Welcome to Conservative Liberty - your guide to the most interesting and exciting investment tools. Conservative Liberty provides unbiased information on various types of Trading - Spread Betting, Forex Trading and CFD Trading - which are increasingly being turned to by investors interested in trying new ways to see good returns.
Spread Betting - The New Way To Financial Gambling
Spread Betting does what it says on the tin - it is a legitimate way to gamble on the financial markets. It may sound like something aimed at casino goers, but in reality it is used by the majority of professional investors and traders as a side activity. It is easy to partake in - and carries risk.
Risk appetite is what makes spread betting interesting, especially to those investors who have a lot of experience in the finance and trading sector. But anyone can partake in this kind of trading - although it would be wise to do some homeworking on the topic before entering the market.
So how does financial spread betting work? Simply, you (the trader) team up with a broking firm, and open an account. They will provide you with a spread on an underlying stock. They key to spread betting is that the trader does not take ownership of the underlying share. He or she simply decides to take a position - that is, a bet - on which direction the market will take on their chosen stock. If the market moves in their favour, they gain. If the market moves against them, they lose. It is as easy as that.
Because financial spread betting is officially classed as gambling, there is neither stamp duty or commission charged. This makes it an attractive option to many who want to keep extra costs down.
Due to the size and volatility of markets, financial spread betting is very high-risk, especially to beginners. While you can make great returns, you also risk losing all the capital you invested - and very quickly at that. Luckily, most spread betting brokers offer 'demo' accounts, which allow the trader to practise before entering the real market. This is highly advisable to gain some experience and to manage the high risk to your capital.
Forex Trading and CFDs - Investment for All
We have had a close look at financial Spread Betting, so what are some other types of trading? Two of the most-used and fast-paced are Forex trading and CFDs. Like spread betting, these are high-risk trading types, but can carry great returns to the savvy investor.
Forex Trading on the Largest Liquid Market
It is no secret that the foreign exchange market is the largest in the world. With daily turnover in the trillions of dollars and a constantly changing climate, it is certainly a very exciting place to invest.
In forex trading, currencies are always traded in pairs, and the most popular currencies traded are the major ones: USD, GBP, Euro, Yen, Canadian and Australian Dollars and the Swiss Franc. Collateral is in a margin, so your broker will make a 'margin call' if the market moves against you, meaning you may need to pay more funds.
Enter the Highly-Paced CFDs Market
CFDs are a very interesting investment choice. They are exciting and easy to get involved in, but can also be nail-biting. Those of a nervous disposition need not apply!
The premise with CFD trading is that they are made on margin. The investor trades shares without actually owning them. The trader speculates (or takes a position) on the direction of a specified stock price. If he is correct, he wins - and if he's incorrect, he loses. Because of the nature of the ever-fluctuating market, the risk to the trader is high. An incorrect position is easy to take, in other words, it is easy to make a gain but equally to lose a lot of capital.
With all the types of trading we've looked at, it is wise to find out as much as you can on the nature of them, and to make sure that the capital you use to invest is money you can afford to lose. The danger of losing all invested capital is very high and some would even say probable.
