Financial Spreadbetting Project
Financial spreadbetting is the most risky, volatile and speculative way there is to make profit in the financial world. It’s more like betting in the casino or in a horse race. In fact, the profit You make with spreadbetting is tax-free in the UK. I don’t know whether it is the same in the US.
While trying to make profit with financial gambling is like playing russian roulette, I have decided to try myself in this area and report the outcome. After all, I have a decent knowledge about the market, investing and statistical calculations. And, like in casino and horse races, knowledge is what makes the risk/chance relation to work in player’s favor.
For this purpose I have opened an account at ETrade Spreadbetting with an initial deposit of 150€. That’s the max I can afford to lose on this project for the sake of the science! 
I have also chosen to play real money instead of demo account mainly because of two reasons:
- First, we humans tend to make different choices when it comes down to the “real thing”. It is like playing poker: You would probably play more conservatively with the real cash bets. For this project, I have decided to make it as real as possible and, therefore, play real.
- Second, should I win something, I would hate not being able to withdraw my winnings just because I have chosen to play a goddamn demo.
As I never did spreadbetting before, the first step will be to investigate and learn the basics. Then, I will have to chose which stock/index to play, study it and develop a sound strategy. Lastly, I will play my strategy and pray that it works and doesn’t affect my objective thinking.
Results and updates to follow, stay tuned!
Sometimes personal loans become mandatory for some set ups. An example is car loans which are a form of unsecured loans. This is not exactly a credit crunch news and everyone who has even taken out loans knows this.
Investing vs Speculating
Never invest money in anything that you do not thoroughly know, be it stocks, a “once-in-a-lifetime opportunity” or a new TV.
In order for an investment to be an investment and not plain speculation, you need rock-hard, objective facts. Without facts, you either just gambling (which is a VERY risky way of “investing” your hard-earned money) or your putting a value on something just on the basis of what someone else has said. If that somebody has his own interests in the issue, it makes your decision also very risky.
Just think about buying (investing your money in) a new car: The seller will try to raise the value of the car either by lying or just showing the “good sides” avoiding any problems the car might have. Your job as an investor is to get the truth as truthful as possible.
How do you manage that? Investor’s #1 rule:
Know what you invest in
Get as many facts as possible from as many independent/objective sources as possible.
Never rely on just what somebody said. Verify the information. Objective information is your power and your insurance. Speculators base their decisions on subjective information. For example, they invest in stock just because it has gone up, not because it’s underlying value rose. Or as Graham put it once:
Investors judge “the market price by established standards of value,” while speculators “base [their] standards of value upon the market price.”
Below is a simple graph that shows how manipulable and, therefore, risky speculating is:
Facets of investing
The following is a great exercise that enables you to think like an investor. And its fun, too!
Everything in life is investing: You use a set of resources in order to obtain something, which value is greater than the sum of those resources. Be it “investing” in its classical meaning or anything else created in life.
For example, your work. Is it investing? Of course! You invest one of the most important resources, your time, in order to obtain a return, a paycheck at the end of the month. This investment can be a good one, if you feel that the payment is OK for the time you have invested, or not. It can also be a risky investment, if you work without any contract or commission-based.
Other example, you buy an mp3 player. Is it an investment? Hell yeah! You spend one of your resources, money, to obtain a result: ability to play music for thousands of hours of entertainment. You would not buy this gadget, if the subjective value you put on its usage was below the price you have to pay, right? It can be a good investment, if you are happy with the player, and it can be a risky one: when its quality is not as good as expected or it goes broken very soon.
There are thousands of examples. Can you think of any?
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My brother runs a unique project over at the options-calculator.com It's a freeware software for advanced warrant trading. You might want to check it out if you're serious about this kind of investing.
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