Hi 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 currency and commodities trader, I 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. Please do drop me a line using the ‘Ask Anna’ in the left hand sidebar as I enjoy providing free help and guidance, so if you have a question, please just ask me! This site also has a ’sister’ at fixed odds trades, which I update regularly with suggested trades using fixed odds so please just follow 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 in 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 cocktail and is 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 few hundred dollars, and you can be trading large lot sizes of most major currency pairs in minutes. With leveraged accounts of up to 1:400, you would be able to trade $400,000 dollars in the foreign exchange market, with just $1000 dollars in your account, and with each pip movement moving your account into profit or loss by $40, a small movement in the market against your position would instantly have your broker issuing a margin call - in effect a call for more funds to sustain your open positions. If this were repeated several times you would end up losing considerably more than you started with!
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 too complex to understand, and secondly because most require you to trade on margin, and as 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 a straddle strategy is far too complex, and in addition will also require a specialist broker. So, is there an answer to all these issues and problems? 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 no less. So if you open a trade with a £10 risk, then this is the maximum you can lose, no matter what happens. Equally your profit is also known beforehand, and as you are trading using real cash, then your profits or losses are never leveraged, and you only win or lose the amount you specify when opening your trading position. Now before you run away with the idea that this seems a rather simple way to trade, let me give you another example of how to use fixed odds in a more sophisticated way when markets are moving sideways. In this case, trying to trade using a simple buy or sell trade, is almost impossible as stop losses are taken out in the the daily whipsaw of prices. Options would be a typical approach to use, but with fixed odds we have a great trading strategy which is the no touch trade, which essentially allows us to open a postion which will win, if the price specified is not met within the timescale. This is one of the many ways you can use fixed odds, either as a free standing strategy, or in tandem with your other trades.
To sum up, I believe fixed odds trading is an innovative and low risk way to trade, providing all the advantages of more complex trading strategies, with a known risk and rewards profile before you open your position, and with no leveraged risk of any margin calls. All in all, an excellent way to learn with real money, and with limited and clearly defined risk on each trade before you enter the market. With a range of complex trades available, fixed odds offer a unique and elegant way to trade using real cash with low risk.
In the navigation bar at the top, you will find several other pages of information on the types of trades available and how to use them, details of a fixed odds broker, and an array of live charts and data to help you in your fixed odds trading. I hope you find the site useful and informative and as always good luck with your trading and investing - regards Anna
