HOW TO

TRADE
ONLINE

A Beginner's Practical Guide

to Financial Trading
and Spread Betting

By Chris Kimber
2016 Edition

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Copyright and Disclaimer

Readers are reminded that the price of shares and the dividends thereon can go down as well as
up. This guide is an information and research service only and none of its contents should be
construed as an invitation to buy or sell securities or open spread betting positions. Readers
should always obtain appropriate professional advice from their stockbroker or financial advisor
before entering into any transaction in securities. Every effort has been made to ensure that the
information contained herein, which has been derived from reputable sources, is accurate but the
accuracy or completeness of this information cannot be guaranteed.
Spread bets carry a high level of risk to your capital. Only speculate with money you can afford to
lose. Spread betting may not be suitable for all users, therefore ensure you fully understand the
risks involved. Past performance is not necessarily a guide to future performance. Ultimately all
investment decisions are made by you. If you choose to open a transaction it is based on your
own judgement and research and at your own risk. Spread betting companies work on an
execution only basis however they may give statements regarding procedures, risks attaching to
transactions, ways of minimising risks and factual market information. It is the responsibility of
readers to ascertain the terms of and comply with any local law or regulation to which they are
subject.

Chris Kimber 2016

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 TABLE OF CONTENTS

Page No

Introduction 4

Lesson 1 - An Overview of Trading Financial Markets 8

Lesson 2 - Basic Chart Reading 12

Lesson 3 - How to set up an account and start trading 17

Lesson 4 - A longer term trade 21

Lesson 5 - Deciding what you can trade 25

Lesson 6 - Different trading styles 29

Lesson 7 - Timeframes 42

Lesson 8 - Risk Management 44

Lesson 9 - The News 49

Lesson 10 - The Psychology of Trading 52

Lesson 11 - Expectations 56

Lesson 12 - Trading Checklist 58

Summary 59

Glossary - The Jargon Buster 60

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INTRODUCTION

Three things:
1. You will make money financial trading
2. You will lose money financial trading
3. You only need to make more than you lose to be successful.

Seems simple doesn't it, but when I started trading in late December 2013 I had no idea of the
rocky road I was about to explore. I dived straight in and like so many, made a ton of mistakes.
Fortunately I managed to learn fast and by the end of my first trading year had doubled what I
had put in. That's a 100% return on my investment! What I want to do here is try to explain to a
novice, like I was, what to expect, how to physically do it, and how to cope with the emotional
roller coaster that is the financial markets.

Some more facts and myths:-

1. FACT - 90% of investors lose money each year.

That seems frightening doesn't it, but if you consider that there are millions of people trying
this around the world and most of them are simply gambling at it then the chances of being in the
top 10% after a bit of studying aren't that unreasonable. In fact the solo investor can often be
much more successful than the large companies who will happily take millions of pounds off
investors to give them a meagre 10% profit. Average Hedge Funds (you know, the guys in the
suits who think they run the world) earn roughly 10-14% each year for their clients, the banks
currently offer you less than 1%, this is because partly they are mean and mostly because the
traders they use have absolutely no idea what they are doing! As you will find out in this guide, if
you can follow a few simple rules, you will be a better financial "expert" than all those " City
types".

2. MYTH - But it must be really hard or more people would make money?

Not true. Most people simply can't follow a system or control their emotions when it comes
to trading. The rules for success can be followed by a child, in fact they would probably be better
as they would have fewer of their own opinions to get in the way.

3. MYTH - But don't I have to know about balance sheets, company management,
dividends, price to earning ratios and be an expert at reading complicated charts?

No, not really. Yes, you will need to understand a basic chart pattern but these are just
wavy lines going up and down, pretty easy to understand for all we need to know, and I will cover
them in enough detail for you later on. All the rest is pretty much useless. Sure you can read
about things like that if you want but it won't make that much difference to your decisions on what
or when to trade.

4. MYTH - Buying into stocks is risky, why should I want to take risks with my money,
surely I'd be safer in a bank?

We all want more money right? If you have some savings it is understandable that you don't want
to lose them, however, you also want your money to work for you having earned it. The facts are
this, the way things are right now (2016) you will get practically nothing in interest from a bank.
This is unlikely to change in the near future. In fact, as inflation is higher than interest rates, your
cash is actually losing value.

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The REAL fact is that, even with the recent financial crisis, (which after about 2 yrs was back to
where it started) US stocks have outperformed all other forms of investment. They have a bad
name because only the bad news ever gets reported, Let's face it, we've all seen the large
headlines
"Billions wiped off Pension funds as Stock Market plummets" or whatever. You don't often see
the headline "Panic over, the markets have all recovered and we all made billions this month"
But in truth, that's what has actually happened over the last 100 years. Don't just take my word
for it, simply look at a chart of the well publicised Dow Jones Industrial Average from the last 100
years - it's only headed in one direction.UP!
In August 2016 the Dow Jones hit a lifetime high, and in October 2016 the UK's FTSE100 hit its
all time high. What's more, if the next Financial Crises type event DOES return, we can STILL
make plenty of money - I'll tell you how this works and more.

This chart below points out quite clearly the long term performance that stocks have benefited
from, particularly against inflation (CPI) and even Gold which is traditionally know as the long
term investment.

5. MYTH - But don't I have to sit in front of computer screens all day long?

Absolutely not. In fact I will encourage you NOT to look at screens for most of the time. Yes, you
will need to have access to a computer as that is how things are done nowadays, but you need
only spend a few minutes each day to keep an eye on things and maybe 30 minutes per week to
make more in depth decisions. You can spend more time if you wish, that will be your choice, but
it is by no means essential. I will teach you how you can run Financial Trading alongside any
other work/family commitments you may have as well.

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In this guide I will try to take you through the basic things you need to know in order to begin
seeing the financial markets as a place where money can be made, how to physically trade and
some ideas on how to select winning trades so that you can avoid many of the pitfalls that I
encountered. It is a vast subject and there are clearly no easy answers or methods, as if there
were, everyone would be millionaires by now.
There are probably hundred of books telling you how to make money and many experts online
and in the media all giving advice, However it didn't take me long to realise that they are pretty
much guessing like everyone else.

6. FACT: In 2015, as is done every year, Wall Street professionals make their forecasts for
the year on how the markets will perform.

Want to know how they did?

48% accuracy. You might as well have tossed a coin!

This means you have as much chance of success as the "Big Boys" do. I learned a great deal
from a very well respected and highly successful trader but even he makes mistakes and is not
shy of saying so. In fact, very recently in April 2016, he was holding one of his special traders'
conferences and made a recommendation to all his delegates. Now these guys had paid a lot of
money to be there and were obviously hoping for some really good information. However, they
were recommended to buy into Apple stock as he believed there was still room for improvement.
He was expecting some good financial results and his technical charts were telling him this was a
good time to buy. What actually happened was that the stock rose slightly for the next couple of
weeks and then released some bad news causing the stock to drop around 20%. Now, I'm not
saying that this guy knows nothing, but my point is that even with 30 years experience, mistakes
can still be made. I don't know how his delegates felt about the drop in price or if any of them lost
any serious money, but considering they had paid for this kind of information, I expect they were
pretty disappointed.

I am not here to tell you exactly what to trade as it depends on what your personal ambitions are,
and how much risk you are prepared to take. What I AM here for is to introduce you to all the
factors which can affect your trading, how to try to manage them and how to actually get started
exploring this fascinating business.
If I had had all this information in one concise "book" as I am presenting here, when I started
trading, believe me I would have not lost as much money as I did to start with and it would have
saved me many, many hours of discovering all theses "secrets" for myself. Though I did get some
training from experts (and I still look for ways of improving) some of the more practical things
were not covered and I think they should have been. Hence this guide.

By taking your time and with some patience, it is possible to understand how most things work in
this industry, build the confidence to trade with your own capital, even if you don't have much,
and limit your chances of making significant losses as well as making sure that when you do
trade, the odds are more in your favour than against.

I have created this guide in Lesson stages so that you can take your time to get accustomed to
some of the nuances involved. I would recommend, if you are completely new to this, that you
read through the whole of this guide, and then read it all again, following each instruction
very carefully. There are a lot of things to take in and some of it will only make sense when you
have seen the whole big picture. This may take you a couple of weeks or more but could save
you a lot of money. After all, the markets are not going anywhere and the opportunities will be the
same whenever you start.

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Sadly, there is no cast iron guarantee in this business that you will make money as some factors
can simply be beyond anyone's control, but I do know that if you stick at this, at some point you
will get that significant, game changing win, which will make any previous losses you may have
made feel so worth it. So, if you want to make a go at earning life changing sums of money then
good luck and read on.....

Chris Kimber 2016

A bit about me

I am a musician by trade. I studied at the Guildhall School of Music in London and have worked
as a performer, teacher, composer and producer for over 20 years now - Google me (which I'm
sure you will) and you can read all about my other life if you are so inclined.
You may now be thinking "Why on earth would I want to take instruction from a musician about
trading financial markets??" Fair point, but until ANYONE has learned a subject they are as
useless as the next person, and I have spent the last 2 and a half years studying and putting
things into practice in the real world markets EVERY DAY. That's more days than a University
student puts in to their degree - that's for sure. I have also, at the start, taken courses from very
well respected and highly successful traders, I just found that the information they offered left
many questions unanswered which I ended up finding solutions/answers to myself. I currently
spend much of my time teaching students the skills I have acquired in music, so perhaps it is my
natural instinct to attempt to teach others my new found "skills" in financial trading - anyway, I am
charging a lot less for this guide than I would charge for a few music lessons, and to be honest,
the information presented here will be highly valuable to you if you decide to start trading, as
most of it is basic facts and not my opinions.
Just think on this - when you were at school, you probably had good teachers and bad teachers.
The bad ones, especially at GCSE/A level classes, probably knew their own subject really well
and could well have had great qualifications in their specific field. But somehow they could not
get their knowledge across well to a bunch of students.
There are certainly many wealthy traders out there who have been successful and made their
fortunes doing all this, but that does not mean they
can understand HOW they did it or how to tell a
complete beginner how to get started doing it.
I can. I have been in this position, and learned a
great deal from some highly successful traders but
these guys left so much out of my training that I felt
the need to tell other beginners what they missed
off.

As previously stated, I am not in a position to tell

you which stocks to buy when or whatever, or even
a totally foolproof "system" that will make you rich,
this guide is from one person who discovered this
fascinating world and wants to help others find their
way much quicker than I did.

I believe this guide gives you what you need to

know in an easy to understand way and not confuse
the reader with a load of information you really do
not need to know.

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LESSON 1 - AN OVERVIEW OF TRADING FINANCIAL MARKETS

Ok, well firstly there are essentially two basic ways of trading in the UK that I use, one is buying
actual stocks using a broker, some may say "the traditional way" and secondly something called
"Spread Betting" through an online company. The word "betting" in there can put some people off
as they don't like the idea of gambling. Any investment is of course a gamble and for our
purposes, the fact that (under current UK Law) any profits made from Spread Betting are
classified as gambling is fantastic as they are therefore exempt from tax!
For the record, I have an international broker account with "Charles Schwab" and use "IG" for my
spread betting. There are other companies and other ways of trading financial markets, such as
binary trading and options but I am trying to keep thinks simple so these are not covered by me
here. I also trade mostly in US stocks as not only are there far more to choose from, but I found
out that the information you want is much more accessible for US markets than UK ones. This is
very useful when making decisions. You can still trade UK stocks, but I mostly refer to trading the
US companies.

So what is it you need to know?

Loads, but firstly let me explain the difference between the two methods I deal with:

1. Buying stocks.
This is generally familiar to most of us and involves essentially buying a small part of a particular
business so that you have a "share" in their success or failure. For example, shares of Apple are
$100 each, you buy 100 of these for $10,000. The new Apple watch sells well and the price of
the shares rise to $110 in a few weeks. Your investment is now worth $11,000. Fantastic, $1,000
in a few weeks, how easy is that?
Of course the opposite could have happened and iWatch sales could have been poor and now
you have $9,000. So what do you do then? Sell and take a loss? Hold and hope it goes back up?
Panic? This depends on your overall strategy and what you are after.

This will apply to Spread betting as well so it's important you think about this straight away.

Here's a made up example of what might now happen -

The "Trader" may well decide he can't wait for Apple to get its act together so closes the deal and
puts his $9,000 into a small biotech firm he has heard about which is about to launch a new
cancer curing drug. These shares are only $10.00 each so he buys 900 of these. There is a
news announcement that the drug works, the shares soar to $20.00 (still a lot cheaper than
Apple) and the trader now has $18,000 in his account. All in a few weeks, or days if the timing is
right. The biotech could also have failed but you get the point, from being down and upset that
Apple got it wrong, he is now much better off.

However, the "Investor" thinks differently.

He knows that Apple are a great company with a global presence. A few poor iWatch sales aren't
going to stop this monster business so he leaves his investment alone and sure enough, after a
couple of years Apple's share price is worth $150 each and he has $15,000 in his account, PLUS
the dividends you receive from stocks like this every few months. Let's say this is $2.00 per
share, (these go up and down depending on the business but we'll stick with round figures) that's
$200 extra every quarter, $800 a year, so the investor has actually got $16,600 in his account.
Not bad for essentially doing nothing but owning the money. You certainly would not get that sort
of return from a bank any time soon!

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So there is a clear difference here between the two strategies. The Investor parks money
somewhere they consider safe and just leaves it, the Trader is looking for opportunities for growth
and quick returns. The ideal is perhaps to run both alongside each other. Both of them would
probably have a portfolio of shares consisting of different kinds of businesses, some do well,
some don't. Overall it is the balance which counts.

But, I hear you say, I don't have $10,000 to invest in just one stock and certainly not $100,000 to
set up a reasonable portfolio? So how do I invest in these big companies and make and money
from my small funds?

Fortunately there is a way.....

2. Spread Betting

This is the one perhaps less familiar to us all. Certainly until December 2013 I had never heard of
it, and very few people I know have either. But now you have. And it may well unleash a hunger
in you which you did not know existed and a sense of thrill and excitement of turning practically
nothing into real money. It will make you very happy it will make you depressed it will mess with
your head, no really it will, so proceed with caution, like watching a horror film, there's no turning
back.....

It can make you rich and IT CAN MAKE YOU POOR (have I already mentioned this?), and you
will be warned again and again about this, don't put in more than you can afford to lose, (though
we will cover realistic amounts later) and if you follow my advice, I hope to greatly increase the
chances of you not making the mistakes I made in my early days, and prevent serious losses.
We cannot expect no losses at all but there are strategies you can use to turn losses back into
wins or simply to pull out if you've made a bad trade, which can be done automatically if you
want.

So how exactly does this work?

Well it is just like the trading stated above except that instead of buying the actual shares, you
buy into the movement of that share. So, you place trades or "bets" as they are often called on
whether a share price will go UP or DOWN. Yes, that's right, you can make money from a stock
that is actually doing BADLY! How crazy is that?!? So even during another financial crisis, you
can still make huge profits, in fact usually much quicker than when things are going "well." It is
more complicated than this but I hope you can understand the principle.

So let's use my previous example of Apple as a guide. The share price of Apple is $100.00 and
this is broken down into "points", in this case 10,000. (Each cent is a point) During a trading day
the price will move a certain number of points up and down and will eventually settle one way or
the other at the end of each day.

Spread betting involves the movement of these points and you can place any amount you want
per point on the movement. So for example, if you placed a 1.00 bet on Apple to go UP and in
the previous example iWatch sales go well, you get a 1000 point rise and 1,000. How much did
you invest? Nothing? Well not quite but practically. And if you had put a 2.00 bet on you would
have 2,000, and a 10 bet gets you 10,000 just for clicking a button. Sounds amazing doesn't
it. But what if sales were bad? That 1000 point loss is going to hurt. Can you afford to lose
10,000? No I thought not. But, and here is where the Investor strategy kicks in, if you used a
1.00 bet, even if we use the losing scenario and you go down 1000 points, if you want to hold on
to your "position" as we call them, it may well be that you still get your 5,000 in 2 years and you
only had to "invest" 1000. Still seems a good deal!
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So you still need to have some money available to use as investment but nowhere near the
amount needed to get good returns from the actual shares. You do also get some dividend
payments but not on the same scale as the stock owners.

Basically there is a much greater risk/reward ratio but this can all be managed.

Here is a graphic example of a price movement during a typical day. (Don't worry if there's more
information on this chart than you understand - just look at the pretty wiggly shape going up and
down for now...)

FTSE 100

As you can see, on this particular day, the FTSE 100 went up at the start and then went into loss
at about 2.30pm (When the US markets opened.) So by 9.00am, if you wanted the markets to go
UP, your day was finished. However, if you decided at 9.00am you thought that quick run up was
not sustainable then you could bet DOWN and you would still have made money.
On that particular day, the FTSE 100 opened at about 6950 (the numbers on the right hand side)
and ended at around 6930. If therefore you had placed a trade at 8.00am (the time is along the
bottom) and waited until 10.00pm the change would be 20 points, if you had bet 1 per point UP
you would now be out of pocket by 20, if you had bet DOWN then you would now be 20 in
profit. Simple. If however, you were watching the movement of price throughout the day, you can
see that at certain times of the day those positions would be different. An UP trade from around
8.00am would have made around 40 points profit by 9.30am, not a loss like it did by the end of
the day. These daily movements are called "volatility" and can be as much a nuisance as an
opportunity. This will be covered more later.

Still worried about losing your shirt? Well there is an option when trading whereby you can place
what is called a "STOP" at a price of your choosing, below which your trade will automatically be
closed. So if you can't afford to lose 1000 then setting a stop at -500 means when your trade
goes down 1000 points the system closes you off at -500 and 500 is removed from your cash
account. Fine, at least you didn't lose 1000! But, using my previous Apple example, we now
know that the trade was actually a good one and that with some patience you would not have lost
that 500 and would have made more.
This is perhaps the hardest part to trading overall and the part that most does your head in.
Knowing when to pull out a losing position and when to hold it is very difficult and there will be
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times when it goes wrong. The skill is in balancing the risks and making sure you know when to
buy, for how much, and what your greatest loss will be.
I will cover more on various strategies later but I hope you are understanding the overall point.
This graphic may help further.

You have made profit here

You buy somewhere here

You go into loss here

Of course the ideal scenario is that you stopped at -500, then re-bought at -1000 and made
5500 profit overall. But this is requires quite some luck!

I will go more into the practicalities of using the IG platform and placing your trades later but first
we should look a bit more into looking at and understanding charts as you really can't make any
decisions without taking some interest in the direction the stock has been moving, and where it is
potentially heading.

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 LESSON 2 - BASIC CHART READING
You are going to need to read a chart to do ANYTHING when it comes to trading, so we will
have a basic lesson now to get you started. I will cover charts and "indicators" in more depth in
a later lesson.

There are many books on reading charts and many mathematically based concepts and ratios
made up by "experts" that will allegedly tell you in what direction a stock is going to move.
These are all lies. Well, at best, all you can do with a chart is make the odds more in your
favour, or use the "probability" to what may happen next which is all we need. However, any
stock price can change its direction at any time, some drastically and some more steadily but
there is always an element of unpredictability hanging around in the background.

The availability of charts on line is enormous and you may well find somewhere that suits you
but it can be really useful to use a charting program where you can make up your own lists of
favoured stocks and add your own notes and set up any technical indicators you may want
automatically etc.

I use a service from a chart provider called "Sharescope", currently 25 per month for their
basic package which is really all you need. You can pay more for extra features if you want but
you probably won't need most of them. (If you want to open a "Sharescope" account, quote my
Name - Chris Kimber and Account number 237799 and you should get some free months trial.)

The most common form of price chart is called the "Candlestick" chart and give us useful
information at a glance. Basically, the top of the candlestick will show the closing price for a
day, or if it went down then the bottom of the stick. The "wicks" at either end show the
extremes of the price movement during the candlestick's time frame. We often look at daily
charts but sometimes you may want to use a shorter time frame e.g. 10 minutes, but the rules
of the candlestick still apply - you see the Opening price, the Highest price that was reached,
the Lowest price that was reached and the Closing price. These Candlesticks are also usually
colour coded, RED for DOWN movement and GREEN for UP movement, if the chart is not in
colour then Black and White are used respectively.

They are also know as 'OHLC' charts,

Open, Highest, Lowest and Close.
There are theories about how
candlestick charts can predict the
future but they are unreliable. Worth
knowing about, but don't make
decisions based purely on candlestick
analysis.

12
Here is a typical chart with candlesticks -

You get these automatically on the IG platform and are very useful.

A "gap up" where the price opens

well up on the previous day

Normal daily movements

up and down Small move, just 4 points

Large move, in this case 14%

or 141 points

It is possible to also use what are known as "indicators" to make the look of the chart more
readable and point out various movements in a different or simpler way. These can also be used
as a guide to help you make decisions. The most common and perhaps most useful indicator is
the "Moving Average" which basically takes the average price over a selected time period, say a
trading week (5 days) and draws a continuous line using that average price. See the same chart
now with a moving average added......

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We can also use a longer term average, say 20 days, (BLUE) to see a slightly different
movement. Add in an even longer time scale, of say 200 days, (BLACK) and you will see a much
smoother, longer term trend appear. This can give a good indication of the history of the price
movement, which in turn will indicate perhaps where the price is now heading. If a business is
good, the 200 MA (Moving Average) will be solidly rising, despite any of the shorter term
indicators crossing about in between.

Using these kind of indicators smooths out the look of a chart and gives us a good starting point
for decision making. It helps us keep an eye on the longer term trends rather than being swayed
by the more volatile intraday movements.

Take some time to look around various charts using Sharescope or online and get the feel for
these as they will be your first point of call for most trades.

I will cover chart reading again in a later lesson but for now just remember to be careful to always
look at the short AND long term picture of a stock price, let me show you why with the next
example....

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Here is a section of a chart covering a few weeks....

It looks good doesn't it? if we had bought this stock any time in April we would be happy.
Now let's see a few months....

Here you can see it is actually below a higher price point but appears to be coming up again. So
if we had bought this at the start of this chart it would have been a while until we got our money
back. Now let's see it over a number of years...
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 This is the area we just looked
at in the previous chart

Wow, looks completely different doesn't it? Looks like this stock was much more expensive but
has never recovered from the last recession of 2008.

So in the long term this looks pretty poor but for the shorter term this looks like a good deal.

The point here is that it can depend on what timescale you use as to what you see - and that's
fine, it depends on how long you think your trade is going to last.

So now you hopefully have a basic idea of how to read a chart we'll move on to how to start
trading.

16
 LESSON 3 - How to actually set up an account and start trading.

Firstly, and unless you are about to do this during October or about the 20th of December
(reasons for this will be covered later - turn to Lesson 6) then OPEN A DEMO ACCOUNT.

Seriously, as tempting as it might be, try to resist the urge to go straight in and use real money
until you have tried things out and watched how the system works or you may well, like me, end
up losing a large amount of your capital on your first day, simply because you had not realised
how certain things worked.
EVEN WHEN YOU HAVE GOT THE IDEA, STILL READ THROUGH THIS GUIDE AGAIN
BEFORE USING REAL MONEY!
Sorry to shout but this is so important and I really don't want you sending me hate emails when
you lost all your money on the first trade because you hadn't completely understood something....

I use "IG" (www.ig.com) who are very simple to use, very helpful if you need to speak to them
and one of the serious and established companies who aren't about to go bust and run off with
your money......You can of course use other companies if you wish.

To open a demo account you just need to go to their web site and follow any links to "Demo
accounts", enter an email address and password and you are instantly given 10,000 to play
with.

What fun!

These demo accounts let you try out most things for just two weeks, after that, at present, you
only get the major indices and some Currency exchanges left to trade with. These can still be
useful to experiment with so hang on to the account when you decide to upgrade.

Once you have logged in, and you'll need to respond to emails first to do this, you will probably
be presented with a screen like this:

17
These are the "Popular" markets that a lot of IG clients trade on and, if you are doing this during
market hours, that is to say from 8.00am to 4.30pm Monday to Friday for the UK markets and
2.30pm until 9.00pm for US markets, then numbers will be constantly flashing and
changing before your eyes. Some markets stay open all night as well so if you need some
stimulation at 2.00am......

One thing to note, and this is when you can get instantly caught out, is the difference between the
red and blue numbers next to a market ie "Wall Street" or "FTSE 100". For these particular
"markets" they will be fairly close, in the above example 17785.1 and 17787.9 the difference
between these two numbers is called the "spread" and are the points taken off your trade before
you can be in profit. Rather like the commission you would pay a stockbroker for dealing with
them.
So if you place a trade for 1.00 per point on Wall Street (another name for the Dow Jones
Industrial Average if you were wondering) then you are immediately 2.00 in the red. Now that's
not much, but take a look at something like "Bitcoin" (type it into the "Finder" box) and you will
see that there are 250 points between them. This would mean a 1.00 bet costs 250 before you
get started and a 10 bet 2,500!!

So this is the first thing to check before you make any trade - how much is the Spread?
Don't worry if you forget this while reading the guide as I will give you a checklist at the end
before you actually start trading.

To be fair, most stocks are about 9 or 10 points apart and the indices much smaller but there are
other things to watch out for which will be explained in a later lesson.

So let's start our first trade.

Remember, this doesn't matter, it's only pretend money and you are going to learn from this. It is
better if you do this during trading hours, as though you can trade out of hours, and you can often
pick up a good deal, for the purpose of this lesson we want some fast movement. Between 2.30
and 3.00pm on a Monday to Friday would be perfect .

If it's not on your screen already, find the "Wall Street" market and click on its name. A box will
appear as shown below -

The market you want If you think the price

to trade will go UP you click
BUY, DOWN and you
click SELL
The amount you
want to trade per
point e.g. 5

The all important

How many points away decision buttons.
you want to risk Once clicked you are
committed!

How much you need

available in your
funds
18
Now you can see several menus and options.

Firstly, you need to decide how much you want to trade with. You can choose any amount you
like, I would suggest 10 as a maximum but hey, if you're feeling reckless, get it out of your
system now and put 20 or more on. You can divide 10,000 by your chosen amount to give you
the total number of points you have to trade with.

In case you are unsure...

You have 10,000 points at 1,
5,000 points at 2,
2000 points at 5 and so on.

Now, unless there is some kind of massive crash or rally going on, the Wall Street market is
unlikely to go more than 300 points either way in a day, more usually within a range of 100 either
way from open to close. Next you will need to decide if you want a Stop set in - i.e. a maximum
amount you are prepared to lose.
As we will be watching this trade you could leave it blank and decide when you have had enough
manually. There is also an option of making a Limit to your winnings but again, we don't really
need this so leave it blank. If you do decide to put in a stop, don't
put it less than 100 points away for now. Jargon Buster

When you wish to trade that a stock/

You will also see a number at the bottom letting you know how
market will go UP you are effectively
much "margin" you need. This is the amount you need to have
"Buying" that market. When you want
available in your account to cover "emergencies" if there is a
to trade the other way you are
sudden movement against you. In the case of Wall Street it is
"Selling" that market.
pretty small (currently 5%) but with the individual stocks it can
be more significant and this will come into play when we look at These are also know as "Going Long"
these later. for Buy and "Going Short" for Sell.
So now we should be ready to choose UP or DOWN.
(BUY or SELL) If you are of the opinion that markets
are going UP you are said to be
Watch the movement for a bit and try to determine which way "Bullish" and "Bearish" if you think
the market is going right now - maybe for 2 or 3 minutes? things are going down.

That may not have helped at all but it's a starting point.
Now decide which way you think the market is going to go and click on the red or blue button and
you're off...........

You will now immediately go "into the red". That is to say, your running profit for the trade (now
visible in a window pane at the bottom of the screen) will be negative by a few pounds, but
maybe not for long. Now we are going to treat this as a fast in/out day trade so find the "open
position" window (usually in the bottom section of your screen) which should have your trade
open with the amount of profit or loss going up/down and click on the "Wall Street" name. This
will bring up a small box with the option to close off your position once you are happy with the
result.

Keep watching and see what happens (you may need to move windows around a bit so you can
see your running total.)

Now you will probably be feeling some kind of emotion at this stage, either excitement as you are
seeing money coming in, or anxiety as you are watching your stack of cash disappear before
your eyes, or maybe just confusion as it flips between loss and profit. I don't know as I can't see
your particular movements but whatever is happening, this is how it is going to be. Emotions play
a large part of financial trading as at times things are beyond your control and there is real hard
earned cash at stake.
19
Leave this alone for at least 10 mins, but, for now, do watch. After 10 mins you will find
yourself in one of these situations, or at least close.

Scenario 1 - you have made some good profit, with a large 10 bet maybe 200-300, on 1.00
bets 20-30. Maybe more, it doesn't matter. Close the position and smile that you just made
some money.

Scenario 2 - the market has not really moved much, you are still flipping between a few points of
loss and profit. Maybe you saw a 10 point gain at one time or a 10 point loss. Nothing to get too
excited about either way. Close the position anyway, if you can, without a loss. You've gained
little, lost little, but learned an awful lot.

Scenario 3 - You have made a substantial loss. Maybe 20 or more points? Even 50? on a 10
bet or more, that's going to feel bad. This is a good thing, you have had your first loss and will
need to deal with that. Close the position and go away for a bit. Do NOT try to wait for the market
to come back to you again. That is not the point of this exercise.

When you want to close the trade, you will click the opposite button to what you did the first time,
if you were trading UP then click "SELL" to close, if you were trading DOWN then click "BUY".

If you want, try this technique a few times, maybe over different days as it is a good way of
dealing with the idea of winning and losing in a small controlled way.

This method of trading is NOT a way I am recommending. Though many people DO trade like
this, as you may have experienced, it is a very fast way of taking in cash, however, it is very
hazardous, very stressful, time consuming and overall you will probably lose as much or more
than you gain. It is pure gambling and not financial trading. It is certainly not investing. There
would be very few times that you can guarantee to know which way the market is going to go by
just watching for a few minutes.

A note about Demo Accounts

Demo accounts are a great way to get the feel of trading and all the different options without you losing any money,
however they can be misleading as they do not behave in the same way as a Live trading account.

For example, many of the minimum bet sizes are much smaller on the demo accounts than Live accounts e.g. 10p
per point bets sizes on Wall Street as opposed to a minimum of 1.00 in real live accounts.

Also, if you set up and Order to open at a certain price e.g. Disney at 1000, if it then opens at 1500 you are opened
at 1000 and immediately get 500 points profit! In a Live account you would just be opened at 1500. The same goes
for when it opens lower, and STOPS would take you out wherever you set them rather than at the actual market
price. This means you can get a false sense of reality from Demo accounts so take care when you go live.

Do make use of your first two weeks as after that you lose most of the markets - don't open it one day and then go
"I'll come back to that when I have more time" as that would be a waste of opportunities.

I still leave a demo account running for when I want to try out strategies or take a crazy punt on something, just to
get it out of my system without damaging my capital!

20
 LESSON 4 - A LONGER TERM TRADE

Ok, so you got the idea that just by opening a trade you are not guaranteed any particular
direction, even if it went well it was really down to chance. Now lets look at trying a slightly longer
term trade and how we can stack the odds a bit more in our favour.

I want you to look at a chart now.

You should have a basic understanding of these charts from a previous lesson so for now we will
use the daily chart of Wall Street which is accessed by clicking on the third grey icon to the right
of the Market name, it looks like a bar chart.
This will bring up a window that will look something like this:

You can see that at present, the price (18269) is pretty much at the highest it has been for a
while, yesterday had gone UP (a green day) but earlier in the week things had gone DOWN. Can
you see a pattern here? If you look back over March and April you can see that whenever the
market went up close to this region, it then sold off again, not for long, but it did sell off. So we
could easily assume that this will happen again and place a DOWN bet. However, there is also
the option of an UP bet as, if you look towards the start of the chart, during the first few days of
February, the market hit a new high and then carried on to greater highs so we can never
assume anything but at least now we have some kind of information to help us make a decision.
So the chart you now have open, will probably give you more information as to how the market
moved on from the point on this particular chart, and more information for you to use as a guide.

21
We are now going to try a trade over a couple of days or so, again it doesn't matter if it wins or
loses at this point, but it will give you an idea of a longer term strategy.
Based purely on this idea I want you to place a trade, not a particularly large one, no more than
5.00 per point on Wall Street. You will decide whether to go up or down using the following
criteria:
If the last few days have been largely DOWN movements then choose BUY.
If the last few days have been largely UP movements then choose SELL.
This is by no means fool proof, nothing is, but it is a common trend so we can use this as a
starting point. We are betting that the market will back off a bit from the direction it has been
going. Markets very rarely just go up and up without a pause.

If however, the last few days look very confused, then look further back, if we are some way
below a recent high point then choose BUY, if we are around a recent high (by recent I mean
within the last 3 months) then choose SELL.
This would be a good trade to start before the market opens, so before 2.30pm so we get any big
moves when the market opens. There may however already have been a big move overnight
from the day before, use that as part of the chart.
So now you have made your decision, place the trade then leave it alone. There will be the usual
up/down as the market drifts about but we are going to leave this one alone. Certainly until the
end of the day, if not overnight as well. Make sure you haven't placed a stop too close, better not
to set one at all.

Now comes the hard bit - not interfering.

If you are only using a computer to trade with, close the window and go and do something else.
Of course, you are probably going to want to watch what is happening to your position, that's
natural but try to limit your watching as this will only distract you from what you should be doing.
We are thinking about the next 12 to 48 hours and as we already saw in the earlier FTSE chart,
anything can happen in this time. We don't care if it goes wrong for a couple of hours, just what
happens by the end of the day.
If you do watch the movements, and it is really tempting, sit on your hands. Don't play with it, yes
you may get that horrible feeling as you watch what was a profit turn into a loss, or you may get
more and more excited as your trade keeps on gaining throughout the day. Don't be tempted to
close off with a healthy looking profit, or decide that enough is enough and you might as well
close it now before it gets any worse.

Leave it now - see you in a few hours.

22
Right, so you are back and the markets have closed. Did you watch much? Yes? If you didn't you
are either lying, very good at controlling yourself or had a busy day to keep yourself occupied.
Now we can decide what to do.

There will of course be several scenarios again. Lets see how we might react to each.

Scenario A - You got it right! You won a good amount of points, maybe a few hundred quid?
Fantastic, you made a good choice based on the information you had to hand. So what do you do
now? After all, the money isn't actually yours until you close the position and it goes to your
account total. Dilemma - will the market turn around or keep on going.....hmmm.....tricky.

As usual, there is no correct answer to this either as it very much depends on a variety of
external factors (more on these later...) and how much movement had taken place that day. For
example, if you have just had a stellar day, (in either direction) at the end of the day, or certainly
for a bit "after-hours" the market will probably reverse its direction for a while. If however, the
market is at the start of a longer term move then this will be short lived and you can expect to see
the market move more in your favour tomorrow.

You must now decide what to do.

Bank your winnings or hold your position fast for more gains tomorrow. If you did have a very
good day then you have perhaps another choice. You can "lock in" some of your profits by editing
your position and moving or adding a stop a distance away from your current points. This will
mean that if the market turns around, your minimum win will be at the point you choose, at least
you wont leave with nothing! However, you must allow for some movement as nothing stays still
for very long and if you are hoping for more gains you don't want your stop to kick in just at the
point it turns back in your favour. I will cover more on stops in a later lesson so for now, unless
you want to bank your profit, either leave your
stop alone or set it about 1 or 2 points above your
entry point. This will at least mean you shouldn't
have any loss - an important factor. See the
graphic here.

Level the market is currently at.

Amount bet per

point in s
Level you opened your position.

The level you want to lock in profits

or minimise loss.

23
Scenario B - You lost. Maybe a little, maybe a lot. A big red number is staring at you and
it's not getting any smaller. Damn, if only I'd clicked the other button! So at this point, in many
ways you have an easier choice, you haven't got to decide if you want to bank any profits as
there aren't any. What you do have to decide is how far can you go before it's really going to hurt
and will the market turn back again in your favour.
The answer to the first question is really down to you. If you have plenty of funds left and you
chose a relatively small bet amount then leave it alone, you can carry on just fine, maybe make
other trades and wait for this one to come back to you, after all this was just one day. Have
another look at the daily chart - does it look different now or are things still basically moving in
your chosen direction? Was today's move caused by anything? How do you know? All these
questions I will try to reveal for you in later lessons but for now get used to this feeling of "getting
it wrong" as it's going to happen a lot.
If you wish, you could add in a stop to prevent further losses as above, don't forget though to
choose a distance that allows for a bit of movement, 1 or 2 points and you might as well just
close it now. On Wall Street, allow at least 20 points stop distance.

Scenario C - nothing much changed at all. You maybe made a few points profit, maybe you lost
a few but overall not a particularly exciting event. This is probably the easiest scenario to deal
with as there is little action that needs to be taken you have delayed your dilemma for another
day. However, what it does give you is a chance to examine again your decision. Look at the
chart again, does it give you the same feel as you had before the trade? Are you confused? If this
is the case, in the real world you would probably close the deal, lose a few quid or gain some
spare change and move on. Sometimes it can be better to do nothing and wait for a more certain
opportunity.
But, for the purpose of this lesson, I want you to hold the position so we can get an A or B
scenario as above for you to deal with.

So, if you have left your trade open, you will basically repeat the above tomorrow. Remember, at
the end of each day, or 5-10mins before (8.50pm) have another look at the chart, take in any
"news" factors (War breaking out??) and make the decision.
One of the good advantages to trading on most of the Indices (Wall Street, FTSE, Germany 30
etc) is that they are always open for trading so you can place or cancel trades at any time of the
day as well as overnight. This does at least mean you have a much more accurate control over
when a trade is closed unlike many of the individual stocks which can only be traded during
normal hours.
Leave this trade running as long as you like, remember to keep an eye on your stops so you don't
lose everything but leave space for intraday movements. If in doubt, leave it further away than
you think for now, we will look at this in a later lesson. A "no loss" placed stop is all we need.

Whatever you have done in this lesson, try to imagine what it would have felt like
psychologically if you had been using real money as believe it or not, this will be one of the
biggest challenges for you to deal with when trading.

24
 LESSON 5 - DECIDING WHAT TO TRADE
So you have seen how to basically trade an Index but you can see that there are hundreds of
other opportunities available to you and to avoid the "eggs in basket" scenarios you will want to
build a portfolio of trades. Remember though that all trades need an amount of money in your
account in order to hold on to the position so if you are intending to open many positions, make
sure they are small or there is enough in your account to cover them all.

"So how do I know which stocks to pick? " I hear you cry.....
Firstly we need to know the options available to us.

Indices - we have already briefly looked at these, they track an overall market, are affected by
global issues, are cheap to get started in and trade all day. These are by far the most popular
traded market. Popular examples are "Wall Street" (the Dow Jones) "Germany 30" (the German
DAX) and "FTSE 100" (the UK Index) All countries have a index of their own particular
businesses so you can look for other countries if you want depending on your own preferences.

FX - Currency exchanges, you know, the Pound against the Dollar etc. These are very volatile,
somewhat unpredictable but somehow very popular. They rely heavily on news and don't often
make long moves. Best to avoid.

Precious metals - Like GOLD or SILVER, these are useful long term trades but movements are
rather glacial. GOLD for example often does well when Stocks are underperforming.

Shares - These are much more easy to understand and follow. They can sometimes go
AGAINST the prevailing market, i.e. if globally things are falling, an individual stock can still be
holding out or increasing in value. They are more expensive to trade (but not much) than Indices
but still very manageable. Shares are also more likely to make big, long term moves and have,
over time, performed extremely well. They are generally less volatile and there is a lot of
information available online for you to research to help make decisions.

Exchange Traded Funds (ETFs) - These are a little like the Indices in that they are a market
made up of a selection or "basket" of stocks. For example, all the Energy companies, or all the
Healthcare companies. Then, if you think Energy companies are going to rise in value, rather
than choosing one or two businesses to invest in, which may be the wrong ones, you can invest
in the "Basket" so that if one or two don't do well but the others do, the price of this fund will rise.
These are available for large numbers of sectors, and I can't list all the options here, but a quick
internet search will find you lists of ETFs that you can look into.

Others - there are still many other markets available, Bonds, Gilts, Commodities, Options etc. but
I really want you to keep things simple to start with so, for the moment, these are beyond the
scope of this guide and we will stick with obvious markets for now.

It is worth at this point explaining how these markets are traded on IG and the different "time
frame" of trades you can open, including the cost of each.

Here's a screenshot of the options you would get for the Wall Street market -

25
DFB - this stands for "Daily Funded Bet" and are the cheapest markets to trade. They have the
smallest Spread so you can be in profit much quicker. However, each day these trades are held
you are charged a percentage interest. It's not much but it depends on how long you hold the
trade for and how much you are investing as to whether this bothers you.

Monthly / Quarterly contracts - these vary in date depending on the time of year, so you get
quarterly dates and monthly dates and have much larger Spreads. For example an ordinary
share may have a Spread of 9 points on its DFB and 30 points for the quarterly contracts. The
difference here is though you may take longer to start making money, you don't get the interest
charges. It will be up to you as to which you choose depending on your intended length of trade. I
usually trade the Indices and cheaper stocks on longer term contracts. If think I will only hold the
trade for a few days then the DFB is cheaper. You can look up the interest charges or call IG if
you are unsure for a particular stock.

All Sessions - these are quite new (as of 2015) and basically mean the market is open for a
much longer time than normal market hours. There's two sides to this, yes, you won't get caught
out by large moves that happen out of hours, but these markets extend their Spreads a lot during
these hours, sometimes with hundreds of points! So you may appear to be in a loss out of hours
even though when the market re-opens everything is fine. It is worth keeping an eye on a
particular market for a day or so to see how it behaves before opening a position. I tend to avoid
these at the moment as if you hold several of these, the "Out of Hours" spreads are quite
alarming. The interest is calculated the same as the DFB or longer term contract.

To start with I would recommend smaller business stocks (often called "small cap") Their price is
below $100 per share, with even some cheaper ones (around the $10 mark). You can take small
steps with these knowing that, if you buy something that is worth $8, this would be on the Spread
betting platform as 800 points. Even at 1 per point, with the chances of this going down to zero
being extremely remote, you can't then lose more than 800 even in the most horrendous market
crash. And if you can place the small betshiw on it (currently 0.24) your worst case scenario
would be a loss of around 190. These aren't going to make you rich either, but you will begin to
learn how markets move around and how your nerves cope with this without losing your shirt!

Some may disagree with me, but I find the main world indices very easy to trade also. The main
reason being that as they are "24 hours", you can set your "stop" exactly where you want it
without you having any nasty surprise out of hours - something I have found out the hard way.
You can sleep easy knowing that if for example, China explodes and the markets loses 50%,
your stop kicks in and you only lose what you have set.

Actually, there are other options available for most "Markets" on the IG Platform, and these are
called "Guaranteed Stops". These aren't available on all markets, but essentially you pay more of
a premium when you open the trade, (a larger spread) but if the market moves out of hours or
very dramatically for some reason, you are guaranteed to have your position closed at the level
you have paid for. I have personally never used these but if you are very cautious by nature, you
can use these to control your risk that bit further. A bit like most insurance policies, you pay a
premium but generally never use it. I will cover risk management in more detail later anyway.

As for precisely which are the best Markets to trade, (shares, Indices, etc.) there's no definitive
answer for this. Opinions vary all the time, markets fluctuate and businesses come in and out of
favour. Also, if we are Spread Betting we can be looking for stocks that might be going down as
well. Essentially stocks go up over time, if you look at a long term chart (10 yrs.+) there are very
few that have made losses, some swing about for a bit, but on the whole markets rise not fall.
A long term investor can easily go for the big names, Apple, Disney, Visa etc., in fact most of the
stocks that make up the Dow Jones Industrial Average would be fairly safe in the long term, but
26
we need to find a stock that is more certain of going up (or down) NOW not some time in the next
10 years. Many of the big Hedge Funds track the Indices as these generally go up over time
more reliably, they are a "basket" of stocks so if one or two underperform and the rest do well, the
Index goes up.

Just as an example of the longer term idea, and to introduce you to the Dow Jones businesses,
here is a list of the current members and their performances for the last five years as of the end
of May 2016:

Dow Jones Industrial Members 2016

3m Co +73% Performance from May 2011-May 2016
American Express +20%
Apple Inc. +92%
Boeing Co. +64%
Caterpillar Inc. -34%
As can be seen, only three of the 30 stocks went down
Chevron -4%
over this time. If you had invested 1,000 in each of
Cisco Systems +65% these stocks (30,000) in May 2011 (which incidentally
Coca-Cola +29% would not have been the most optimum time to have
Walt Disney Co. +137% started this, but more on specific timings later.) your
Du Pont +25% 30,000 would now be 49,610. A return of
Exxon Mobil +9%
approximately 65%. Now where would you have got as
good a return on the high street??
General Electric +46%
Goldman Sachs +11% Of course you wouldn't have bought all these at that
particular price/time so with a bit of a system in place
Home Depot +250%
the return would be much higher.
IBM Corp -15%
Intel Corp +25% And just think if you had invested in the top 10
performers only? A pleasant 72,000. A return of 140%
Johnson & Johnson +70%
JP Morgan Chase +70% Now this is all with actual stock buying, which you may
McDonalds +51%
be considering, and with dividends as well it really would
add up, but with Spread betting it is not so simple as if
Merk &Co +45%
things take a dive you feel it more as you tend to deal
Microsoft +102%
with points not percentages, but I hope the point is
Nike +164% made - don't worry about what happens tomorrow as
Pfizer +58% real wealth can take time.
Procter &Gamble +18%
Remember, these figures came from a totally random
Travellers Co +75% date, if I had been a week earlier they would have
United Technologies +11% looked different (actually better) but essentially, these
United Health +156% types of business are worth keeping an eye on.
Verizon +33%
Visa +284%
Walmart +24%

27
It is also worth being aware of the different "sectors" that are available in the markets as these
often move around together. The common ones are:

Financials - Banks etc.

Industrial - Machinery manufacturers
Consumer - Clothing, Cars etc.
Services - Amazon, Disney, Jewelry etc.
Healthcare - Drug manufactures and healthcare providers.
Energy - Oil, Gas companies etc.
Technology - Apple, Microsoft etc.
Materials - Metals etc.
Utilities - Water, electricity etc.
Transportation - Airlines, Railways etc.

You can easily look up how these sectors have been performing if any stock which fits these
categories interests you.

If however, you are looking for someone else to do the work for you and make recommendations,
there are countless online agencies willing to take your fee for "insider" advice and hot tips. To be
honest they are guessing about as much as you might be, some are good, others are plain crazy.
Some are genuine and do get results and can be a good starting point but there will always be
errors. I believe you are much better off long term finding a system you like and sticking with that.
If you begin to rely on others making all the decisions for you, you are then bound to them. If they
disappear you are left high and dry again. By all means get ideas, but you need to do your own
research as well. More on all this later.

No matter what market you choose, you will have to bear in mind that
despite a business doing well, the markets are very volatile beasts and
can essentially move all stocks on a global scale if some economic news
seems important. For example, a stock I love is Disney. A great business
and if you look at its chart you can see it just seems to go up and up.
However, if, across the board, people are selling, and there are many
various reasons for this covered later, then Disney's share price will go
down even if they are doing well as a business. That's just what happens
as investors take their profits or get fearful of bad things happening.
Sometimes the market can be quite cruel to a stock price for what seems
a rather trivial matter, for example, a business can release some good
financial results but perhaps they are not quite as good as Wall Street
were hoping for and the stock price plummets. No obvious reason, it just
does.

Volatility is another thing we have to get used to and try to ignore for the
bigger picture overall.

I am personally in favour of a more balanced approach and use a blend of

long term investment thinking alongside the trader looking for the best
entry price.

28
 LESSON 6 - DIFFERENT TRADING STYLES

There are a variety of different styles to trading, some of which I have already hinted at in this
guide, and probably many more that are beyond the scope of this guide, but let me now talk
about a few of the easiest and most common methods.

1. Buy and Hold.

2. Fundamentalist
3. Technical trading
4. Value investor
5. Trend trading
6. Seasonal trading
7. Day Trading

Essentially, to trade individual stocks you will need to do a bit of homework. However, depending
on your style of trading, exactly what your homework is will change.

1. Buy and hold.

This is a pretty easy and obvious method of trading. Usually this approach works better if you are
buying actual shares rather than Spread Betting but, if you have the funds, then there is no
reason not to apply this to Spread Betting also.

Basically, all you need to do here is find good solid businesses, probably some of the "large cap"
businesses, the huge global corporations like Google, Apple, BP etc. preferably ones that also
pay dividends, buy a load of shares and just leave them.

You would be thinking long term, at least 5 years if not 30. Of course you may want to buy these
shares at a good value price still, and some of the techniques used in other methods will help
with this. You won't care about the day to day volatility of price movement and are most likely to
earn far more from your capital than you would get from a bank. Think of it as your own pension
fund and chances are genuinely high that you will earn more over 30 years than from any retail
investment opportunity. I wish I had known this when I was younger.....

This method works best if you have a large account to start with as some of the "safe" shares can
be pretty pricey but don't forget that if you are buying shares then you are interested in
percentage change not price movement. For example if Disney is worth $100 and moves to $120
that is a 20% increase. If you had bought 1,000 shares that would cost you $100,000 and you
would be $20,000 richer. That sort of target is very possible in one given year, in fact from
December 2014 to July 2015 Disney did just that, but the point of this strategy is that rather than
being that bothered when it dips back to $100 again (which it did) as you are not cashing in for
another 20 years for example, you are waiting until you need it when it may well be at $250 or
more.

Look at a chart and see what sort of growth these big name companies have had over 20+ years
as this will give you some idea what to expect in the next 20. Also be aware that as NO system is
foolproof, there will be some mighty giants that do fall, and if you had decided to retire at the start
of 2009 you would have been pretty annoyed at your portfolio's performance over the previous
two years. This is why you need to be able to keep an eye on your performance and the global
markets if you want to make the most of any type of investing.

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2. The Fundamentalist

This is really a way of selecting stocks rather than a particular trading method and can be applied
to any way of trading that we are looking at.

Essentially you are looking for real world businesses that you can plainly see are doing well and,
in your opinion are unlikely to disappear any time soon. I have already mentioned Disney as they
have not only their successful and popular theme parks, but constantly release blockbuster
movies with all the merchandising alongside. No chance that this business is going to close its
books any time soon.

Take a look around you, in your daily life. Maybe you keep seeing Starbucks appearing in every
high street, or some well known clothing brand advertising in every newspaper and billboard.
These are obvious signs of success and can give you ideas for businesses to look into.

For example, my family are almost entirely dressed in NEXT clothing, my wife buys all sort of
decorations for the home from NEXT and my Mother-in-law recently bought a bed and tables for
her new home from them. I could tell this was clearly a business worth looking at. I watched the
stock price for a bit, was aware their recent financial news was positive, saw an overall drop in
the market, bought in, and made several hundred pounds across the year.

You may also have noticed in the UK, and probably across most of the world that Nike (and their
owned Converse brand) have been extremely popular amongst teenagers and joggers! Now look
at their stock price on a chart since 2009.....

Pretty impressive. Sadly you can't always tell when this is starting, but just because you didn't
buy at the bottom doesn't mean you can't enter at any point during this kind of run.

What you are looking for are clear obvious businesses which are going to continue to do well for
the foreseeable future. You should not be particularly worried at what price you are buying at as
you know it will rise despite short term trends that may be affecting the whole market. Of course,
it pays to get a competitive entry point, especially if you are Spread Betting but this method is a
good way of finding quality stocks that you can add to a "watch list " and then choose an entry
point you feel comfortable with.
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3. Technical Trading

This, above all the others, offers the most reliable method of trading and, if you find a particular
set of rules, this is the easiest style to implement as essentially you do not make any decisions
yourself but merely react to information presented to you.

Basically, technical trading involves observing mathematical data added to charts and when a
"signal" appears, for example a "moving average crossover " you buy, and when the opposite
happens you sell.

Here is a chart with some of the sort of technical data added.

As you can see, all these pretty lines look fairly confusing and would need some in depth
explanations to what they all mean. However, if mathematics is your thing, you may well find this
is an area you can explore further than I am covering here.

There are many, many technical methods available and used by Chartists, too many to cover
here and a lot of them are pretty useless, so I will give you a quick round up of some I have found
useful. It is worth noting however that there are no magic formulas that will guarantee that every
trade you make will be instantly profitable but, like any trading method, these kinds of
analysis help you to either select a particular stock or give you a way of deciding an entry point.

A) Moving Averages. (MA)

By far the most simple to understand and in my opinion (and that of many highly successful
traders) a great way to make your trading decisions as well as consistently giving winning results.

What these do is track the closing price of a market and average it out depending on what your
setting is. For example, if you set the Moving average to 20 days, each point in the graph for
each day would be the average value over the previous 20 days. In effect what these do is to
smooth out the natural volatility of price movement so you get a smoother and easier to view line
as opposed to a jerky graph. Here are two examples, firstly the S&P 500 daily data from 1997 to
2010. As you can see, there are lots of ups and downs that give it the jagged edge look, and if
you were to zoom into a particular area you may not be able to see clearly what the long term
price movement is.
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However, now look at the same chart with just the 200 day average used instead. Much simpler
and smoother isn't it? You can really see how the ebb and flow went over this period despite all
the shorter term volatility.

And now we can look at the two together which is probably the best way of looking at data like
this.

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 Graph shows daily movements with 200 day Moving Average.

The technician may then use two or more of these averages to track the movement and when the
shorter term average crosses the longer term average this would give a signal to buy. For
example the 50 day crossing over the 100 day.
You can explore this really easily on the charts on the IG platform or indeed on any other charting
software that allows you to add Moving Averages.

B) Support and Resistance

Stocks do tend to follow a certain pattern from time to time, and support and resistance are a
very common technical tool. Essentially, the price of a stock will find certain levels where buyers
are happy to keep buying, and prices where no one want to buy any more.
Let's say Nike stock is $50 and over a few months it moves up to $80. At this price there are no
more buyers so the stock begins to fall again. When it reaches $50 again, the buyers return and
the price increases again. $50 can therefore be said to be the level of support and $80 it's level of
resistance. If you therefore buy when the stock price is above $50 you can now assume it
is unlikely to go lower than this again and you could also decide to sell once it reaches near $80
as it is now more likely to attract resistance at this point. Remember, either support or resistance
can be broken at some point and this is often a signal that the stock is going to continue a bit
further in that direction.

So taking our previous example, if the price of Nike fell to $48, we can wait until a new support is
found (say $40) and wait for it to rebound from that before looking to buy again.
Or, some investors actually wait until resistance has been broken and new high prices achieved
before investing as this is taken as a sign that the market is prepared to pay more for that stock
now. Stocks can often stay "range bound" for a while before making a move beyond these
support/resistance prices and many traders take advantage of this.

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 Level of resistance

Level of support

The above graph shows you a rough idea of the support / resistance of Gold from 2013-2015.
If you had SOLD at any of the levels of resistance you would have had a good trade. If you had
then waited until the second or third support level, that would also have worked out.

You can find levels of support and resistance in all markets at some point, the trick is knowing
when they are going to break out, or if that will fail and the price will return again to its range.

Generally speaking though, keep an eye on support levels of different time frames as these can
be a good indicator that a big move may happen if it breaks through, and can be good places to
place "Stops" as well.

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C) Relative Strength Indicator (RSI)

The RSI indicator is a measurement of the market's performance against itself - how it is
performing relative to previous price movements. It is always a number between 1 and 100.
When the strength is high (above 70) the market is considered to be "Overbought" so traders
would look to sell. When the RSI is low (below 30) it is considered "Oversold" and may well be a
good buying opportunity.

I would not use this indicator exclusively as prices can remain at an overbought/sold level for a
while but it is another fairly simple one to add to your collection.

Here is an example of a section from the same Gold chart we just looked at with the RSI added
below -

You can see here that the RSI reaches about the 70 mark in July '14 and then sells off. It then
bounces around the 30 mark in Oct '14 and rises again.

35
D) Moving Average Convergence/Divergence (MACD)

This is a tricky one to explain as it involves the relationship between two moving averages and
how they are trending. Hey, you can look it up on Google in a flash so I won't bore you with the
details here as I am all about keeping it simple. The reason I am adding it is that it is really easy
to follow VISUALLY as you will now see on the following chart. You can add these easily to a
chart on the IG platform.

This was time to sell again

This signal caught the big

move well.

Here we see things going

back up, despite a false start.

So now you can see it, when the red bars change to green, this is a time to buy, or sell when they
turn red again. On top are the price candlesticks and below is the MACD. You can see in this
example (actually of Tiffany) it works pretty well indicating the start of fairly big moves each time.

E) Volume

Volume indicates the number of actual trades that were made on a particular market according to
a selected timeframe, usually daily. Though not in itself a great indicator, it does give us an
insight as to how the market overall is thinking about a particular stock.

Let's say that Disney has an average of 7 million trades per day, if you see it going down
significantly on a volume of 3 million, that indicates that most of the traders do not want to sell
and that fall may be short lived. If however there was a dramatic fall on 10 million trades, this
would indicate there is more to worry about so you would either close your position if you were
Long or decide to Sell from here. A rising volume over several days is also a good sign that the
stock is gaining interest and likely to continue rising.
Again, worth keeping an eye on to add to your decision making set of tools.

A rise in Volume here

indicated that traders were
You can see a spike in volume when the
more keen to sell off.
business announced earnings

36
4. Value Investing

Another favourite of mine, has probably gained me the biggest wins but can also cause a great
deal of stress. Let me explain.

What the value investor is looking for are good quality stocks that are, for whatever reason,
having a bad time and are kind of "on offer" for a bargain. That's to say, if for example, Apple is a
stock generally trading over $100, and during a market downturn it is selling at $80-something,
then this can be an attractive entry point as you are assured that at some point the price will
return above $100. You may of course be wrong or have to wait longer than you thought but this
is still a system that can work. As always, you need to make sure you don't get caught up in a
long term decline, particularly if you are spread betting, as even if the stock appears to have
dropped a large amount, there is nothing to say it won't drop even more still, but here's where
your research on the business should help.

Basically don't buy a bad business when it's down, only the good ones.

Within this trading method I want to add the concept of "picking a bottom". Many traders may
want to tell me off for encouraging this but if you tread carefully, and get these right, they are
often the most rewarding trades you can place.

Sometimes stocks will take a particularly bad hit and run down to all time lows, or at least multi
year lows. There may be many reasons for this, e.g. a bigger than expected loss on earnings,
some bad news related to their sector or business- a Biotech company's drug fails its test or the
oil slump of 2015/16 due to oversupply etc. All these reasons can cause an unusual drop in price
and at some point it will eventually hit a bottom. Picking this bottom can be a hazardous
challenge but if you get it right, or at least nearly right, once you are in profit you will essentially
never be worried about it becoming a losing position.

The danger is that you decide on the bottom too early and struggle to hold on as it continues its
decline.

There are strategies to use in these situations so it is worth investigating some of the technical
trading methods alongside this for the most efficient entry points.
The upside to this technique is that there may well be no limit to your profits, and, if you look at
any chart which shows this kind of price action, when the turnaround happens, more often than
not, it starts to climb very rapidly at the start so you are instantly into a secure position.

If you look back at some charts and say "wouldn't it have been great if I had bought at that price",
and you had, these are the best possible gains you can make in trading. Definitely one to look at,
particularly if you find a low priced stock, which you can also bet a small size trade on. As a
beginner, it means you can enter the market with hardly any risk, and learn more about how
markets work, safe in the knowledge your house isn't going to be repossessed!

As a further example, at the time of writing, I have recently bought a small Biotech stock whose
price has fallen to just 76 cents. This is unusual for IG to list these stocks but as it has been a
much higher price in the past, that's when it got listed. So if you were to buy into this at the
smallest price of 24p per point, (the smallest bet size IG currently offers) your greatest possible
loss (though ultimately extremely unlikely) would be 75 points, or 18.00. That's not much, but
your possible gains are essentially unlimited - it won't make you rich but if it returns to its most
recent two year high of $5.70 that's a very nice 494 points or 118. Not a bad return for such a
small risk.

If you were buying the actual shares, your percentage increase seems even more exciting. How
does a 650% increase in your pension fund sound??
37
If then, you then repeat this type of trade across say 10 similar stocks you can find, your greatest
risk (and we are talking ball-park figures now) would be 180 (if ALL the trades failed) and your
greatest reward would be 1,180. Now that sounds more exciting doesn't it? Of course, the
markets aren't that straightforward but I hope this shows you how this method can work.
As with all trading methods, some trades will work, some won't but if you stop the bad ones
getting worse, and let the good ones run, the overall result will be profitable.

5. Trend Trading

You could say this is similar to technical and fundamental trading but it merges the two into
another method.

Trend trading is what it says - following a trend. Basically, you look at a chart of a stock, if it is
going up, you buy, if it is going down, you sell. You are following the trend of the price of the
stock - you are not bothered about why it is going up or down, just that it is. The millions of
people who invest in the stock markets have decided to buy so you just follow them.

So how do you know if there is a trend?

Well, here's where you mix in the technical side as you would want to look at a moving average
to see its "shape". If it is going up, the likelihood is it will continue to go up, so it is "trending",
rather like a "tweet" does on Twitter - once everyone has read it, it stops trending but when you
first read it, maybe it's only half way through the total number of people who are going to read it.
Certainly you are unlikely to be the last, so if you see a stock trending upwards and buy it, you
are also unlikely to be the last, so the trend should continue for a bit longer - maybe for several
months - nobody knows, but again, a method to use to help you make trades. Don't forget that
sometimes you will get it wrong (like all methods) and it really will feel like you were the last one
to want to buy at that price. That's the challenge of the markets, and if you are employing a good
risk management strategy, even if some of these trend trades go in the wrong direction, your
winning ones will outperform the losing ones.

As an example, we will use a 20 day moving average (green line) and see on a few charts if there
is a trend worth following:

In this example, there has been a recent down

turn, it has bounced back and now seems to be
heading back up again, so you would buy.

38
 In this example, there has been a longer
period of downturn, and now it seems to be
"bouncing around" a little. The trend is not
clear so you would look elsewhere.

In this chart, the trend is clearly

down, despite a recent "rally" so
you would look to sell.

39
 Here you can clearly see the moving average is heading
down, and with two visible sudden drops (caused by poor
earnings/forecasts) you would sell.

Now this is a very brief overview of how this system can work and you can look further into this
style of trading and what sort of trends to follow once you are feeling more confident or have
done further research.

6. Seasonal trading

This is more of a style you can add to existing ideas and only really refers to the American
market, but as these generally affect the global markets you may find it useful for non US
companies as well.
Essentially, it has been observed that for whatever reason, the US markets tend to follow buying
and selling patterns across the calendar year. These may be due to holidays or financial years or
whatever, but we can plan for these and hopefully choose good times of year to "go shopping" or
good times to start selling.
These kind of seasonal ideas can be found in various publications on-line but I will share a few
useful ones here.
Generally, and particularly in the last few years, October has begun the start of a strong recovery
and made good gains. This sometimes lasts into November but certainly is one to try to get into.
There is also something known as the "Santa Rally" where in the few days before Xmas (20th
Dec?) there tends to be a strong will to buy, so buying into the Indices, like the Wall Street
market, are usually a good bet.
So if you have just picked up this guide and it is the 1st October or 17th December, you may
want to do a few late nights to finish this guide - twice!

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7 - Day Trading

I have already hinted at this one and our very first trade was an example of this but as exciting as
it sounds, this is perhaps the most difficult style to implement simply because of the speed at
which you need to react.

As we have already observed, markets do not move in straight lines and often exhibit somewhat
random movements known as "Volatility"

Some will trade this volatility in what is known as Day Trading where basically a trade is placed
during a daily session and the small "intraday" movements provide the movement of price, with
the trader pulling out when they have made their profit or loss. They would generally make many
trades per day and hope that enough of them win. You can make good money from this but it is
hard work as you have to be constantly watching for price movements and reacting the whole
time. This is stressful. Feel free to try this with a demo account but it takes some commitment.

Day traders might still look at charts but then try to predict how the market is going to move
TOMORROW rather than how it might move over a longer time period. They might then set up a
load of trades to open at the start (maybe even get in Pre-Market) and hope that they were right.
They may well also keep constant watch of screens and react to sudden price movements or
news being released etc. Here, timing is everything and unlike a longer term method, where you
might go into loss for a few days or weeks before your chosen market goes your way, the whole
deal is done in one day (or less) and the next day their rules are reset.

Essentially you can follow the same rules as some of the previous methods but speed up the
timeframes, so you can still follow a trend for example but need to be hovering over the "Sell"
button for when the trend reverses.

From what I have gathered, and in my limited experience, this is not a reliable way of making
money for the long term, and beware of online courses telling you how to do it - the serious
millionaires do NOT trade this way.

One key point to take from these ideas is that there are several strategies you can use to select
entry points for trading and you need to find the one that suits you or you feel works best for your
type of investing. You may probably have noticed the contradiction that occurs for example
between "trend trading" and "value investing" where the trend is clearly going down but the value
investor sees the low price as a bargain.

I did say there was never an easy answer didn't I?

Useful Information - Each market you can trade is allocated a short name known as a "ticker" in the US or as
an "EPIC" code in the UK. This uniquely identifies the stock/ETF/Index etc.

They are made up of letters, numbers or both.

For example, Disney is called DIS, Apple - AAPL and Visa simply V.

When you want to quickly look up a stock on the web you can use these codes to quickly get you to relevant
information. Also in many financial apps these abbreviations are used.

You can easily look up a ticker for a stock on Google, or the other way around.

41
 LESSON 7 - TIME FRAMES

One other decision that needs to be made is what timeframe you are going to trade in.

For example, are you going to trade every day? Once a day? Once a week? Once a year?
When you know the answers to this you can then look at your charts in different ways.

I have just touched on the short term idea of trading (Day Trading) in the last lesson and if you
remember, the first trade we made where we watched the price moving up and down was an
example of this. You may have made a few points profit then, and with your demo account you
can have a lot of fun playing games with this style of trading, however, unless you are following
some kind of strict system, you are just gambling and could not guarantee yourself long term
profits. However, any of the methods of trading we have already discussed can be used on pretty
much any timeframe.

The charts used in the previous lesson were all daily charts, but if you imagine they were all one
minute charts (for example) then you can still follow a trend or pick a bottom of a market, just the
whole thing might well be over in 10 minutes rather than 10 days or 10 months. So if you place
larger bet sizes (say 10 per point on the DOW) and waited until you were up 10 points, which at
times could be under 30 seconds, you can bank 100 and walk away. 100 per minute?? That
sounds too good to be true? That would make 6,000 per hour!! Well, yes of course it would, but
the chances of you getting 60 trades right all in a row are frankly nil so it really is not that simple.
In reality you are just as likely to get it wrong as many times as right so, assuming you had set
your limits to 100 loss as well you would still walk away with nothing.

In practice, of course you only need to make more Dont be fooled into thinking you can simply trade
correct trades than losing ones and this system with a 2 or 3 Point stop-loss on the Wall Street
works, but you already know this and imagine market and only lose 20 each time you lose and gain
winning or losing 100 EVERY minute for a day!! 100 when you win. In reality, you will lose 20
Pretty stressful, especially if your first run of trades EVERY time!
are losing ones. This is not an easy way to trade at
all - you have probably heard about these young
"City types" who do this sort of thing - and the early heart attacks many of them suffered as a
result .

If you are going to trade like this, you will need to be so disciplined, and have such a reliable
system that you are not really making any decisions yourself. That is hard. Not impossible, but
hard. Basically you simply watch your chart(s) and when the signal comes e.g. a Moving Average
crossover, you buy/sell and when it crosses back, you sell/buy. Over the day, you would expect
some trades to lose but enough to win so that you make consistent profits. You do need to do
this EVERY day as well though, as you can't pick and choose which days are going to go your
way, some days may end up completely losing and you will need the profitable days to cover
these. If you have the time, the system and the cash, then do feel free to look into Day-Trading. I
am not a day trader as I found it way too stressful but sometimes it can be nice to get excited......

You may also not have a great deal of time to make decisions on trades so want to take a much
longer term view on trading.

Now imagine the charts used previously are weekly charts, or even monthly. You can see how
the principals will still apply but you are not concerned with the day to day price movements.

In spread betting in particular, you would need to have the sort of account than can withstand any
swings between your goals. Using the examples I used in Lesson 1, if you bought Apple at $100

42
as you had seen the monthly charts climbing and you wanted to follow the trend, despite it going
down to $90 (1000 points) you are following a longer term trend so are confident of it continuing
and wait until it reaches $150. So if you have a large account, you can stomach 1000 points
easily but if you, like many of us, are using Spread betting because you DON'T have a large
account then this kind of thinking isn't really going to work.

Essentially then, you need to decide early on what time frame you are going to trade in.

In my view, the simplest method is what is known as End of Day trading (EOD) where you look at
the prices that your positions are at the end of each day and make decisions about your next
move then. You can spend a few minutes reviewing positions or an hour or two looking for new
ideas, depending on your level of interest, but it is far more flexible and less stressful to work like
this. You can now see more clearly how a day has been for a market (as big moves can happen
towards the end of trading sessions) and your Moving averages and other technical data will fit
into place. You might set up an order to open something the next day or maybe set an alert
(using the IG platform for example) to tell you when something you are interested in is moving in
the direction you are looking for etc.

You can then get on with your normal daily routine - work, leisure or whatever without having to
be glued to screens all day waiting for the right moments.

In reality you may well end up watching a screen or on your phone or whatever as, certainly to
start with, you will be excited at the thoughts of making money or worried about losing it, but you
will have to get used to the idea that you should not make decisions during these times (unless a
particular price target is met or significant news comes in) as you have already made your
decisions when the markets were closed - when you were calmer.....

Use your demo account wisely. You will soon see what sort of timeframe works best for you by
trying out different bet sizes and how you can cope with these around your normal daily routine. If
for example you put a 24 pence per point trade on a market which moves no more than 2 or 3
points each day, it's going to take you a few weeks before you begin to feel any serious pain (let's
be honest, 7.20 in two weeks isn't going to be terribly upsetting or exciting) so each day would
only create a sense of mild interest to you. This may well be a good thing. However, if you start
putting 2 or 3 per point on something like Amazon or the Wall Street markets then your funds
will change drastically throughout the day and even overnight, this may be more that you can
handle. Try it and see how you can cope. Also try to imagine it is your actual money as well -
though in practice this is really hard to do.

Once you find a timeframe that suits you, try to stick with that as you will get very confused if you
start to behave differently towards your trading. Over time you will learn to cope with different
trades but to start with, keep it simple and regular, this way you will learn what works and what
doesn't. When I first started, despite my own training, I began looking at longer term charts and
then treated each day as if I was day trading, being bothered by the slightest fall in my positions
etc. it was only after a few months that the penny dropped and many of the trades I had started
on a longer term trading style would actually have done really well, and I had missed out by
thinking short term.

Learn from this.

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 LESSON 8 - RISK MANAGEMENT
I can't say that this is the most important lesson as they are all important, but above all, this is
one area where you have to be really aware what you are doing as you can, in theory, lose all
your working capital very quickly, and sometimes there's nothing you can do about it.

Up to now, I have been fairly upbeat about financial trading, I am telling you that if you follow
some rules and keep bet sizes under control, you are going to make money.

Great.

That's true.

However, you may well not follow the rules or place bet sizes too large - because you think you
know what is happening and have put a stop in place.....let me now give you some horror stories
which may - and I would not be worried if they do - put you off entering trading at all. To be
honest, if you are not worried at all by this then you are probably missing the point and may need
to learn the hard way.

If you are spread betting on the IG platform most of the markets you can trade on are only
tradable during normal market hours. For the US stocks I tend to follow, this is from 2.30pm until
9.00pm UK time. Outside these hours ANYTHING can happen to your stock price. Normally, very
little happens but sometimes when the markets re-open the next day there can be significant
changes, I will go into reasons for this in a later lesson but one major factor can be a businesses
earnings release. This is when a company announces how much profit/loss it has made in the
last financial quarter.

Understandably, if a company has done really well, then share prices tend to rise, but if the
figures released disappoint then the markets can hit really hard. As an example, and you can
look these sort of things up on charts, I once thought about buying into a cosmetic company
called "Ulta Salon" just before its earnings were due so I looked back on the chart to see how the
market had reacted in previous cases. To my horror I saw that on one occasion, it had dropped
about 2400 points - wow - and I was thinking of putting a 1 per point bet on. Of course, with that
kind of risk, I chose not to trade. In the end, the report was good and the shares rose, I ended up
day trading this by buying just after the open and gaining points before the end of the day when I
sold off. However, the point I am trying to make here is that even with a stop placed in at say 50
loss, due to the dramatic change out of hours, when the markets re-open they will still open 2400
points down. You would then be instantly closed out with a 2,400 loss and that money taken out
of your account - EVEN IF YOU DON'T HAVE THAT MUCH IN THERE. That's the point. The
broker only makes your transactions based on available prices during official market hours. Your
cash balance will read negative (if you don't have the funds in there) and very soon IG will
contact you to pay your bills! Don't be fooled into thinking if you only deposit 500 into your
account that's the most you will lose.

Then, imagine you had several UP positions open on Friday 21st August 2015. Now you may or
may not have noticed this but something extraordinary happened over the following weekend.
This was mainly due to concerns in China and had been brewing for a few weeks but the markets
behaved in an extraordinary way. If you had been exposed to this without sufficient funds, you
were in for a shock.

The Wall Street (Dow Jones) market had slipped 500 points on the Friday, that alone was pretty
significant, but during the open of trading on Monday it fell a staggering 1200 points. (It had
NEVER fallen so many points before) What's more, due to the unprecedented price movements,
IG had to close online transactions so, despite Wall Street being one of those "open all hours"

44
markets, during this time of crisis, you couldn't even close (or open) any positions as the markets
swung around wildly.
Now that alone, at just 1 per point, might be cause for concern, but if you were in for say 5, and
remember, this is a market which rarely moves over 300 points in a day, you could have lost a
staggering 6,000 in minutes. It wasn't just the Indices that fell of course, everything opened up
significantly lower so even your small 24p per point trade may well have cost you hundreds of
pounds in losses that day.

Thankfully these kind of events are rare, but sudden changes in stocks prices are fairly common
and need to be planned for. Sometimes you can benefit from these big moves but you always
need to be aware of the potential risks you are exposed to.

Now before you decide right now that this whole thing is too risky after all, there is one option I
have mentioned before that you can choose to employ if you think you will need to.

When you open a new position, you have the option to use a "Guaranteed Stop" and by paying a
bit more in spread, you are then guaranteed to be closed out at the price you want, well, at the
minimum price they are offering (usually 10% below the current price), and can at least manage
your risk completely. You won't always need this but if you are expecting volatility you can use
this as a backup. Do note however, that IG do not always offer Guaranteed Stops on all markets
so check before you commit. (late edit - IG have recently changed their options here)

Now, taking all the crazy times out of the equation, you will still need to manage your exposure
and potential losses well in order to succeed.

There is a general rule accepted in the trading world that you should never allow any one trade to
be exposed to more than 5% of your account. This is of course a sensible principal but if you are
spread betting and are on a small account, as indeed I still consider myself to be, then if you
have 1,000 then 5% is just 50. If you want to trade the Wall Street market, then that 50 is
almost certainly going to get lost unless you are very lucky with your timing. I did an experiment
once using a demo account where at the end of every day I would place a bet on Wall Street,
either UP or DOWN depending on just how I was feeling about things, with a 75 stop loss, and
almost every day, even when I had made the right decision (which I think was about 50/50) I was
stopped out. Over the few months I tried this, I essentially lost about half the invested amount. If
however I had made my stop 200 away, many more of my trades would have ended up well in
profit, and I would have made profit overall.

So you can see that with my small account, I would have had to chance 20% per trade, at least to
start with in order to prevent being stopped out by volatility. "But," I hear you cry, "you should
never have been betting on a market you could not afford to trade!"
True, but sometimes you may well need to take the extra risk when it comes to trading if you
really feel the timing is right, not always, but sometimes.
A sensible option would be to limit yourself to 10% of your capital at first, this would effectively
give you 10 losing trades before you were all out - if you end up making 10 losing trades in a row
you will need to look at how you are trading.

What you must do is to be aware of the risks you are taking and making a running record of this
is a good way to see where you are. You can make a simple spreadsheet with each trade you
have open and the amount of risk you are exposed to. You would then have a running total of
potential maximum loss so you can then see how this compares with the amount in your account.
If say you had 1,000 in your account and over 5 open positions could see a maximum loss of
500 you may be happy with that. If not, you would either close some positions or reduce the
amount of risk (make a higher Stop) for any trade you thought could handle it, or you had your
doubts about.

45
Here's an idea of how a spreadsheet might look -
Market opened Maximum Loss Minimum profit Current max. Risk/Profit

DISNEY 100 0

Bank of America 50 0

NIKE 0 50

PFIZER 0 0

Current totals: -150 50 -100

Here we have a position in DISNEY that hasn't yet gone into any significant profit yet so I am still
at risk for 100 if it turns against me. Bank of America is the same but I have only risked 50 on
this as it doesn't move as many points as Disney so doesn't need as much to trade with.
NIKE has gone into profit and I have "locked in" (by moving my stop) 50 so I can't lose on this
trade, it may well be making much more, remember this is not my ACCOUNT but my risk
manager.
PFIZER has then gone into profit but not enough for me to start locking it in so I have moved the
stop up to a "no loss" position so the worst that can happen is that I walk away from this trade
with nothing.

So looking at this chart, if all the four trades turn against me then the maximum I am going to lose
is 100. When this number gets positive for example, I could then decide to add more trades
depending on how much risk I want to keep myself exposed to.

Don't forget to keep an eye on the margin requirements also as these can cause trades to be
closed off automatically, even if your stops are not being reached, if your "available funds" is
reaching zero. For example, you have 1,000 in your account, you have 5 trades open with stops
100 away. This would in theory leave you with a spare 500, however, due to the amount you
may need to cover margins, you may well only have 200 or less left available. If your trades
then start to fall, this figure may get less so keep an eye on this as I once got into a terrible mess
with margins as I was trading right on the edge and when I closed one trade I ended up with a
knock on effect of all others being closed off! Just make sure you keep your account well topped
up or don't over trade.

What you should NOT do is blindly open positions here and there without seeing the impact on
your overall account.

So how do you know where to place these STOPS without risking too much but still allowing for
the general volatility of the markets?

This is without doubt the Holy Grail of trading and if you are looking to me for the answer then I
am afraid I am going to be no help to you.

Ok, well I'll do my best but there is no absolutely correct answer, though there are certain
strategies you can employ depending on your trading strategy.
46
If you are trading long term and have large accounts then the use of stops is not necessary. You
might still be keeping an eye on some longer term Moving Averages but as you are planning to
hold these pretty much regardless of short term price movement, then you don't want to find your
positions closed off without you noticing.

However, if you are spread betting and like most of us, have limited funds, then managing your
losses is going to become your main goal.

There are two decisions to be made, firstly how much you are prepared to lose on a trade and
secondly, how far away you think the price will move from your entry point. Let's stick with UP
bets for now to keep things simple but just reverse things if you are trading DOWN bets.

So how much can you lose? Well this is ultimately up to you but as stated previously you need to
keep things under control as some of your trades are going to lose (maybe even most of them)
so if you allow 25% of your working capital to be lost each trade, after 4 losing trades you are
going to be out completely. The 5% rule is good but I am happy to use more on a small account
say, 10-15% as on some markets you can't really trade for less if you are using limited funds.
Let's take the example of 1,000 in our account (I would not recommend starting with less,
2,000 would be better) and we are prepared to risk 50 on our next trade. What you now need
to do is look for the trade that will fit your budget, don't try to squeeze a trade into your budget!

I'll say that again as it is important -

Find a trade that fits easily in your budget, don't open trade you can't afford.

Let's now say we are looking at a trending trade, a pair of moving averages have just crossed
over and you are looking to BUY this particular market. What you need to check is how low the
price has been recently, let's say in the last 20 days.

So if your current entry point is, and we will stick to round numbers for the sake of ease, 1000
and the lowest price in the last 20 days was 920, you could set your stop 80 points away from
your proposed entry point of 1000. From there we can work out his much you can afford to LOSE
if things do not move in the way you are expecting.
If you bet 2 per point you are risking 160
If you bet 1 per point you are risking 80
If you bet 50p per point you are risking 40 (this would be best here for our 50 risk)
If you bet 25p per point you are risking 20

You get the idea.

IG will still require you to have an amount of "margin" in your account for each trade, it does
depend on the market, and you can find out how much it is under "market info" but it is usually
around 10%. So in this example, even though you have set a stop at 80 points away, you will still
need to have 100 points of funds available (10% of 1000) to trade to allow for what is known as
"slippage" where IG are unable to stop your market at the price you want, usually due to unusual
out of hours market activity such as earnings release as discussed previously. You will need to
watch out for this kind of potential hazard anyway as some of these "market movers" are
advertised in advance but sometimes they are not. Just one of the hazards of the game I am
afraid.

Only you can decide then how much you are prepared to risk and this will depend on your funds
you are working with. If you have a 10,000 account then risking 160 is not going to hurt you as
much as if you only have 500.
47
Now you may be thinking "only risking 20 sounds great- how much will I potentially gain?" Well
of course we never know but if you get the market right then several hundred points may be
coming your way which will maybe give you 200/300 return. And if you are prepared to risk say
200 overall from your account then 10 of these type of smaller trades may be a good way to
spread your risk rather than one trade which risks 200 on its own. Just an idea......

One of the biggest appeals of Spread Betting is that the potential for gains are virtually
unlimited, you might have bought a stock many years ago and it is STILL gaining, 2016 is
seeing many "All time highs" for some stocks.
However, this only works if you manage your losses as if you let your losses be
unlimited as well then the whole system collapses!

So to summarise risk management :-

1. Manage your account at ALL times - keep a written record/simple spreadsheet.

2. When picking a market to enter, work out how much you can LOSE not what you want to
win.

3. Fit your budget to the price action, set realistic stops to allow for volatility without putting too
much cash in harm's way.

4. Be aware of potential dramatic market moves like earnings releases or major Fed policy
news etc. If unsure wait until after the news then re-evaluate. (see Lesson 9)

5. If in doubt at all about taking a new position DON'T DO IT. Wait for a more certain
opportunity.

6. Make the protection of your account the number one priority, even if that means you miss
out on an opportunity.

7. If a trade is losing, and there is no obvious reason to hang on, just let it go and move on.
DON'T try hanging on for ever "just in case" !

8. Always trade with a STOP in place, even a "Guaranteed" one if you are in volatile times
(and it is available).

9. Avoid entering a market on a "whim", just because you feel like it, or have the time right
now. Make sure there is some reason for entering.

10. Make sure your account is large enough for margins as well as your chosen stop levels,
particularly if you intend to have many positions open.

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 LESSON 9 - THE NEWS
There's no doubt that news, whether it is about an individual business/stock or something global,
affects price movements of stocks. The Indices may be affected by global news whereas smaller
stocks will be affected more by their own news and perhaps less by the global news.

Here are some of the main reasons that affect US stock price movements:

Quarterly earnings (this is generally the most important for stocks)

US Dollar against other currencies
Global conflicts/economics
Oil price
Government policies (in the US known as the Fed)
Valuations/Analyst ratings
Interest rates
Overall GDP and employment

Of course some stocks are affected more by these categories than others and some hardly at all
but it is always worth bearing in mind all these influences when starting a trade, as if the global
markets are tumbling then it's best to wait until that tumble is over before opening a trade
regardless how great the business you want to invest in is.

I have found that more often than not, today's news is tomorrow's recycling so if you are following
a trend, and some news comes in which may affect the price you are following, don't start
panicking that this is the end of your trend. It might be but news alone should not be your
deciding factor when trading. There will be times when global news affects everything in the
market such as wars breaking out (the recent Ukraine conflict for example) or major financial
information such as the poor performance of China's economy in 2015, however, reacting to
news rarely gives the results you are looking for.

Trouble is, as soon as you've heard the news, the market has already reacted and you have
missed the "big move" so catching these kind of moves is very tricky. You can never really predict
how a market will react to news and that's the problem.

Sometimes, even what appears to be good news can cause a tumble and apparent bad news
causes a rise. It frequently makes no sense. The best thing is to react to how the market moves
AFTER the news not try to predict the reaction beforehand.

It is also important to note that you should not be swayed in any way by so called experts on TV
shows or articles you come across stating that "this stock is going to fly because...."
As discussed before, they are only guessing as well and channels like CNBC (which is fun to
watch) are only there to make a programme and sell advertising. Call me cynical but this is the
fact. Sure, some of the "predictions" will come true but just as many won't so we are back to the
coin tossing situation.

It is very easy to be swayed by someone who comes across as an "expert", especially if you hold
their view as well but you must not get sucked in to thinking they have some kind of magic
information that you don't. They don't. Experts can research all they like and spend hours
checking data, finances, trend patterns etc. etc. and still get it wrong so by all means watch this
kind of thing for entertainment or read the odd article in the newspapers but do not try to make
trading judgments based on other people's opinions. If an opportunity is suggested, use your own
criteria to decide if it is still worth investing in. It may be a good decision after all.

49
However, keeping in touch with how global markets are reacting IS a good idea and there is
nothing more frustrating than having a position you are holding go the wrong way and not know
why it is doing so.

So when I started trading, I wanted to find out "why" as well.

Sadly there is sometimes no real reason, remember, the behaviour of stocks is down to the
actions of millions of people around the globe who all have differing opinions of what to do. When
the overall consensus is to BUY, then the stock goes up, when they mostly want to SELL it goes
down, and we can't possibly influence or predict what the prevailing opinion will be. Occasionally,
the big Institutions or famously large fund investors may buy a large number of shares in a
particular stock and that could send the price upwards as other participants believe they should
follow these kind of decisions. This is not a bad thing but may only last a day or two before
settling to an agreed direction again.

However, when there IS a reason, it is nice to know and it can help decision making (trend/
technical traders would not respond to news and both sides may be right)

Let me point you to the few channels I do use to see if there is any obvious reason for price
movements or if it is just the way of the market ebbing and flowing like usual.

CNBC - As mentioned previously, the American TV channel is fun to watch from time to time but
the "App" I have installed on my phone I do find useful. You get odd notifications of important
events in the financial world, some of them are not important or only relevant if you own a
particular stock (e.g. Ford recalls 100,000 vehicles for faulty seatbelts), but you do get things like
US GDP announcements and employment figures etc. which often do have an effect on the
overall markets. You will also get the earnings announcements of the more popular US
companies which can be useful to know about if you are following them.
You don't get inundated with notifications or advertising either.

Stocktwits - This is a very popular resource where basically anyone can "Tweet" in a comment
regarding a particular stock using its ticker code (AAPL=Apple, MSFT=Microsoft etc.). This is
really useful for getting hold of news or information regarding a business and its price movement
though as it is generally the public who are adding the information, you still have to put up with
the "Hey guys, this stock is gonna fly tomorrow!" sort of thing and "Why is this stock falling so
much?" questions - which is why YOU are there in the first place. Sometimes, as we know, there
is no obvious answer, but when there is, Stocktwits will pick it up, which is always reassuring as
not knowing is just annoying.

Seeking Alpha - another app I use on my phone (they also have a web site) but for this one you
can create a "watchlist" of your chosen stocks and you will get notifications of news specific to
your stocks, things like earnings and mergers etc. You also get occasional articles through with
"experts" opinions on your chosen businesses. Some of these are highly detailed and well
researched and can help with decision making but as with all opinions, you need to decide for
yourself whether to take any action or not.

I did look into other stock prediction apps but as you need to subscribe to many of these, and -
sorry to keep repeating myself - they can only guess like the rest of us, I don't see the value in
these type of news feeds.

One piece of advice I will give you for free when it comes to the news, if you see a headline on
the front page of daily newspapers like The Times or Telegraph saying something like "Billions
wiped out of Pension Funds as FTSE hits lowest in 4 years" or something like that, then that is a
pretty sure sign that all the selling is over and this would now be a good time to buy. Just look
50
back (if you can find them online) at the headlines when major Indices hit lowest troughs and
these will pretty much tally up.

You're welcome...

So news can affect the broad market as a whole and specific news will affect individual stocks.
Some technical traders will happily trade without ANY information or news but personally I could
not cope with that style so I like to keep in touch with the important stuff, not overdose, just keep
in touch.

Here's a classic example. On October 16th 2014 this was the

front page of the Daily Telegraph and below is the text of the
article .

What actually happened was that from that day onwards the
FTSE rose steadily until December, back to where it had been
most of the year, and by April 2015 it had reached its all time
high. No apology printed for getting everyone worried was
there?

And look how many "experts" forecast yet more doom and
gloom, yet the hard evidence shows that if you had bought on
this day you would have gained an easy 500 points on the FTSE
by December, and with a minimum bet size of 2 on IG that's a
handy 1,000.

51
 LESSON 10 - The Psychology of Trading
Without doubt, this is the area where you won't fully understand its importance until you are
actually trading with a real cash account. It's the one area that, though when I first started out I
was kind of told about, it came as the biggest shock and often has a powerful effect on your state
of mind and ultimately your trading.

I will not be able to cover in much depth all the things about the mind you might want to explore,
there are many books and courses available if you feel further research is needed, but I will try to
point out strategies you can use to help you deal with the stresses you may well encounter when
trading, after all if you are aware these sort of stresses are coming your way then you can
hopefully prepare for them.

When trading I have recognised five situations that cause an emotional response:-

1. Gaining good profits

2. Gaining a little profit
3. Breaking even
4. Losing a bit of money
5. Losing a lot of money

Now those make sense and you can at this point imagine how you might feel when each situation
arises. I am telling you now that, even though we have talked about protecting your account, you
will at some point reach all five of these situations.

However, there are more:-

6. Gaining good profits, then losing most of them before you cash out.
7. Losing a position with a bit of profit and then seeing that trade soar to higher profits.
8. Not buying into a trade you are considering and then seeing that trade make big gains.
9. Pulling out of a losing trade as you can't take the pain anymore, just as it turns around.
10. Not foreseeing an earnings release, being on the wrong side and you are powerless to
do anything about it as it was announced just after the markets closed and you have to wait
overnight to see exactly how much damage is being done....
11. Being the right side of an earnings/other news event and making an absolute mint in
no time at all.
12. Hanging on to a losing trade as it must have reached the bottom by now....then it drops
a lot further.

And so on.....

You can see that some of these situations don't fit exactly into the first five I listed, why for
example, would you get upset when you just don't win on a trade you weren't in?
Good question, after all there are hundreds of stocks to choose from and you can't be in them all,
but this is the point I need to make. You will still get affected by these situations even though it
makes no sense to be. Believe it or not you can get just as cross/annoyed/upset (depending on
your personality) when NOT winning money as you can losing it, in fact I would be so bold to say
that pulling out of a trade to see it go considerably higher is worse emotionally than just making a
small loss on a trade.

The situation where you feel the most cheated has to be when you pull out the losing trade just
when it turns around so that not only would you have lost less, you may well have actually made
good money!
The trouble is that these wild emotional swings can play havoc on your ability to make good
decisions and also maybe make you give up trading completely even though you have hardly got
going.
52
Let's look at a few concepts in more detail.

What we need is to try to pre-empt these feelings so when they come, we are not so surprised,
therefore we should be less affected by them.

Starting with the concept of losing "a lot of money"

If you have placed your stop correctly, you have already committed to that amount coming out of
your account. If it then does, i.e. your decision was not correct, you are prepared for that and
move on to the next trade.
If you have got into the "out of control" situation and the loss is far greater than you were
expecting, you just have to deal with it and move on. If you still have plenty of capital, you could
perhaps wait a little longer, it would depend on what, if anything, was causing the drop in your
price. Generally though, it is better to close the trade and then analyse your next move carefully
before doing anything.

What you MUST NOT DO is try to "revenge trade" where you want to get back at the markets as
you feel they have been unfair to you.

For example, let's say you were on an UP bet and you end up having lost 1000 points, if this is
1,000 that's no fun at all. You may feel really panicked at this and feel the need to quickly get
some of that back, you maybe decide to bet DOWN on that trade as that is now surely the way
this is going - and then it reverses and goes back up, so not only would you have lost less if you
had been holding on but now you are losing even MORE money and you are already in a state of
panic? Now what?? Pull that new trade out? Wait until it goes back down again?? Aaaargh!!!

You see, as you are already under stress from the losing trade you start to act irrationally and are
more likely to make further mistakes. You MIGHT have been right and maybe got some of your
loss back but at this point your well thought out original trade has turned into a gambling
situation. This is hard, but after a big blow, and it may happen, you need to:-
a) check none of your other open positions are exposed to anything hazardous
b) walk away from your trading for a bit - do something else to take your mind off and calm
down. This may be a few minutes, hours or days but distance yourself from the situation to get
back to a clearer thinking state.

After this you can analyse what went wrong, learn from it, and make a better decision next time.
There is a very true saying that we "learn more from our mistakes" and this applies so much in
trading.

Less obvious perhaps, is how to deal with great successes.

While there is no stress attached to this you are still prone to making mistakes and therefore
losing your cash perhaps quicker than you gained it. You see, when you get a good win, you
begin to feel invincible, you are the expert, you have cracked it and know how it's done. You
become complacent, you have more cash to trade with so you increase your bet
sizes.....suddenly this new decision isn't going how you thought, your profits are being eaten, you
are holding on longer as you have more capital......and now it's all gone.

It can happen, and frequently does.

So if you get a good win, let's say you start with a 2,000 account and after a while you get a
lucky break and you now have 4,000, it would be easy to think as you have double the cash,
you can double your bet sizes, open twice as many trades etc. What you SHOULD be doing is
looking at how you got the big wins. These may have been particular opportunities you spotted
but they are not here right now. This is where you will need patience. Wait for your chosen
opportunities to come around again, don't just get back in because you can.
53
Enjoy the time being successful ! In the above example, making 100% in a trading year is
exceptional so wallow in your cash for a while before looking for new ways of losing it.

Essentially then, unless you have been trained by a Vulcan, (sorry, Star Trek reference) you will
experience a wide range of emotions while trading, whether it is the intraday volatility or wins and
losses, these are a large factor in trading and take some getting used to. Though "psychology"
was mentioned to me in the initial courses I took, this area was never really given much weight
and it really should have been. I guess these "pros" are either so used to it they forget or are
actually rather emotionless people anyway.

Being an artist as I am, this has been a steep learning curve but I am far less stressed about
trading than I was, now I know what to expect and that every day can bring a new opportunity. If
you are the sort of person who gets easily wound up then you really must take things slowly at
first. If you are the analytical scientific type you may well find this easier as you are used to
perhaps scientific experiments that don't work as expected etc.

Of course, if you don't want to experience any of these emotions, you will end up just sitting on
the fence. Sometimes that can be a safe option but it sure won't make you rich.

Beware of "following the crowd" mentality. It is so easy to think that if you read or hear about
others who are enthusiastic about a particular stock then there must be something in it. An
average stock might get traded say 2 million times in a day. If you have read, on Stocktwits for
example, 20 people who think one particular stock is going to go up tomorrow, there could be
nearly 20 million who don't. The "crowd" is what actually happens, not what a few "twits" think.
They may be completely right of course, the point I am making here is that psychologically you
can get swept up in a trade idea because you feel safe if others around you are doing the same.
Trading is a lonely game and rightly so, as if you are relying on others to make your decisions for
you, you will have no right to complain when it all goes wrong. Perhaps discussing ideas with a
trading friend can help you see different angles on a decision but essentially you still need to get
your system and then stick to it. There is no debate on whether a MACD signals a buy or sell, it
just does.

I was surprised when I first started trading how exhausting I found it. Strange really as you aren't
really doing anything during trading hours unless you open or close a trade but the stress of price
movements, and the thought of losing trades is stressful. By the end of a trading week I was
knackered. I am not so much now. If I have a bad week, say some trades finally meet their stop
level, or the markets are very volatile, that can be wearing, but generally, as I have a system in
place, stops far enough away that it would usually take several days of normal behaviour to
reach, and no one trade is going to cause too much pain, I can afford to be much more relaxed
about it all.
That did take me a bit of time to get sorted so don't be surprised if you do get a bit drained at first,
stick to the plan and this should become much easier to manage.

One other way of coping with your losses is to really see them as just on going business
expenses. This is after all what they are. You often learn from your losses and there are no other
expenses as such except perhaps a charting program. Seeing losses as an inevitable expense
helps keep things in perspective and again keeps the stress levels down. After all, you don't get
stressed if you have to order a load more paper and ink for your printer? This could cost you
100 plus, so a couple of losing 50 trades could be seen in the same category "I had to invest in
those stocks" as they could have generated income, can be seen in the same way as you "had to
print out those flyers" as they could have generated income.

I know I have certainly "wasted" money on printing and advertising in the past on my other
musical/ theatrical activities, but never beat myself up about it as a bad decision.

54
There are many other more in depth resources on Trading mentality and if you are so inclined I
can recommend you check some out, again, it could well save you a costly mistake!

Just one more thought, I have given myself two sayings that I try to use when at extremes of my
trading:-

"Maximum Pain" - when a trade is going so badly I absolutely have to pull out, that is when I
should have bought in.

"Too good to be true" when I am beaming at how well a trade is going, that is when I should have
cashed in.....

To finish this section, here is an amusing, but very true graphic, indicating the realities of trading!

Graphic used courtesy wallstreetcheatsheet.com

55
 LESSON 11 - Expectations
When I first learned about Financial trading, the advertising I had come across promised me
financial freedom, I could quit my job, I could sit on a beach somewhere with a laptop and just
rake in the cash.....

Of course that didn't happen, and hasn't yet, but it still might.....which is why I have spent so
much time learning about it all.

In reality, it will depend on how much capital you start with as how much you can get in cash
terms. Start with 100k and getting 10 to 20k should be quite achievable per year as that
equates to 10-20%, but, if like me, you are trading with much less, then in order to make
thousands you are going to need to take more risks, and that may mean starting all over again!

I can't predict how you might trade or how the markets will be behaving in the future, but if you
bear in mind that anything over 30% is seen in the trading world as pretty impressive, if you
follow these guidelines you should be able to achieve this. Remember also that if you gain in your
capital, you can in time increase your bet sizes, but TAKE IT SLOWLY. There is no rush, the
markets aren't going anywhere so wait for the right opportunities to come rather than think "I can't
win if I'm not in!". There is some truth to that but if you think that most people LOSE because of
this mentality then you will always proceed with caution.

Think about this -

You start with an account with 2,000 in it. If you gain say 30% per year you will end up with the
following results:-
Year 1 - 2,600
Year 2 - 3,380
Year 3 - 4,394
Year 4 - 5,712
Year 5 - 7,426
Year 6 - 9,653
Year 7 - 12,550
Year 8 - 16,315
Year 9 - 21,209
Year 10 - 27,571

At this point, 30% is around 8,200 per year. Useful.

Just to perhaps excite you again (as I have been rather negative a lot - because you need to
manage your risk) let's imagine you manage to double your money each year (as I did in my first
year alone!) which with Spread betting is actually easier than with traditional trading, then your
2,000 account could potentially look something like this:-

Year 1 - 4,000
Year 2 - 8,000
Year 3 - 16,000
Year 4 - 32,000
Year 5 - 64,000
Year 6 - 128,000
Year 7 - 256,000
Year 8 - 512,000
Year 9 - 1,024,000
Year 10 - 2,048,000. !!!!!

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This is sadly unlikely to happen quite as smoothly, but you can see that these sort of figures
make getting all this right a very attractive proposition! There's not many businesses that can get
you these sort of returns with so little capital. The idea is simple, as we have discussed through
the lessons, you will make errors and the road is full of hazards to stop your progress, but if you
are determined to make this a success then the potential really is unlimited.

The FIRST ever trade I made was a 5 per point UP bet on the Wall Street market. I had no idea
what I was doing and made 25 in about 2 minutes. I was so excited that I cashed it in and
looked for some other trade to open. Without any kind of research I opened another trade on
New York Cotton - no idea why, it was just there. I didn't even look at the spread. It immediately
opened down 180 (due to a large spread) and within about 20 seconds I had lost 200. That's
when I decided I needed to study this properly!

Here's where it hurts more, if I had held the first Wall Street position, by the end of the following
year it would have been standing at about 6,000 profit and that alone would have been a gain of
over 1000%. But I didn't hold it. I stopped it. I made mistakes. I still do and so will you, but bit by
bit I learn from these, the mistakes get smaller and the wins get bigger.
That's what you need to make happen in order to succeed.

By the way, the laws of probability don't really apply to trading. You may think that after your 9th
losing trade, the probability of your 10th being a losing one is far smaller, but in reality the
markets don't care about you, they will do what they will do so react TO them don't try to predict.

Having said that, every trade is a prediction, despite Technical traders trying to tell you they are
not trying to predict the future, but basing your prediction on probability of behavioural patterns is
the best you can hope for, whether it is trending, bottoming out or seasonal.

Also, don't get put off if you do have a losing streak, analyse what you may be doing wrong -
wrong stocks, too close stops, poor timing etc. and try to avoid making the same mistakes. Keep
persevering and you only need a few big winners to cover all your losses so let these run as
much as you can, and BE PATIENT!

I will sum up with a broad made up list of possible trades so you can get an idea of what to
expect and how that can be a "normal" trading pattern.

Trade 1 = Loss 50
Trade 2 = Loss 50
Trade 3 = Loss 45 7 Losing Trades with a Loss of 365
Trade 4 = Loss 60
Trade 5 = Profit 220 3 Winning Trades with a profit of 1,150
Trade 6 = Loss 50
Trade 7 = Loss 50 TOTAL PROFIT = 785
Trade 8 = Profit 380
Trade 9 = Profit 550
Trade 10 = Loss 60

This might have been over a few days, weeks or months depending on your chosen markets and
risk strategy but we have kept losses to around 50 per trade so you could say we only risked
500 of our working capital. If you had started with 2,000 you would already have made nearly
40%. Do think though, that your first four trades were losing ones and your emotions could have
affected your decision making at that point.

I've said it before and I will say it again, you need to keep your losses under control and let the
winners run. Only then will you make good profits like this.

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 LESSON 12 - TRADING CHECKLIST
I am going to provide you here with a checklist for opening a trade. You may well add to this as
you find your particular trading method but it is worth checking all these things before you open a
trade.

1. Why are you thinking of opening this trade?

Does it meet your trading criteria? Are you following a trend? Are you picking a value
opportunity? Has your chosen technical indicator given you a signal?

2. Can you allocate enough funds to allow for flexibility of movement for the amount you
want to invest?
How much of your capital is this? How will you feel if the trade loses? Should you
decrease your bet size? What is the spread? How much margin will it need?

3. What are the general markets doing presently?

How is the sector of your proposed trade performing? What is the DOW / S&P500 doing?
Are we in a seasonally strong or weak period?

4. Are there any imminent news items about to be released that might affect the whole
markets or your individual stock?
When is the company earnings release? Is there an important FED announcement due?
Jobs reports? GDP announcements? Etc.

5. Has the stock just had a strong run in your chosen direction?
If a stock has had a few days of solid movement in the direction you are about to
trade in, it is common for profits to start to be taken and price to pull back a bit. You may
well want to wait a day or two for a more attractive price entry.

6. If you are ready to trade, are you going to set up an order or watch and trade live?
Setting up an order is a useful way of getting in at the price you want. If I am going for an
UP bet, I will always place the order a few points BELOW my ideal entry point as I never get
it exactly right so might as well get in a bit lower !

7. Update your trading account/log with the new details so you can see your new total
exposure.
Remember to keep monitoring your positions at least once a day. But don't watch positions
continually as you are more likely to want to alter the position unnecessarily.

8. If you are unsure whether the trade is a good idea, WAIT until things become clearer or
find another trade to look at.
Remember there are hundreds of opportunities every day, if you've just missed one or aren't
sure, look for another

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 SUMMARY
Hopefully you can see now how things work. I have introduced you to many of the styles and
concepts behind trading and investing and hopefully pointed out the areas of danger you may
come across.
I have become more and more fascinated with the concepts of trading these huge markets over
time, and still love being part of the "Global Economy", even if it is such a small part.

I love knowing that Apple have just had a bad time or that a small Biotech company has just
found a new pain relief drug for Cancer patients. It makes me personally feel part of something
bigger and once you realise quite how much money changes hands each day doing this sort of
thing, it is really quite mind boggling. (The Foreign Exchange markets trade around $3.2 trillion a
day!!) The idea of walking down a high street and seeing one of the global companies like
Starbucks, and thinking " Hey, I own a bit of this" or "Thanks to your poor efforts last quarter I
made some money from you" ( a DOWN bet) is something I still find both fascinating and
amusing.

I also hope to have inspired you to take control of your money in ways more beneficial than the
banks and Pension funds are offering you. You may want to "get rich quick" and Spread Betting
is certainly one way you CAN do this but for long term prosperity you will need to take in a lot of
factors and trade sensibly.

It will take a while to REALLY understand all this as seeing it in practice is quite different to the
theories, especially when large amounts of money are at stake. As I suggested at the start, as
silly as it may seem, read this guide AGAIN before you start trading with real money, you may
spot things a second time you didn't really take in before, and repetition is such a useful
educational tool.

Once you are ready to "go live", take it easy to start with. If you only make 10 or 20 in your first
month, that's fine, it's a lot better than losing 100 or 200! If you do lose in your first few trades,
don't let that put you off, if you have managed your account properly, see these as "start up
costs", put them in perspective and keep going. If you find that you are consistently losing, drop
me an email and I will see if I can find out where you might be going wrong.

Try to keep your emotions in check, particularly during trading hours, don't interfere with trades
unless you are absolutely sure. Let them run their course, even if it means a loss. Don't take your
profits too early, you need these to run higher to cover the losing ones!

As I stated in my introduction, I have not given you a definitive System to use as sadly there is no
foolproof answer to this. However, there are some good and reliable systems out there and I am
hoping in the near future to put together all the winning formulas I have come across and maybe
make a second guide to accompany this one with some more in-depth strategies.
Watch this space!

And may I now thank you for taking the time to read this guide. This has been my first attempt at
something like this and I have tried to put as much useful information in without overloading the
beginner with too much. Do let me know how you have found it, as I can then improve the guide
for future users. If you do this, I will add you to a list and provide you with any updated versions
for no charge!

I wish you well in your trading and may it bring you the prosperity, wealth and happiness you are
looking for.

Now read it all again......

CHRIS KIMBER June 2016
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 GLOSSARY - The Jargon Buster
Here is a brief list of terms you may come across in the financial world and a short explanation.

AH - After Hours. Some trading goes on after regular trading has ceased, can cause big moves.

Ask - This is often more common in actual share trading than Spread betting but basically means
the price you can BUY a particular market at. It is the opposite to Bid.

Bear/Bearish - expecting the price to fall

Breakout - when the price of a market moves significantly in a new direction.

Bull / Bullish - expecting the price to rise.

Bull Market - term given to the overall market rising, 2009 to 2015 is considered a Bullish
Market. A market that is constantly falling is known as a Bear Market.

BUY - to enter a trade expecting the price to rise. Opposite to SELL.

Consolidation - when a price of a market remains around one particular area, for example the
price stays between 90 and 100 for several months. This is usually followed by a significant
breakout.

Contract - taking on a position for a fixed term which will expire. For example the Wall Street
September contract expires on the third week of September so your position would close then
regardless of your profit/loss.

Crash - term used when a market takes a sudden downturn. Fairly rare but there are usually
some kind of warnings, especially on the technical indicators.

DFB - Daily funded bet. When spread betting, if you hold this overnight you pay a small
percentage charge. However, these come with much smaller spreads.

Day Trader - A trader who only opens and closes positions during one daily session. They would
not hold onto positions overnight therefore not exposing themselves to out of hours risks.

Downtrend - Price action of a market which consistently shows lower highs and lower lows.

EOD - End of day. used when you make decisions once the markets are closed.

Expiration date - the last date when a particular market can be traded. It is then sold/closed at
the end of the trading day.

FED, The - the US central financial decision making body. Their comments and statements often
cause much volatility and change in market direction

FX - Foreign Exchange markets - e.g. USD/GBP

Fundamentals - all the information which indicates the potential of a stocks performance, eg.
Economic data, business reports and earnings, and news related activities.

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Gap - When a market opens significantly higher or lower than the previous day's closing price.

Good till cancelled (GTC) - This is used when you place an order to open a position and need
to tell the broker how long to hold this order until deleting it. For example, you set to BUY a
market at 1000 and it opens at 1050 and continues up for many months. Your order would never
be filled until it drops back to 1000 by which time you may well have changed your mind!

Hedge - when you set up trades that go against your other trades you might have open. For
example you have a couple of LONG trades in the Retail sector and you may take out a third
SHORT position on a different retailer in case the market turns unfavourable.

Long / Going Long - when you buy a market expecting price to rise.

Limit - the opposite to a STOP where you can set a level at which your winning trade will cash in
automatically.

Market / The Markets - Anything you want to trade can be called a Market and "The Markets" is
often used to refer to all the stocks/shares etc. in one go. For example " I would buy Apple today
but the Markets are falling" meaning that for whatever reason, most shares are declining.

PM - Pre-Market, when stocks are traded out of normal trading hours.

Position - when you buy or sell into a market you are said to have a "position" in that market.

Rally - when stocks rise significantly.

Resistance - The price of a market at which there is not much call for going any higher.

Roll-over - When you wish a longer term contract to continue open to the next dates contract you
can ask your broker to automatically "roll" it over to the new one.

SHORT - the opposite of LONG where you expect the price to fall. Not all markets can be shorted
at all times.

STOP - the price at which you set below your opening point where you trade is closed at a loss.
Used to protect yourself from further losses.

Stop, Guaranteed - Offered on most markets where you can set the exact price you will be
stopped out regardless of out of hours price action. These cost more in spread when you open
them.

Support - the lowest price at which a market sells to before buyers come back in.

Uptrend - when a price of a market is generally rising over a period of time.

If you come across more terms you didnt understand at first, please do let me know so I can add
them to this list!

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Final word..

My main aim for producing this guide is to help people. Yes I am charging for it as it took me a
lot of work to put it all together, but despite my best efforts, there may be some readers who
still find it a bit confusing, or just need a helping hand to get started.

So I am offering, for a limited number of clients, an additional email support service where you
can ask me any questions about trading and I will do my best to answer them. Obviously there
has to be a fair use policy to this as I am not your personal PA but, I would normally expect to
answer your mail on the same day. Please note however, this is not a Stock Picking service
so I would never recommend a particular idea to you, but if you have an idea, I could suggest
reasons why you might or might not want to enter that trade. I would also help with the all
important risk management and any other worries!

If you feel you want extra help then you can either drop me an email at

info@howtotradeonline.website

Or go directly to the website and follow the links to subscribe.

The cost is 49.99 for 6 Months support.

If you would like FREE updates to the guide, and additional material I add as this is
developed, please send me an email using the above address and I will inform you of
any latest changes and give you access to the "members only" section of the website.

www.howtotradeonline.website

Chris Kimber 2016 All rights reserved V1.2

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