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Get the best out of your spread betting demo account

For residents of the UK and Ireland, it is relatively easy to get started with a spread betting demo account. Most Brokers are not required to perform the number of checks and collect as much personal information for a demo account as they do for a live account. Setting up a demo account is generally…

For residents of the UK and Ireland, it is relatively easy to get started with a spread betting demo account. Most Brokers are not required to perform the number of checks and collect as much personal information for a demo account as they do for a live account. Setting up a demo account is generally a speedy process.

A spread betting demo account will let you practice trading with paper money – which means your profits and losses will not be real. It will give you a feel for the platform you choose before you commit real money.

We’ve compiled a comprehensive list of spread betting demo accounts for you to cast your eye over. Follow the links to find our independent review of each broker. Before you make any kind of decision on which spread betting demo account you wish to trial though, take a look at our short guide to choosing a spread betting demo account below.

Choose a spread betting demo account

Spreadbetting Broker  Description
Pepperstone logo

Virtual Funds: $50,000

The new Pepperstone spread betting account enables novice traders to spread bet from 20p per point on a range of Indices, Commodities and Currencies. There’s flexibility to increase stake sizes as you gain in confidence. See our full Pepperstone review
ActivTrades logo

Virtual Funds: £10,000

ActivTrades provide spread betting clients with the option to trade from a minimum of 10p per stake across a range of indices, commodities and forex pairs.

City Index

Virtual Funds: £10,000

City Index offers access to over 8,000 instruments across Forex, Indices, Shares and Commodities markets. City Index is a familiar UK brand having been established in 1983 and will appeal to novice through to experienced traders.

Markets.com review

Virtual Funds: £10,000

Markets.com enable new clients to trade on their platform from 50p per stake across a range of indexes, currencies and commodities.

Ig Group

Virtual Funds: £10,000

IG offer new spread betting clients with the opportunity to build their confidence with reduced minimum bet sizes within the first two weeks of opening an account. You’ll be able to trade a 50% smaller bet size for those two weeks on an industry leading range of Indices, Commodities and Currencies. See our full IG review

How to make best use of a spread betting demo account

For beginners, a spread betting demo account offers you an opportunity to understand how fast the markets move, and will let you explore some of the other facilities spread betting companies offer, like market news and charting.

Bear in mind a demo account may not incorporate all of the markets you would expect from a funded account and the prices quoted may not necessarily be the live prices. However, most of the popular markets are likely to be available, giving you a chance to practice your trading strategies risk free and developing a style of trading that works for you.

It is important to bear in mind that a spread betting demo account will not necessarily prepare you for live trading.

Here’s the crux of it.

There is an added pressure that comes with trading real money that you simply can’t replicate with a demo account.

This is where your trading strategy will be invaluable. You will need to strive to formulate and hone your strategies using your spread betting demo account so that your trades become a simple function.

Removing emotion from your trading before you do it for real with a live account will help you avoid the big losses that come from beginner’s mistakes. Trading with real money is a game changer.

A spread betting demo account will allow you to monitor the underlying performance price of your chosen markets and understand their relationship with other markets and events over time.

A good spread betting demo account will also offer you the opportunity to manage your risk by setting stop orders as you would with a live account.

Spreadbetting platforms for beginners

We’ve taken a look at all of the online platforms available and put together this list of the best spreadbetting platforms for beginners. Each platform offers a limited risk feature that will significantly reduce your exposure to losses while you learn to trade.

Before you go ahead and sign up for a spread betting demo account, we’ll explain how you should go about choosing your spread betting broker

Choosing the right broker can be a bewildering process. There are now more companies offering access to the financial markets than ever before. The barriers to entry are lower, while the big, established firms are seeking ways to innovate, and to provide products and services that others cannot afford to deliver.

In addition, the overall cost of trading is coming down as more firms seek to compete on price. For the new trader, this is a great time to be starting out, as many companies will bend over backwards to win your business.

Competition is hot out there for your business, but not all brokers offer the same suite of products and services. It is fair to say that some are better positioned to deal with the beginner than others.

1. A lesson for beginners

For starters, some of the bigger companies have had the resources to invest in substantial educational programmes, which include colourful trading guides, videos, seminars and access to trading coaches who can answer your questions. These are usually offered free, and The Armchair Trader would encourage you to take advantage of them.

2. The trade off

Many brokers use different trading ‘platforms’ – the system you use to place your trades, follow prices, even do some analysis on. These are getting more sophisticated all the time, so it is important that you familiarise yourself with a spread betting demo account before you commit your funds to a live trading account.

Much is made of these platforms, and indeed they can cost a considerable amount of time and money to build from scratch, so their creators can feel justly proud of them.

But trading platforms are not the be-all and end-all. A poorly designed trading interface, however, can really cripple your ability to trade financial markets online.

Brokers will be able to take you through the process of familiarising yourself properly with the way their trading platform works, and it is essential that you do get to grips with it, or costly mistakes can occur later.

The majority of brokers now offer mobile applications (‘apps’) that allow traders to follow markets and trade on the move.

Obviously, there are limitations on just how much functionality can be delivered to a mobile device. If trading when you are out and about is important to you, you’ll need to choose a broker that offers the mobile technology you need.

3. Your Opening Gambit

Next, look at how much firms are asking as a minimum account opening sum. This still varies quite widely. Some companies are not only set up to cater to novice traders, they are also equipped to service thousands of retail clients, even those only prepared to stake a maximum of a few hundred dollars.

Others will only be interested in the big money traders.

When brokers compete on price – and they are increasingly having to do this – they compete on the size of their spreads.

One of the ways brokers make their money is by quoting a spread which is marginally wider than the spread they can get themselves in the market from their prime brokers.

Fifteen years ago, when there were fewer brokers competing in this space, they could afford to quote nice, fat spreads.

Nowadays, spreads are getting narrower all the time, and according to some sources within the business, some spreads are now so narrow that firms have to be running some of these tight markets at a loss, in order to attract new business.

We are seeing record narrow levels in spreads on some key markets, like the big stock market indexes. These are already highly liquid markets, with plenty of volume in the futures markets, so brokers can already afford to transfer this level of market activity to their customers in the form of tighter spreads.

Not all brokers are convinced that competing on spreads is the way to go, and they quietly maintain the conviction that a shiny new trading platform or a bigger range of markets will still allow them to compete. Time – and the consumer – will tell.

4. Set out your Stall

The range of markets offered can be important to some traders. Much of the volume in trading at any given brokerage will be in a small handful of key, headline markets.

These include the big financial indexes, the most important currency pairs, and the commodities that are most closely followed by the media, economists and global trading desks.

Indeed, 80 per cent or more of the volume of trading in any given month will be accounted for by fewer than a dozen markets.

This means most of the traders, and most of the money, are focusing on the same prices. These are the markets where brokers will be competing most aggressively when it comes to hacking down spreads and margins. Outside these markets, the pricing will not necessarily be as competitive.

5. A Showering of Awards

While it is true that deeper pockets can also provide superior products and services to the trader, this is not always the case.

However, publishers of financial magazines always need to have one eye on their bottom line, and glitzy black tie awards ceremonies, while making everyone feel good about themselves, also contribute heavily to magazines’ profits.

Our advice to the beginning trader: don’t be guided by how many awards a company has won.

Marketing departments love to plaster them all over their advertising, but the proof of the pudding, as always, is in the eating.

6. Compare the Markets

Astute traders will use more than one broker account.

The primary reason for doing so is to allow proper comparison of the prices between them.

If a trader is focusing in particular on a handful of markets, he can develop a good idea of where a price should be, and place trades with the firm that can offer the most competitive prices most consistently.

While this is less of an issue for the beginner, it is worth considering further down the line if you have the spare capital to commit to a second account.

7. Credit where it’s due

Brokers are in the business of lending money.

The very fact that they offer margin trading facilities means they are offering credit.

When opening a live account with an online broker, you are entering into a credit agreement. The company concerned will analyse your financial circumstances, just as a mortgage lender would, to assess whether you can afford to trade in the first place.

The long and short of it

The most important thing we want you to take away from this is to do your homework before you commit to a broker.

Take the opportunity to trial a few spread betting demo accounts and meet with a selection of brokers through their education offerings, in person at their offices if you can, and get a full understanding of the tools you will need in your armoury in order to implement your trading strategy.

Want to read more? You can get a copy of our Beginners Guide to Choosing the right Spread Betting Company which features a more in depth look at the topic. Get your FREE copy here.

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Daily Financial News

Don’t Count On JPY Correction; Staying Long GBP/JPY

The path of the potential pace of the JPY decline may still be underestimated by markets, which continue trading the JPY long.

While the 10% USDJPY advance from September lows looks impressive from a momentum point of view, it may no thave been driven by Japan’s institutional investors reducing their hedging ratios or Japan’s household sector reestablishing carry trades.

Instead, investors seemed to have been caught on the wrong foot, concerned about a sudden decline of risk appetite or the incoming US administration being focused on trade issues and not on spending. Spending requires funding and indeed the President-elect Trump’s team appears to be focused on funding. Here are a few examples: Reducing corporate taxation may pave the way for US corporates repatriating some of their USD2.6trn accumulated foreign profits. Cutting bank regulation could increase the risk-absorbing capacity within bank balance sheets. Hence, funding conditions – including for the sovereign – might generally ease. De-regulating the oil sector would help the trade balance, slowing the anticipated increase in the US current account deficit. The US current account deficit presently runs at 2.6% of GDP, which is below worrisome levels. Should the incoming government push for early trade restrictions, reaction (including Asian sovereigns reducing their holdings) could increase US funding costs, which runs against the interest of the Trump team.

Instead of counting on risk aversion to stop the JPY depreciation, we expect nominal yield differentials and the Fed moderately hiking rates to unleash capital outflows from Japan.The yield differential argumenthas become more compelling with the BoJ turning into yield curve managers. Via this policy move, rising inflation rates push JPY real rates and yields lower, which will weaken the JPY. Exhibit 12 shows how much Japan’s labor market conditions have tightened. A minor surge in corporate profitability may now be sufficient, pushing Japan wages up and implicity real yields lower.

JPY dynamics are diametrical to last year . Last year, the JGB’s “exhausted”yield curve left the BoJ without a tool to push real yields low enough to adequately address the weakened nominal GDP outlook. JPY remained artificially high at a time when the US opted for sharply lower real yields. USDJPY had to decline, triggering JPY bullish secondround effects via JPY-based financial institutions increasing their FX hedge ratios and Japan’s retail sector cutting its carry trade exposures. Now the opposite seems to be happening. The managed JGB curve suggests rising inflation expectations are driving Japan’s real yield lower. The Fed reluctantly hiking rates may keep risk appetite supported but increase USD hedging costs.Financial institutions reducinghedge ratios and Japan’s household sector piling back into the carry trade could provide secondround JPY weakening effects

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Daily Financial News

Mexico raises interest rates, cites Trump as risk

The head of Mexico’s central bank says U.S. Republican candidate Donald Trump represents a “hurricane” sized threat to Mexico.

Banco de Mexico Gov. Agustin Carstens told the Radio Formula network Friday that a Trump presidency “would be a hurricane and a particularly intense one if he fulfills what he has been saying in his campaign.”

Trump has proposed building a wall along the border and re-negotiating the North American Free Trade Agreement.

Mexico’s central bank raised its prime lending rate by half a percent to 4.75 percent Thursday, citing “nervousness surrounding the possible consequences of the U.S. elections, whose implications for Mexico could be particularly significant.”

Mexico’s peso had lost about 6 percent in value against the dollar since mid-August. It recovered slightly after the rate hike

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Financial News

Africa’s first Fairtrade certified gold co-operative offers hope to gold miners living in poverty

Syanyonja Artisan Miners’ Alliance (SAMA) has become the first artisanal small scale mining co-operative in Africa to become Fairtrade certified, bringing much needed hope to impoverished communities who risk their lives to mine the rich gold seam that runs around Lake Victoria.

SAMA is one of nine previously informal groups from Uganda, Kenya and Tanzania which has benefitted from a pilot project launched by Fairtrade in 2013. This innovative program aims to extend the benefits of Fairtrade gold to artisanal miners across East Africa.

In that short time, SAMA has undergone training in business and entrepreneurship, as well as safe use of mercury, internal control systems, labour rights and better working conditions, health and safety and more. Previously, daily contact with toxic chemicals used to process gold meant members risked disease, premature births and even death.  Fairtrade gold was first launched in 2011, and SAMA now joins Fairtrade certified gold mines MACDESA, AURELSA and SOTRAMI in Peru.

The co-operative produces just 5 kg gold per year, but nevertheless has the potential to significantly benefit many people in the local community through better conditions through certification. It is expected that Fairtrade and organizations like Cred Jewellery will support the miners, ensuring their gold can be refined and made available to jewellers in the UK and other markets.

Gonzaga Mungai, Gold Manager at Fairtrade Africa said: “This is a truly momentous and historical achievement and the realisation of a dream that is many years in the making. Gold production is an important source of income for people in rural economies. Congratulations to SAMA, it sets a precedent which shows that if groups like this can achieve certification, then it can work for others right across the African continent.”

The Fairtrade Gold Standard encourages better practice and changes to come in line with international regulation around the production and trade of so-called ‘conflict minerals’. Under the Standard, miners are required to:

  • Uphold a human rights policy preventing war crimes, bribery, money laundering and child labour
  • Clearly represent where the minerals were mined
  • Minimise the risks of conflict minerals through robust risk assessments and collaboration across supply chains
  • Report to buyers and trading partners regarding the risks of conflict minerals

Now in its second phase, the programme will focus on supporting other mining groups in the region to access affordable loans and explore a phased approach to accessing the Fairtrade market, allowing more mining co-operatives across Africa to participate in the programme.

Gonzaga added: “Sourcing African metals from smallscale miners in the Great Lakes Region is the responsible thing to do. For a long time companies have avoided buying gold from this region, with devastating consequences for impoverished communities who were already struggling. It has driven trade deeper underground, as unscrupulous buyers pay lower prices and launder illegal gold into legitimate supply chains. That’s why we have chosen to work with these groups to help them earn more from their gold within a robust compliance system that offers social, environmental, and economic protections.”

The Fairtrade gold programme offers a small but scalable solution to sustainable sourcing of gold from the region in line with Section 1502 of the Dodd-Frank Act in the US, OECD Due Diligence Guidance and recent EU Supply-Chain Due Diligence proposals which could come into effect in 2016. This means that up to 880,000 EU firms that use tin, tungsten, tantalum and gold in manufacturing consumer products could be obliged to provide information on steps they have taken to identify and address risks in their supply chains for so-called ‘conflict minerals’.

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