Fixed Odds Trading

Hello and welcome to another of my trading sites which I hope will help you understand the relatively new concept of fixed odds trading. My name is Anna Coulling and as well as being a full time trader in forex, commodities and equities, I also enjoy helping traders, both novice and experienced, understand how to improve their trading, by providing free resource sites such as this, which explain new trading concepts and methods. Fixed odds trading is one of these, and as you will see, it is ideally suited to new traders, as the risk of each trade is known before opening the trading position. I hope you find the site both informative and enjoyable, and as always I enjoy hearing from you so please do drop me a line in the Ask Anna link on the left hand sidebar. In addition to this site, I also run a sister site, which provides regular updates forecasts, market analysis and tips for fixed odds trading, and you can find it here by simply following the link.

So, what is fixed odds trading, and why do I believe it provides an excellent low risk introduction to the world of financial trading and investing? Well, put simply, it removes the greatest risk element from your trades, which is trading on margin ( often referred to as leverage), and which is effect allows you to magnify your profits, and more importantly your losses, using borrowed money. When this is combined with a lack of sufficient trading capital, then this provides a powerful and is a recipe for failure. Most traders fail because they are under funded and over leveraged – it is a simple fact. Entry to the forex market can be very easy – a quick sign up, fund your account with a credit card and you can be trading large lot sizes of most currency pairs in minutes with leveraged accounts of up to 400:1 allowing you to trade 400,000 USD with just 1,000 dollars in your account. Each pip movement in the currency pair would equate to a profit or loss of $40, and it would not be long before you received the dreaded margin call as a result, in effect asking for additional funds to maintain your position in the market.

In addition to the problems associated with trading on margin, many more complex instruments such as futures and options are simply avoided by traders altogether, firstly because they are complex to understand, and secondly because most require you to trade on margin, and as a result many traders never use the more sophisticated techniques associated with these instruments which provide a broad range of hedging and risk management techniques, particularly when markets are trading sideways or in consolidation. For many, the prospect of learning how to trade options and futures is far to complex, and in addition generally requires a specialist broker. So is there a solution to this problem? I believe there is, and the answer is fixed odds trading.

The concept of trading using fixed odds is very simple to understand and is based in trading using real cash, with no leverage. When you open a trade, your risk is always known beforehand, so you can only lose the amount specified in the trade, no more and no less. So if you open a trade with a £10 risk, then this is your maximum exposure on the trade. Equally your profit is also known in advance and fixed, and as you are trading using real cash, then your profits or losses are never leveraged and you only win or lose the amount specified before you opened the trading position. Now before you run away with the idea that seems a rather simple way to trade, let me give you another example of how to use fixed odds trading in a more sophisticated way rather than a simple up or down bet, which is when markets are moving sideways. In this case trying to trade using a simple buy or sell is almost impossible, and the  answer here is to use a no touch bet, which specifies that the price quoted will not be achieved with the life of the contract or bet. This is one of the many ways you can use fixed odds trading either as a free standing strategy or in tandem with other instruments and strategies.

To sum up, I believe that fixed odds trading is an innovative and low risk way to trade in the financial markets, providing all the advantages of more complex instruments and trading strategies, yet underpinned with a fixed risk reward profile and without the inherent dangers of trading on margin. So let’s get started and look at how the fixed odds market works and the strategies that you can use to trade  a variety of instruments and markets.

Click on the links at the top to browse around the site.

C&WW to communicate turnaround plan - well almost
8 Feb 2012 at 8:07am
Will frustrated shareholders let Cable & Wireless Worldwide (C&WW) off the hook for poor communications?

Shire's shot in the arm fails to rouse FTSE
7 Feb 2012 at 7:25pm
While the market retreated to a darkened room as the interminable Greek debt talks dragged on, drug-maker Shire was on perkier form.

Admiral sails into into choppy waters
6 Feb 2012 at 6:34pm
Blue-chip motor insurer Admiral has been navigating choppy waters of late.

Talk of a £1.2bn payout warms up Centrica
3 Feb 2012 at 5:59pm
As an Arctic chill gripped the country, British Gas-owner Centrica warmed up nicely amid suggestions that it could pay a £1.2bn special dividend.

Japanese smoke signals push up Imperial
2 Feb 2012 at 7:39pm
Having ticked up after a trading update earlier this week, Imperial Tobacco rose another 5p to £23.08 as takeover speculation refused to be stubbed out.

BAE and Rolls motor on as FTSE accelerates
1 Feb 2012 at 7:27pm
As the market moved up a gear, aerospace engineers BAE Systems and Rolls-Royce were both in the ascendant.

Warning of post-Christmas hangover for pubs
31 Jan 2012 at 7:06pm
While the market bubbled up, pub companies experienced varying fortunes as City scribblers cautioned that after the Christmas party, a headache could hit the sector.

Tax troubles take their toll on bookmakers
30 Jan 2012 at 6:44pm
Bookies came under the whip as City scribes flagged up the potential for higher taxes on the sector when Chancellor George Osborne unveils his Budget in March.

Hotel investors check out as large-caps slide
27 Jan 2012 at 6:49pm
Traders headed for the exit of InterContinental Hotels (IHG) after UBS turned bearish on the business, whose chains include Holiday Inn and Crowne Plaza.

Oil giants' retreat is mirrored by the market
25 Jan 2012 at 7:40pm
Oil prices might have been fuelled in recent weeks by tensions over Iran but that did not mean City scribes were feeling particularly optimistic about forthcoming results from the oil and gas majors.