Spread betting is aimed at those who love to make money, so it’s surprising that so many question whether it’s really capable of delivering profits. The answer is a resounding ‘yes’, but achieving this end is no easy feat, for spread betting is as high risk as it is high reward.
This makes spread betting ill-suited to those with an aversion to danger, yet beautifully complementary for those who enjoy an intellectual challenge and an adrenaline rush combined in one heady tonic.
This doesn’t mean that the odds can’t be stacked in your favour, and with the right strategy and tactics, it’s eminently possible to make major gains, which are handily exempt from taxes.
If you’re ready to give it a go, then here are three tips to help you…
#1: Take the Time to Learn the Ropes
One of the most common causes of disillusionment amongst spread betters is trying to do too much too soon. The markets are not determined by mere luck, and it takes time to get to grips with the factors that drive them. The best way to pick up this knowledge is through hands-on experience, but you needn’t throw yourself in at the deep end. Keep your early trades small, bide your time until you earn some small successes, and only then start playing with greater amounts.
#2: Adapt to Circumstances
Another common cause of trading chaos is an inability to grasp the subtle nuances of the markets. A blanket approach to spread betting will never pay off, and every move must be made based on the individual circumstances surrounding it. Above all, this means knowing how much to risk on any given trade, and a simple rule of thumb to follow is this: if the risk is high, bet a small amount; if the risk is low, bet more. Either way, you’ll turn a tidy profit if your instinct proves right. However, if you err, your mistake will still be fully recoverable.
#3: Use Stop Losses
There is a famous quote regarding leveraged products, and it goes like this: ‘More money has been lost by people not using stop losses, than all the other reasons put together.’ It’s simple to understand, and simple to avoid making this mistake yourself – all that you need to do is use stop losses. The logic behind this is clear: you can safeguard your profits, and guarantee that your losses never snowball to a catastrophic degree.
Put these tactics into play today and give trading a go.