The 2008 financial crisis hit many of the financial markets hard, with many entering free-fall as a result. Making money off falling markets has actually become a great source of profit for many, with some individuals posting notable weekly profits in the hundreds of thousands. Spread betting is considered the leading way to go about this. It is officially classed as gambling and was once the realm of high-flying city hot shots. However, times have changed and now there isn’t any reason as to why any all traders shouldn’t be getting involved with spread betting on some level.
What is spread betting?
Spread betting isn’t an easy realm to get to grips with, even though many brokers will try and convince you differently. It is gambling at the end of the day and even though practice is key, understanding spread betting as a platform is more important. The bookie (in the form of a broker) will use a spread rather than a traditional fixed odds set-up. Spread betting success depends on how “correct” you predictions are in terms of the direction of the market or set stock. But, as with any other form of gambling, the more mistakes you make, the more losses you will experience.
Keeping loses to a minimum
Success is determined by profits made, meaning that you need to make halting losses crucial to your spread betting plans. You can do this by introducing stop losses on the bets you make. Meaning that, to an extent, you can limit how much you lose on a bet, related to the movement of the stock. However, risk management tools (such as stop losses) aren’t free, and your broker will charge you for using them.
It doesn’t cost an arm and a leg to get involved in spread betting, as the minimum transaction cost can be as low as £2 or £3 per point. Certain brokers will even allow you to get involved on a lesser level for a limited time, should you be cautious about making bets. So if you want to dip your toe in the water by betting pennies instead of pounds, then odds are you will be able to do so.
The main reason people spread bet is to make a profit without the worry of tax. As spread betting is gambling, any money you make is tax-free. It means that even though a stock portfolio may be the main avenue for revenue, it pays to least dabble in spread betting on the side.
The popularity of spread betting shows little to no signs of showing down and it may be time for you to get involved. Even though it is gambling, should you understand the marketplace, it can be a realm that has serious profit potential. There are many steps in front of you when it comes to finding success, but taking on board what has been mentioned in this guide will definitely allow you to put your best foot forward.