Putting your money to good use – Spread Betting

Putting your money into a bank account doesn’t quite add to the value of your investment. There are many of us who have some spare money and would like to use it to maximize the returns. Spread betting is one of such ways in which you can justify your investment. The only thing is that it takes some time and a great deal of experience to do really good in the financial trading market. However, there are many who make a living with spread betting. How does it happen?

One of the first challenges with spread betting is being seduced by the penny shares that always promise huge rises. The next alternative is to get attracted to ‘day trading’ systems. There are people who regularly get lucky with these systems but for most, the money never shows up and you would still be waiting after a year.

Things to look out for:

Successful spread bettors mostly go by the trend using highly liquid and large capped stocks which are probably traded thousands times every day in the banks. It’s the rule of buying higher and selling higher, but is only possible when you know the trend. It is not a very wise idea to go for a share just because it is low priced today – in many cases the prices will fall even lower. The theory is same for rising prices – it can always go higher. While penny shares will always maintain their place in the market, they are an exception and not quite a rule. The idea is as long as you can cut short your losses while letting your profits run and earn!

When entering the spread betting market, it is also advisable to apply strict stop loss, between 7% and 9% as soon as you enter. Consequently, you can depend on your trading broker to have it executed automatically without having to change your mind. Just turn off your monitor or looking at the prices – that’s one of the peace of mind you need to achieve. You can certainly be wrong with this, but 70% of times, you would be getting a healthy return from your investment. It is also necessary to point here that you should be working with a very experienced broker like ETX Capital to really have the courage to step back and see the game.

What kind of capital is needed to do well in the market?

The amount of money you should start your trading with really depends on how active a trading frame you are using, the risk percentage in the market, the length of your trade and similar things.

It is always better to do a backward calculation, especially if you are targeting a specific amount of return. So the amount of points you will need to make in the financial year will help you measure the volume of the stakes you should be putting up and this also includes the amount of money needed to survive losses (which again are a part and parcel of the process).

Even with spread betting there is no such thing as easy money. The profits you get to earn are dependent on the factor of work, the actual labor and the risks in place. For people starting out, it is advisable to bet small and get to know the market. Betting too big at the start might easily blow you out of the market. Spread betting is a leveraged process but even so, it is advisable to avoid betting too big. Work with someone experienced until you are comfortable with the ‘trends’. There’s huge opportunity here but as with any kind of success, it takes time, patience, understanding and hard work.