains, on the seventh day 64 grains, on the eighth day 128 grains.
By the twelfth day the grains of rice numbered 2,048. By the
twentieth day 524,288 grains were delivered. And by the thirtieth day
536,870,912 grains - requiring 40 servants to carry them to Pong Lo.
In desperation the Emperor did the only honourable thing he could do,
and consented to the marriage. Out of consideration for the Emperor’s
feelings, no rice was served at the wedding banquet!
(Retold from a grain of Rice by Helena Pittman)
IthinkthatthisisagreatstoryandIhopeyouunderstandtherelevancetofinancialbettingandinvesting.
Withfixedoddsbettingwecanincreaseorreduceourriskasourbankgoesupordown.Usingthesamegrainofriceprinciple,amodestaccountcangrowveryquickly.
![Page 49: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/49.jpg)
44|Making A Fortune From Fixed Odds Financial Trading
Remember:
ManyofmyBetOnMarketstradeslastaround7days,sothecapitalandprofitscanberolledoverfromonebettoanother.
Ifyoucouldjustachieve1%returnadayonyourcapital,takingthatthereareapproximately250tradingdaysayear,yourreturnwouldbe250%ayear,but
yourcompoundedreturnswouldbemuchhigher.
![Page 50: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/50.jpg)
• YoucanmakemoneyfromUp,DownorSidewaysmovements
Withfixedoddsyoucanmakemoneyfrommarketsmovingup,movingdownorstayinginasidewaysrange,aconceptthatevenprofessionaltradersfindhardtograsp.Evenafterthebigfallsinthemarketsin2008,mosttradersstillwanttobuylowandsellhigh.
Rememberthatmarketsfallfasterthantheyrisesodownbetscanmakequickprofits.Withfixedoddsyoucanbackcurrencies,sharesandindicestofall,allwithlimitedriskandthemostyoucanloseisyourstakewhichcanbeaslowasGBP10.
SidewaysmarketscanbebackedusingBarrierRangebets.UntilBetOnMarkets.comintroducedtheseitwasverycomplicatedtomakemoneyfromrangeboundmarketsandyouwouldhavehadtouseoptionsstrategiessuchassellingoptions.Nowyoucandoitwithasimplebetandwithstrictlylimitedrisk.
C h a p t e r • 4
8 Top Tips for Fixed Odds Trading
![Page 51: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/51.jpg)
46|Making A Fortune From Fixed Odds Financial Trading
Tip:
Youwouldbesurprisedhowoftenacurrency,shareorindexactuallystaysinarange–untilrecentlyyoucouldnotprofitfromranges.
• LearntolovevolatilityWithBetOnMarkets.comyoucanplacean‘UporDown’betwhichbasicallymeans:“Idon’tknowwhatthemarketisgoingtodobutIthinkit’sgoingtomove.”
Aslongasthemarketmovesupordownandbreaksaboveorbelowyourpredictedbarrier,youwillbepaidout.Thisbetisidealafteramarkethasbeengoingsidewaysinanarrowrangeforawhileastheoddsofabreakoutbecomemoreprobable.Thosethatfollowchartscanlookforcontractingtriangleformations.Asthepricesqueezes,youknowthatatsomestageitwillbreakout,normallywithabigmove.With‘UporDown’betyoudon’thavetopredictthedirectionofthebreakoutaslongasitdoesbreakoutwithinyourpredeterminedtime.
Buy a bit of extra time. We all want our bets to payout as quickly
as possible and for the highest payout, but I suggest taking a
slightly lower payout and buying a few extra days of time. So let’s
say your offer is 40% for the NASDAQ touching 1550 in 14 days, try going
for 18 days. The extra few days have saved me on many of my trades.
![Page 52: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/52.jpg)
Chapter 4: 8 Top Tips for Fixed Odds Trading |47
Tip:
• UseOneTouchbetsMarketstendtobelikelightning;theylookforthepathofleastresistance.Whenamarketbreaksabovearesistance(ceiling)level,youtendtofindthatthemarketcarriesoninthesamedirectionforatleastafewmoredays.Theotherwayaround,whenamarketbreaksbelowasupport(floor)level,themarketcarriesonfallinguntilitsnextsupport.
UsingaOneTouchbet,traderscanbacktheseevents.Rememberthatyou’resayingthatthemarketjustneedstotouchthegivenlevel,andthatwouldbeenoughtopayout.
Solet’susearecentGoldexample.GoldstartedtobuildupmomentumandbrokethroughtheUSD830/ozlevel.LookingatthechartIcouldseeUSD850wasthenextpotentialtarget,soIplacedaONETOUCHbetthatGoldwouldtouchUSD850withinthenext14days.GoldwentontohitUSD870withinafewdays,sothebetpaidout.Ofcourse,ifGoldwouldnothavetouchedUSD850duringthese14days,thenmybetwouldhaveexpiredworthlessly.
IfIseethebetgoingagainstmeandtimeisrunningout,Icansellthebetbackandlooktosalvagesomeofthestake.
Markets have a tendency to move to round numbers both
on the upside and downside. You often see this happen in
currencies, indices and individual shares. Look for possible
moves to next levels, especially on falling markets. Just look at the way the
Dow Jones fell from 9,000 to 8,000 in a matter of days back in October 08.
![Page 53: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/53.jpg)
48|Making A Fortune From Fixed Odds Financial Trading
Tip:
• Balance Risk and RewardEveryonelikesthebigpayouts;however,youhavetorememberthereisareasonwhyyou’rebeingoffereda300%return;that’sbecausethereisafairlyslimchancethatthebetwillpayout.Ontheoppositeend,a1%returnishardlygoingtomakeyourichandshouldthebetgowrong,youwouldlosealargestake.
Thesimpleansweristolookforabalanceandmixandmatchtrades.InmyowntradingIamlookingforreturnsbetween40%to100%.
Look to tweak your bets. Before you accept the bet you will be
shown the odds and asked to confirm whether you’re happy or
not. You can adjust the levels and dates and see how this affects
your payout.
• Be a disciplined trader not a reckless gambler
Afteragoodrun,manybecomeoverconfidentandstarttakingstupidrisks.Afterapoorrun,manytrytoplaycatchupandwanttomaketheirlossesbackfast;bothactionsaretheeasiestwaytoloseyourtradingcapital.ManybookshavebeenwrittenonMoneyManagementwithcomplicatedformulas.Thekeyshouldbethatnotonetradeshouldevercauseyousomuch
![Page 54: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/54.jpg)
Chapter 4: 8 Top Tips for Fixed Odds Trading |49
damagefinanciallyoremotionally.IrrespectiveofhowsureyouarethattheXYZisgoingtorocket,onlyapercentageofyourtradingbankshouldberisked.
• Runtwobetstogether,tradingapairAnotherstrategyistotradetwodifferentmarketsthathaveanegativecorrelation.Forexample,GoldandtheUSD.GoldispricedinUSDsoifthedollarweakensthenGoldtendstorise.Goldisalsousedasahedgeagainstfallingcurrencyvalues,soyoucouldlooktohaveaBearbetontheUSD/EURandaBullBetonGold.
TheJapaneseYen(JPY)andtheUSstockmarketsareanotherpairthatcanbetraded.YoumayhaveheardoftheCarryTrade,wheretheJPYissold,asmoneyisborrowedinJPY,andthentheJPYareconvertedandinvestedinhigheryieldingcurrenciessuchastheNewZealandDollar.
IfyoulookattheEUR/JPYandsaytheS&P500youwillseethatastheEUR/JPYweakens(somoneyisflowingbacktotheJPYwhichisthefundingcurrency)asdoestheS&P500.IfyouseeafundingcurrencystrengthensuchastheJPY,itmeanstradersaretakinglessrisk,whichisnotgoodforequitymarkets.
• Seasonality–Historydoesrepeatitselfinmanymarkets
Mytradingstyleusestechnicalanalysiswithseasonality.Mostknowwhattechnicalanalysisis.Seasonalityhowever,isnot
![Page 55: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/55.jpg)
50|Making A Fortune From Fixed Odds Financial Trading
aswellknown.Seasonalityinvolvestheusageofthecalendarandpastresultstoforecastthelikelihoodofthesameeventhappeningagain.Forexample,GoldtendstobestronginSeptemberwhereasstockmarketstendtobeweak.PeriodsaroundmarketholidayssuchasChristmas,Thanksgiving,IndependenceDayandthefirstfewdaysofthemonthtendtobestronger.Thewellknownsaying,“SellinMayandgoaway,”whilstnotperfect,hasworkedasagoodbasetoatradingsystemwhichIusedtomakelargeprofitsin2008.Youwillalsofindseasonalityincommoditiesandsomecurrencies.WatchtheJPYstrengthenaroundMarch,aslargeJapanesecompaniesclosetheirfinancialbooksandtendtoputYenbackontheirbalancesheet.
• CombineSpreadBetsandFixedOddsLet’ssayyouhaveacoreviewthattheFTSE100isgoingdownandyouhaveplacedaspreadbettobackthisidea.AfteraweekorsotheFTSE100startsgoinguporsideways.Youcouldofcoursecloseyourspreadbet,oryoucouldleaveitopenandlooktoplaceafixedoddsbettorunalongsideit;maybeabarrierrange,sowhilstthemarketisgoingsidewaysyourspreadbetwillnotbemakingmoney,butatleastyourfixedoddswillmakeaprofit.
![Page 56: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/56.jpg)
Areyoumissingout?
FixedOddsfinancialbettingisnowover10yearsoldandhascomealongway,offeringbothsmallandnotsosmallclientsawaytobackmarketsinuniqueways.IhavepersonallyusedBetOnMarkets.comsince1999andhavetradedagoodfewmillionpoundsworthofbetsduringthelastfewyears.Icanassureyouthatit’saserioustradingvehiclethatcancomplimentbothspreadbettingandotherformsofinvestinganditspopularitywillcontinuetogrow.Youcanopenafixedoddsaccountwithinminutesandstarttradingwithaslittleas£25.
Regardlessofwhatthefinancialmarketsaredoing,thereareplentyofopportunitiesforyoutoprofitusingBetOnMarkets’fixedoddsbetswithstrictlylimitedrisk.
MayIwishyoueverysuccessasaprofessionalfixedoddsfinancialtrader.
Conclusion
![Page 57: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/57.jpg)
About Vince Stanzione
VinceStanzionehasbeentradingmarketsforover23years.Henowtradeshisownaccountsaswellasteachingothers
andistheauthorof“MakingMoneyfromFinancialTrading.”Formoreinformationgotowww.fintrader.net
![Page 58: Making a Fortune From Fixed Odds Financial Trading](https://reader034.fdocuments.us/reader034/viewer/2022042713/546779e2af795983338b5645/html5/thumbnails/58.jpg)