Anatomy of a Trading Screen

Posted By Robert On Wednesday, December 11th, 2013 With 0 Comments

When you log into your spread betting account, you will be presented with a trading screen not dissimilar to the Capital Spreads trading screen that I have reproduced below. If your spread betting provider utilises the London Capital Group trading platform then it will look very similar (at the time of writing) to this one. If you’re using a different trading platform, much of the essential anatomy will be the same.

Trading Screen

The labelled areas of the trading screen are:

  1. Markets: Using the search box (to the right) and the various tabs for Indices, Forex etc. you can populate the markets pane with a choice of financial instruments that you might wish to trade.
  2. Trading Tickets: Clicking the TRADE button for any market launches a trading ticket that allows you to place a “buy” or “sell” bet.
  3. Positions and History: When you have placed some trades, your open positions will be listed with an indication of the running profit or loss as shown. Clicking the CLOSE button allows you to close any open position. You can use the other tabs in this area to see your Trade History, your future Order Book (don’t worry about this for now) and your balance-affecting All Account Transactions.
  4. Account Summary: A summary of your account, and in particular how much trading firepower you have left in the form of your Trading Resources is shown at the bottom of the screen.
  5. Extra Functions: Additional functions, for example to deposit or withdraw cash using the Payments button, are presented at the top of the screen.

My intention here has been to give you an idea of how a typical spread betting trading screen is laid out with areas for researching markets, placing trades via trading tickets, and seeing your open positions and overall account standing. The exact layout will likely change over time from what I have shown here, and other trading platforms will differ slightly, but I expect the example trading screen layout to remain roughly right for some time.

A Note about Trading Resources

The displayed Trading Resources figure – which may go under different names such as Available to Deal or Trade Funds Available –  represents the amount of free cash you have available for committing to new bets.

On some spread betting platforms, notably Capital Spreads, this figure won’t change except in response to balance-affecting transactions like financing charges, dividend receipts, or profits from newly-closed positions. So you need not worry too much about maintaining a minimum balance that at least covers your anticipated rolling charges.

On some spread betting platforms, for example IG Index and ETX Capital, your available funds may rise or fall as a function of how the prices of your open positions are rising and falling. This can be both bad (because you might stray into a negative trading funds balance) and good (because better performance leads to more available funds). On these platforms you need to keep a closer eye on your trading funds balance so that it stays above zero.

A First Spread Bet

Once you’ve opened a spread betting account with one (or more) of the spread betting companies, it’s time to place a first spread bet. In the example that follows, I’ll give a rationale for the bet and then we’ll place the bet via a trading ticket.

Rationale for the Bet

On the morning of 7 May 2012, the day after socialist Francois Hollande was declared the new president of France, the price of French bank Credit Agricole’s shares “gapped-down” but then appeared to have bottomed-out and begun a new upward trajectory as shown here:

Credit Agicole

At this point you may have seen an opportunity to make a quick day trade profit of 20 points (times the number of £££s-per-point that you would bet) if the price gap “closed” from a possible entry price of 3.45 to the previous trading day’s closing value of  3.65. Alternatively, you may have noticed on the longer-term price chart (see below) the fact that the price was now at or around a resistance level that possibly marked the bottom of a trading range and from which you might be able to benefit from a swing trade.

Swing Trade

Don’t worry if some of the terminology is a little unfamiliar at this point, as it will be defined more formally later. Also don’t worry about whether or not this first spread bet worked out, or if your own real-life first spread bet works out. The important thing is that we have some kind of plausible rationale for placing a bet that demonstrates the process.

Placing the Bet via the Trading Ticket

After searching or browsing for the Credit Agricole Rolling Daily market in the list of available markets on your chosen spread betting platform, you would typically press the TRADE or BUY button so as to launch the trading ticket and place the bet. Note that on some platforms the open-ended daily rolling bets that I prefer may be indicated as Daily Funded Bets (DFB) or Daily Funded Trades (DFT), but the important thing is that at this stage we are not choosing a future-dated market like (for example) Credit Agricole June 2012.

Here is an example trading ticket inspired by the ones provided by Capital Spreads. It shows that I can “go long” by buying Credit Agricole at a price of 3.45 or “go short” by selling at a price of 3.41. I will go long for £1-per-point at 3.45 by pressing the BUY button, but not before entering the STOP and LIMIT values shown.

Trading Ticket courtesy of Capital Spreads (prices are for demonstration only)

Trading Ticket

In this example you can see that I have tried for the longer-term “swing trade” by adding a contingent LIMIT that will close the bet automatically for a profit of 200 points when (or if) the price reaches 5.45. It would be a 200 point profit and not a 2 point profit in this case because on this particular market the decimals are counted as individual points or pips, so it’s like betting on an equity priced at 345 rather than 3.45.

You can also see that on this trading ticket I have added a contingent STOP (or stop order) that will close the bet automatically and therefore cap my potential loss at just 10 points (or £10 on a £1-per-point bet) if the bet goes against me and the price falls from my entry price of 3.45 to a price of 3.35. On this first example trade I have risked £10 for a possible pay-off of some £200, which is an excellent risk-reward ratio.

On all spread bets it is vitally important to limit your potential loss using a stop order. On your first spread bet it is vitality important to further reduce your risk by betting at just £1-per-point or whatever minimum stake size is mandated by the spread betting platform.

Reviewing Your Open Bets

Once you have placed your first spread bet you will see it listed in your Open Positions list something like this:

Open Position

Any new bet that you place will show a loss initially, as a result of the difference between the buying and selling prices: the bid-ask spread. For this reason it’s not usually a good idea to close a bet that you only just opened unless you are doing so to correct a mistake.

The First Winning “Day Trade”

The example bet just described was a real bet that was placed using real money, albeit as a demonstrative example.

The good news is that at close-of-play on the day that the bet was opened it was showing a profit of £10, which is the profit that the day trader would have banked when the bet was necessarily closed at the end of the trading day. The even better news (for the day trader) is that the banked “day trade” profit disappeared in the course of the subsequent couple of days; so in this case it was “one-nil” to the day trader.

While a £10 profit on a first bet of minimal risk is not a bad result, and is certainly not a loss, we need to do better than winning £10 whenever we risk £10.

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