YTE’s Ben Power speaks to technical analyst and educator Malcolm Pryor – who talks CFDs, spread betting, trading strategies, and what it takes to make a successful trader.

In recent years, many traders have turned to over-the-counter products such as CFDs, and, in the United Kingdom, spread betting, attracted by leverage and the huge range of markets the products provide (and in the United Kingdom, their tax-free status). However, traders face unique challenges using these products, not least the fact that trades are not conducted on exchanges, which can potentially trigger conflicts of interest.

Malcolm Pryor is a private trader, investor and educator who, with his books, DVDs and seminars, is helping traders work through the complexities of trading over-the-counter products. His best-selling book, ‘The Financial Spread Betting Handbook’, is now in its second edition. Pryor also publishes the websites www.spreadbettingcentral.co.uk and www.sparkdales.co.uk. 

Pryor entered trading through investing and taking control of his retirement funds. He started learning about technical analysis, which led to day trading. In trading, he saw frequent opportunities and a potentially high annual return.
While Pryor’s writing and education focus on spread betting, like most successful traders his success is based on universal principles. He is focussed on finding genuine trading edges through continuous research and learning, which helps him weather difficult markets like the current market. Pryor employs strict risk management, cutting losses and optimising bet sizes for each trade, and he works hard on the psychological issues of trading.

He spoke with YTE’s Ben Power about the opportunities and pitfalls in spread betting, his trading strategies, and what makes a successful trader.

Why did you focus on spread betting?
Leverage, and the ability to trade many instruments – futures, FX indices, stocks and interest rates – all in the same account. Another benefit is that, currently, most UK citizens pay no tax on spread-betting profits.

What are the major differences between spread betting, which is particularly popular in the UK, and CFDs, which are big in such countries as Australia?
For most UK citizens, under current tax laws there is no tax to pay on spread-betting profits, whereas CFD profits are taxable. In many respects they are very similar products; and CFD traders come to my seminars...

Excerpted from an article originally published in the Jan/Feb 2012 issue of YourTradingEdge magazine UK. All rights reserved. © Copyright 2012, Your Media Edge Pty Ltd.
If you are a subscriber to YourTradingEdge magazine UK, you will receive this article in your Jan/Feb 2012 issue of YTE UK. If you are not a subscriber, click here to subscribe to our print edition, or to purchase a digital subscription, click here.