Ground Rules - Part 3 - Platform

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So we have the genera and report rules satified. Now I will explain about the system I am using. I think this is necessary because when we move into dealing in the real world we are going to need to use some system in order to trade. There are any number of ways of doing this including brokers, both online and offline, CFDs (contracts for difference), spreadbetting and more. For my experiment I am going to be using a spreadbetting platform.

There are reasons behind this choice:

• Spreadbetting is outside the market. When you place a bet on a spreadbetting platform itdoes not impact on the price. Therefore all my results will be clean.
• Leverage. You are able to set up an account with a spreadbetting firm with very little capital. Therefore many more people are able start using the thories immediately.
• Tightening Bid/Ask Spreads. The spreadbetting market is getting more and more competitve as more competitors enter the market. Therefore we can take advantage of tighterspreads for more gain.
• No admin charges. One issue with using brokers is that there are charges attached to everytrade. This means you wither have to have a large amount of money invested, or it is not worth investing it. Therefore, with no admin charges, it means we cdo not have to earn as much before it breaks even and then into a profit.
• No commission. Using brokers generally means there is a commission on all sales. Therefore, without this, once we have completed our sale we do not ahve to give any away and keep more for ourselves.
• No Tax. Since the tax is incorporated into the initial bet there is no tax to pay on any profits. Therefore yet again once we have made out money we don't have to give any of it away.

Be warned though, there are disadvantages to spreadbetting:

• It is a leveraged product. This means that though you can gain way more than you bet, you can also lose more than your initial deposit, and even your funds if you do not have the correct safety measures in place.
• There are time limits in place. There are generally time limits in place for spreadbetting, these include: Daily, Near Quarter (the one we are in), Far Quarter (the next one), Very Far Quarter (the one after that). The issue with this is that as we change the timeframe the bid/ask spread widens.
• Calculations. I don't expect everyone to be able to use Excel to such an extent that they can work everything out in an instant. I myself have difficulty sometimes. Since it is a leveraged product the calculations we will have to do will be based on deposit vs funds. I will do my best to provide you with everything you need for this.

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