FAQs

“This is where I offer help and advice in the form of short tutorials, and downloadable lessons. If you have questions on relevant matters that I haven’t yet covered, email enquiries@johnpiper.info and I’ll do my best to include them.”
John Piper

How to start - the 55 Steps
How to Risk £300 to make over £8,000 (video presentation download)
My thoughts on the current market.
What makes a successful trader?
How do I set up a Binary Betting account with Capital Spreads?
How do I set up a Binary Betting account with IG Index?
How do I set up a Binary Betting account with Beton Markets?
What level of trading should I expect?
How much to trade?
What are stonker trades?
Abbreviations
What do you mean by buying at x (often 10 or 30) or better?
What do you mean by selling at 70 or better?
Does “Lunchime Traders” send out alerts to Close Bets?
Can I use my telephone to open and close bets?
Is Binary Betting the same as spread betting?
How much should I put into my betting account?
What is a tunnel bet?
What is TradeWatch?
Where can I see free charts in real time?
What is a Binary Bet?
What about the pricing of binary bets?
What are the advantages of binary bets?
What does “Closing Early” mean?
Why should I want to Close Early?
Are there drawbacks to Closing Early?
Are we traders or are we placing bets?
“With 5 Points A Day Spreadbetting, You Can rule The World!” (download)
Lessons to be learned from a professional gambler

How to start - the 55 Steps

So how to start? I think an extract from my first book is in order. This may relate to trading, but I think similar processes apply to most of the important things in life. Here it is:

The 55 steps (a personal journey to success)

1 - We are intrigued by the market and start to do some preliminary reading and research.
2 - We buy a book or two and perhaps some newsletters.
3 - We find something we quite like and start doing some research using this particular technique.
4 - We dabble a bit in the market, trading every now and then, mainly losing money, but not much, and having the occasional winner.
5 - We generally forget about the losers and congratulate ourselves on our winners. Convincing ourselves that once we learn the techniques better there will be fewer of the former and more, lots more, of the latter.
6 - We keep manual charts, which may become quite large physically, and maybe plot a few indicators manually (this was before computers became quite so available).
7 - We spot an approach to the market we think cannot fail to win!
8 - We start to trade actively.
9 -The results make it clear that it is not as easy as appeared to be the case. There were a few key points we failed to fully appreciate.
10 - We continue to trade. Results are fairly indifferent (to bad) but there are enough profits to keep the interest up.
11 - We continue to expect great results.
12 - Trading volume increases and the amount of money in the market grows.
13 - We continue to read and take newsletters, but our research has only scratched the surface. We still have no real idea what we are involved with.
14 - Our technique scores a major success (the '87 Crash), but our lack of trading skills means that we do not profit from it as we might.
15 - The market begins to instil a little fear but we have yet to learn the first key lesson.
16 - We keep trading in size. We are overtrading and clearly act as a fugitive from the law of averages. It is only a matter of time.
17 - We make a big profit. It is all going well, we start to get overconfident.
18 - We suffer a big loss. Psychological problems start to develop.
19 - We buy a computer and start to monitor many more indicators.
20 - We look at other techniques and other markets.
21 - We get wiped out.
22 - It becomes clear this is not at all as easy as it looks.
23 - We become impossible to live with.
24 - It also becomes clear that the information available (in 1987/88) is not much use to those seeking to make money from trading.
25 - We determine to fill this void and look to create a newsletter telling it how it is.
26 - We work with an analyst in the USA . Note how inappropriate this is for someone who wants to trade. Much better to work with a trader!
27 - We continue to trade, but in a much reduced manner.
28 - We start our newsletter which is an immediate success.
29 - This requires a lot of research plus a lot of self analysis, but it is still not clear that trading is a psychological issue and that the externals (systems/software/computers/ brokers/advisers, etc.) are almost completely irrelevant until the internal is set up right.
30 - We are plagued with fear and have no clear methodology.
31 - It becomes clear that judgmental trading (without a clear methodology) is a dead end.
32 - We start to look for a suitable methodology.
33 - Those available on the market do not seem to be suitable and so we design our own.
34 - We start to trade using a clear methodology. This is not easy but some things start to become obvious.
35 - We find ourselves trading for no good reason (something that was impossible to detect before we had a clear methodology), but then realize that it is due to an argument earlier. Self esteem clearly plays a role.
36 - We realize that the key element in trading is our own mentality. Now we can start to make some real progress.
37 -We improve our systems and start to make some money on a one contract basis.
38 - But we are still fearful and this remains a big problem. We learnt, some time ago, the necessity of cutting losses, we cannot get to the second secret until we deal with the fear.
39 - We keep trading and we continue to do OK, we start to get more confident and the fear starts to dissipate.
40 - We take another big hit.
41 - We feel awful and think we should perhaps give up, should perhaps have given up some years ago when it all went wrong the first time.
42 - We keep trading and determine not to get overconfident again. We reinforce the stress management systems we had to learn in the early days and keep meditating (essential to trading success). We realize the importance of remaining humble and also of being an "empty vessel." If you are full of yourself there is no room to learn anything else.
43 - We meet another trader who becomes a mentor. He introduces a new (to us) technique (Market Profile) which immediately "fits." This is because we now have the right attitude.
44 - We build on our successes. Systems improve, results improve, and our mental attitude improves, fear becomes less of a problem.
45 - We decide to see a trading coach/psychologist (Adrienne Toghraie) and have an initial meeting in Switzerland .
46 - We make a big profit by letting profits run. We have managed to do what every successful trader must. Can we repeat this trick?
47 - We start to move away from fear, and start to become risk orientated.
48 - We realize that mental attitude is all. We see that it is vital to be relaxed, we reduce position size, again!
49 - We spend a few days in the USA working in a group with our trading coach/psychologist.
50 - We begin to make money with consistency.
51 - We get a little overconfident, again! But this time we realize the fact and the damage is limited. But we learn, again, to remain humble.
52 - We start to trade almost subconsciously some of the time. We are becoming expert.
53 - We know there are still many challenges ahead but we are confident that we will deal with them.
54 - Money ceases to be a problem, we truly live in a world of abundance.
55 - We find that our lives improve across the board and that we are achieving in a wide range of areas.

How to Risk £300 to make over £8,000

This ten minute extract from John Piper's DVD course is called “Shorting the DOW on 11 October - the Day of the 2007 High.” Learn how binary bets work at their best by clicking here to download this fascinating video in Windows Movie format.

My thoughts on the current market.

In 1987 I had been trading for around 2 years and I decided to make the break and go full time. It wasn’t quite that simple, as I had a fairly active tax consultancy business at the time, but I could see that my major client was not going to honour certain commitments and I therefore decided to jettison them - as this was round £60k pa it was a fairly "brave" decision back then - it would still be fairly brave twenty years later! At the time I was also involved in a couple of industrial and residential property developments, which made the decision a little easier. Nevertheless the decision to go full time is no easy one and can lead to disaster. One of the biggest problems is, of course, psychological - as the whole trading experience lies within our own heads this should not be surprising. But once we go full time many find their attitudes change. Some feel they must trade at least X times every day otherwise they will not be "working" - but with trading less is often more - in any case why work when you could simply enjoy the time between trades? Others simply find the psychological pressure of having to support themselves by trading too much to bear and this can change their winning mind-set into the opposite. Clearly the decision to go full time is a very important one, but not one to be taken lightly.

But this decision back in the spring of 1987 meant that my first few months included a very memorable event - the 1987 Crash. It is hardly surprising that this is indelibly imprinted on my mind. Not only did Elliott Wave signal this event with precision (although it did not tell me it was all going to happen at once) but I also took many trades as the crash unravelled - making a complete hash of it in the process!

One of the reasons I mention this is that I well remember the lull before the storm. The very quiet action that came in after we had seen the first five waves down, and which then gave way to the Crash itself. In fact the action we are seeing now reminds me of that time. FTSE has again seen a five-wave decline. It has, again, bounced back and it has, again, entered a very quiet phase.

I still feel that the next shorting opportunity may be of some importance. We never really know what comes next. Maybe this is the lull before the even bigger lull, but the wave patterns are still highly negative.

All the best,
John - 01306 882579
to sign up to my free service send a blank email to jptt@aweber.com

What makes a successful trader?

Becoming a successful trader is a journey but many fall by the wayside. What is it that differentiates the winners from the losers?

Commitment - The journey to success is never easy and if you are not committed then you will simply never make it - I am talking fairly heavy duty commitment here.

Facing reality - Many come to the market expecting easy money. Sometimes it does work that way but more often it does not. You need to face this reality and decide to continue on down the road.

Discipline - This is essential. First you have to control your emotions so you only take trades for the right reasons. Not easy, although fixed odds bets do lend a big hand as every bet has built in limited risk.

Relaxation - Pretty much the opposite of discipline but required when running profits.

Balance - Whilst doing all this you need to ensure you do not get over-confident when you win and fearful when you lose. Many traders find that they have good winning streaks but give it all back when they think they can walk on water.

Your edge - It is the combination of YOU, reflected in the qualities I have mentioned so far, linked to a trading approach that has an edge that results in profits. Make no mistake - you need BOTH. If you haven't got your head straight then you destroy your edge and without an edge you can only lose.

How do I set up a Binary Betting account with Capital Spreads?

Click on the link below to visit the Capital Spread web site:
http://www.capitalspreads.com/common/frontend/public/agentredirect.aspx?url=/public/index.shtml&agentid=434

There is currently a special offer for visitors to this John Piper website who use the Binary Betting facility on Capital Spreads. Make 2 trades, and receive £75! To take advantage of this special offer, here is what to do.

* click on "how to apply" for an account to receive the £75 once you have completed 2 trades.
Please note these conditions:
* Accounts are subject to status.
* Members must be at least eighteen years old.
* Once a new LIVE spread betting account is open, £:250 must be deposited and two bets made before receiving £75 credit to the account. Please note, eligible bets for this offer exclude equity bets.
* The £75 cannot be withdrawn from the account for 3 months.
* This offer is subject to fair use policy and abuse of this offer may result in credit being withheld. Capital Spreads reserves the right to withdraw this promotion at any time.
* Once you have done two eligible trades please email Capital Spreads to claim your cash.

It is important to understand that you can only trade at the prices shown. You must always wait for the right price and if this is not shown then it does not meet the recommendation. If you have any problems with this process Capital Spreads provide a help desk on +44 (0)20 7456 7020 or email admin@capitalspreads.com.

How do I set up a Binary Betting account with IG Index?

Go to http:/www.igindex.co.uk/?QPID=396&QPPID=1

and click on “Apply for an Account” – this is the fourth option in the row of tabs near the top of the screen.
Tick the box stating you are over 18 and then click on “Launch online form” – there are alternatives but this is the easiest and quickest route to open an account.
Complete the form and IG will then confirm your account number and password by email – these are your login details.
If you enter your account details you will then get to the dealing desk.
If you left-click on any bet you will get the option of adding that bet to “My Prices” and of accessing a tick chart of the price data.
If you hit “DEAL”, the box in the left-hand corner of the page becomes active.

It is important to realise that you can only trade at the prices shown. I always wait for the right price and if this is not shown then it does not meet my recommendation. Once you have placed your bet, it will be shown in the lower box on the page. The minimum trade is £2 a point and not £5, as is shown in the IG handbook. Thanks to those of you who pointed this out. Once you have an open bet you can monitor the open profit or loss in the lower window and you will see that this is the final figure on the right.

There are two ways to close the bet. Either hit the “CLOSE” button on the left of the open trades in the lower window. If you hit this, the “trade box” in the top LH corner again becomes active. Once the trade box is open you do not need to enter the amount as that will already be shown. But you will need to hit BUY or SELL to close the bet. If you had originally BOUGHT a bet then you need to hit SELL to close. But if you had originally SOLD a bet you will need to hit BUY to close. Alternatively you can hit “DEAL” and simply do the reverse trade. By entering a lower sum you can close only part of the trade in this way.

How do I set up a Binary Betting account with Beton Markets?

Go to http://neptune1.betonmarkets.com/GB/BOMUK/MX8638
Once you have opened your account you will be given Login details.

What level of trading should I expect?

Usually we will be buying bets at around the 30 level and this is chosen for two key reasons:

A binary price can never go lower than zero. So if we buy at 30 our maximum risk is 30. Furthermore as the price nears 30 it tends to slow down - leaving us ample opportunity to limit any loss.
Conversely above 30 the binary will tend to move quickly and may hit 70 or thereabouts very fast. The maximum price of a binary bet is 100, so the price starts to slow as soon we go above 70.

The combination of these two factors is that losses should come in slowly giving us plenty of time to re-consider whereas profits should be quick.

How much to trade?

This is an important issue and my suggestion is that you risk no more than 2% to 4% of your trading “pot” on any one position. So, as for example, if your pot is £5,000, 2% of your pot is £100 and 4% is £200. If the risk is 30 then at £3 per point your maximum loss is £90. At £7 per point it is £210.

It is, of course, totally up to you how much you risk. Some will prefer a more modest exposure, others will prefer to be loaded to the gills. But please keep risk exposure to a minimum until you fully understand how binary bets work. We do keep a track record of our recommendations and this is based on a “pot” of £5000 with risk exposure of 2% - 4% as stated above. Sometimes we suggest using lower risk parameters in which case this will be reflected in our track record.

What are stonker trades?

I have talked about trading at 30, which are our ‘bread and butter’ trades. That said, when we can trade at 10 or less we really stand to rake it in. If we buy at 10 our profit can be 90! Let’s compare the two. Assume we are risking £200 per bet:

At 30 we buy at £7 per point and our total risk is £210 (30 x £7 = £210. But we can make 70 points – that is maximum profit of £490 (70 points at £7 per point is £490). Of course I am always happy making £490 – but just look at how it works out with a stonker trade.
If we bet at 10 and we can trade at £20 per point – 10 at £20 per point is £200. The maximum profit is 90 points and at £20 per point that is £1800!

I usually trade a little smaller with these trades as the odds are high but that’s also up to you.

An important word about selling. As a binary price can only move between zero and 100 it makes no difference (in a risk sense) if we buy at 30 or sell at 70.

If we BUY at 30 then we want the bet to INCREASE in price. So if it does go up we could make 70 (100 less 30). If it goes down we could lose 30 (30 less zero).
If we SELL at 70, and I am talking about selling to open the bet, then we want the bet to REDUCE in price. If it goes down we could make 70 (70 less zero). If it goes up we could lose 30 (100 less 70).

With a stonker we will often be selling at 90 or better, thus risking 10 points or less to make a possible 90 or more.

Abbreviations

BB – Binary Bet
Type A bet – look to exit at 70 or more on a “BUY” bet, and if a “SELL” bet look to exit at 30 or less.
Type B bet – look to hold to expiry, although you may want to take any price around 90, if selling look to exit around 10 or less.

What do you mean by buying at x (often 10 or 30) or better?

A bet is only good if we get in at the right price. If we buy at 30 then we are risking 30 points (at however many £'s per point we are using) with the potential of making 70 points. That is a ratio of around 2.33:1. But if we buy at 50 we can only make 50, the ratio is 1:1 - not nearly as good. If we buy at 10 (or sell at 90) the ratio is 9:1 and at 5 it is 19:1

"Or better" means we get a better risk reward ratio and when buying this means a lower price. Having said that I would recommend some flexibility in applying both time and price limits.

What do you mean by selling at 70 or better?

When we sell, we want to maximise our risk reward ratio. But when we sell we want a higher price. Think of it like selling your house. You are offered 70 at £10,000 per point, ie £700,000. You are then offered 43 points. Is this better? Cleary not!

Does "Lunchime Traders" send out alerts to Close Bets?

On both type A and type B bets they try to choose ones that will go all the way. By this I mean if we sell I want to see the bet go to zero for a 100% profit (and we have had a few of those) and if we buy I want to see it go to 100. It is really a personal choice whether you wish to monitor your bets into the close or not. Because these prices can move so quickly it is, unfortunately, not always practical to give "close" signals. Our plan is to issue opening recommendations in advance so you have time to enter the trades but if price starts to move the right way it will tend to go to 100 (or zero if we have sold) or bounce very quickly. So if it goes to 100 (or zero) you will have made the maximum profit but if it bounces quickly there would be no way we could advise you in time.

In short, Lunchtime Trading involves acting on my recommendations, then seeing if the bet collects. I aim to make you a profit every time I make a recommendation (as has happened with the last two bets I've made).You just get the bet on and collect. But if the market moves against us then we may have to take the resulting loss on the chin. Having said that we will monitor the trades (as we will be in them!) and if it seems sensible to take profits (or cut losses) we will send out an SMS (+ email) to that effect. The SMS may be very brief and to the point, ie “take profits” or “cut losses”

Can I use my telephone to open and close bets?

You can if you have a PDA mobile with an internet link but IG does not accept orders by telephone. If you click on "mobile" on the IG "welcome" pages in the top RH corner and then click on "supported devices" on the left of the next page it will tell you which PDAs and networks are supported. If you have any trouble with this you will find the IG helpdesk on 0800 195 3100 very helpful - at least I did!

Is Binary Betting the same as spread betting?

No, binary betting is very different and has, I believe, significant advantages over spread betting. In particular your risk is always tightly controlled whereas a spread bet can run away with you.

How much should I put into my betting account?

it really is up to you of course, but I would suggest you open with approximately £500.00 and certainly no less than £250.00.

What is a tunnel bet?

A tunnel bet is a bet on the range. A +50/-50 tunnel on FTSE is a bet on whether FTSE will stay in the range 50 points either side of the prior close. If the prior close was at 6000 the range would be 5950 – 6050 – ie 6000 +50 and -50. The bet definition is "FTSE to keep in the range..." and if that is true the bet goes to 100. If it is false and FTSE penetrates the range, the bet goes to zero.

Always read the bet definition carefully as that will always determine what needs to happen for the bet to close at either zero or 100. I normally sell tunnels at 70 or more and hope to see a penetration outside the range

What is TradeWatch?

The TradeWatch section is designed to help you become good at binary betting. It covers bets I expect to win or give profit potential but which do not meet my risk parameters and/or may not go "all the way". For example in a recent report I mentioned that I had already bought the "FTSE to finish up" bet at 18.3 in anticipation of the rally I was expecting. I expected some sort of bounce to give some profit or the chance to get out with a very limited loss.

Those who are comfortable with binaries may want to have a look at bets like this but it is NOT for beginners. The bet would need careful monitoring, which a lot of you do not want to do, and may require quick action to take the profit or cut the loss – which again a lot of you do not want to do.

Where can I see free charts in real time?

I would suggest using the charts on IG Index. To view charts of FTSE on IG's site, left-click on "FTSE 100 Daily" (or the bet you are interested in) and then click on "tick charts" - you can then adjust the period by using the drop-down menu where is says "tick by tick" and "settings" allows further adjustment to the chart. You can pretty much access any market you want in this way. In fact I use this myself from time to time. I should add that these prices are IG's own composition but are so close it makes little difference - and they are "real time".

What is a Binary Bet?

A binary bet is a form of fixed-odds betting, but expressed in a different format. The key features of this format are that –

If the bet is a winner it is priced at 100, and
If it is a loser it is priced at zero.

The word binary means “involving two” and it is because the final price is either 100 or zero (ie two distinct prices) that this form of betting is known as binary betting.
Let’s look at an example:
A fractional bet of 3 to 1 is the same as a binary bet priced at 20/25. Here is how both bets work…
If we bet £100 at 3 to 1 then our maximum risk is £100 and that is all we can lose. If we win we receive £300 (3 x £100) and we get back our stake. Our profit is £300.

To bet the same on the binary, we would buy at 25 (the quoted price is 20/25, and when buying one always pay the higher price).
We have a choice of how much we can bet per point. In this case, we will bet £4 per point.

Consider the two possible outcomes:

If we lose, the binary price goes to zero, and we lose £100 (25 x £4).
If we win, the binary price goes to 100, and we receive £300 (75 x £4). The 75 being the closing price at 100 less our purchase price at 25.

So the profit and loss is the same for the fractional bet (“3 to 1”) and the binary bet (20/25): the upside is to win £300, and the downside is to lose £100.

What about the pricing of binary bets?

A binary bet is a bet on the outcome of a certain event.

If the event takes place the bet becomes worth 100.
If the event does not take place the bet becomes worth zero.
There is a pre-defined expiry time/date which is often the end of the relevant event.
Up to expiry the price will vary between zero and 100 depending on the likely probability of the event taking place.

What are the advantages of binary bets?

A binary bet is a way of placing a bet which gives you three key advantages:
1. Your risk is always limited,
2. Your reward can be very high, and
3. You can profit at any point after you place the bet.

What does “Closing Early” mean?

With Binary Betting ou can close a bet when you want and this point needs to be fully understood as it adds another dimension to how you can bet. With most “betting” you would place your bet and then your only option is to sit and wait for the event to occur. This means:

Waiting until the race or the match is over to see whether you had won or lost
Waiting for the market to close if you have made a financial bet.

With binary bets you have this choice:

You sit and wait for the event to occur and the bet will then close at either 100 or zero.
You take your profit whenever you want. This is also known as closing and I should add that you will not always be closing at a profit.

Why should I want to Close Early?

Here are several reasons:

You have a good profit in hand and you want to take it
You have a good profit but the price is now moving against you and you want to take the profit while you still can
You are down and you don’t want to lose your full stake.
You placed the bet for certain reasons and something has now changed so you want out
You just feel like it
You have a hunch
By taking your profit now you end up with an overall profit on the day and you find this gives you a boost for betting tomorrow
You were attracted by the low risk/high profit opportunity when you bought the bet (below 20) but now it is well up (above 70) you don’t want to risk all that for a limited reward

Are there drawbacks to Closing Early?

Although being able to close your bet early is clearly a huge advantage, it does have one significant drawback. The drawback is simply that you have to decide whether to do this, whether to get out early. This can be a very difficult decision. In trading binary bets my biggest problem is how much profit to take. I have no real problem cutting my losses, or taking my losses on the nose, and it does help enormously that my losses are always small. But there is a significant difference between taking 20 points of profit out of the market or 60 points and that comes down to how you manage the trade once you have placed your bet. I think the best advice I can give you is that once the bet is going your way –stick with it! It may feel like a bucking bronco but if a bet goes all the way, and they often do, your profits may increase exponentially. So ride ‘em cowboy!

Are we traders or are we placing bets?

Binary bets are a bridge between the betting world and the financial world, which is why it is necessary to sometimes talk about betting and some times talk about trading. If there is a difference between these two terms perhaps it is because usually a bet cannot be closed before the event is over, whereas a trade can be. But when it comes to binary bets, they are called bets but you can close them before the event is over. When you place your bet (and this is also known as opening your position) you can call it either trading or betting and if you run the “bet” to expiry then it again makes little difference. But if you close before expiry then I would say you are trading. In fact there is a case for saying these bets should be known as binary “trades.”

“With 5 Points A Day Spreadbetting, You Can Rule The World!”

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Lessons to be learned from a professional gambler

You could do a lot worse than learn from Bob Rothman, the UK's top horseracing punter.
Visit www.horseracingpro.co.uk to unlock some of his secrets.