Connect with us


Spread betting for novices

Image: Pixabay

Spread betting is a form of trading which allows a person to speculate on a stock, share, and asset movement, without having to commit to using a stockbroker. Spread betting allows a person to profit financially from both rising and falling stocks, but if things don’t go as hoped, money will be lost, so this is something to consider.

If you’re new to the spread betting scene, it’s important first that you know the risks involved. While there is a great chance that a person could go on to make substantial profits, this also means that there are substantial losses to be aware of too; especially if things don’t go as intended in terms of market movement. This should always be something that a trader is aware of.

As a novice, it’s always best to be cautious and starting out small is the perfect way to begin. There are many well-known brokers where anyone can start slow, for example, spread betting on can be done at any level and members can very much go at their own pace within a set budget.

By starting out small, the risk of disaster is limited, which will allow a beginner to learn their craft, as well as being able to recognize and correct mistakes. When you are spread betting for real, the risks become real too, so it makes sense to ensure that you are confident in your own ability before you begin to put more money on the line. It may take a while, but it will save and potentially earn a person money in the long run.

It’s always important to remember that flexibility is key when it comes to spread betting too. If you go in at the same price every time, you’ll quickly end up in a whole world of trouble. Each trade should be treated as an individual move, where the risk and rewards are assessed thoroughly before proceeding. If, for example, the risk is high, a person doesn’t need to lay as much to pick up a good amount of profit. It makes sense to bet low when the risk is high and increase things slightly if the risk is low. This should see a consistent flow of profit, where losses are also limited.

Remember, stop-loss orders are vital in spread betting too. They work by limiting a person’s losses using a broker, where a security is sold if a certain price is hit. Most of the money lost through spread betting happens because of stop losses not being used, so it’s recommended that a person uses them for every trade they make. While everyone makes losses, having some control over them allows a person to fight another day in many respects. They can come back and turn a profit the day after for example, which would make up for the hit that was taken.

There’s no denying that spread betting is proving very popular with traders, especially in the UK where the earnings made are tax free. While there are some fantastic opportunities to turn substantial profits, it is important to consider and be aware of what can go wrong too.

Have any thoughts on this? Let us know down in the comments. 

Editors’ Recommendations:


More in Business