Spread Betting Advice

According to the London Business School over one million British people will have a spread betting account open by 2011. It is an area of the market that is growing rapidly, and – unusually for British gambling – more often than not features bets on subjects that aren’t sport. It is viewed by some as an easy way of playing and making money off the stock market.

Financial spread betting is actually a very easy concept. It is a way of making money from fluctuations in various markets, though it doesn’t have to be in regards to the FTSE 100 as a whole (it can be single companies, commodities, currencies – you name it). If you put a £1 bet on the stock market to rise, and the FTSE accordingly rises by 50 points, you’ve made £50, however, if it drops by 50 points, you lose £50. Accordingly, if you bet on the market to fall, you can make money on a loss.

The most simple advice is never bet more than you can afford to lose. Whilst for some spread betting is a career, for many it is a hobby and one that is an incredibly imprecise art, even the most experienced stock traders cannot always predict what will happen to the FTSE, and there is no reason why you should be any better placed to know than these experts are.

If you are going to start spread betting expect to lose before you start to win. Make sure that you start as small as you can until you actually begin to get some knowledge of the market. If you’re approaching spread betting as a hobby it’s best to make sure that you do actually enjoy it before you start wagering significant sums of money on it.

Another idea is to specialise, make sure that you play a few markets well, rather than playing all across the board. Most markets tend to fluctuate with their own sort of life and rhythm, and all are interconnected in some way – just see how the U.S sub-prime mortgage crisis is linked to the price of gold! If you get to know how one particular market works, you have a better chance of not making enormous rookie errors that could potentially cost you a lot of money.

Spread betting has quite a lure, there is an assumption that it is quite possible to get rich easy from spread betting. This is, of course, a complete myth. It is possible to make large sums of money and to do so quickly – but it is not easy, and unlikely to be quick. There are specialist companies who deal with spread betting, such as City Link, who will make you aware of the risks when you open an account but there is nothing like being prepared yourself, so before you begin make sure you do your homework.

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