spread betting

Over the course of this decade, the concept of spread betting has caught on among financial traders around the world. That said, this potentially lucrative method of financial trading is often shrouded in enigma. In turn, this has given rise to a number of misconceptions which may have held back some from venturing into the sector. This guide is meant to help dispel some of the most common of these myths.

1. Spread betting is too complicated, only specialists can understand it

To a rank outsider, spread betting may sound very complicated. This is not helped by the jargon bandied about in tabloids and on some online forums. However, with some little patience and practice, you will come to find out that spread betting is actually a very straightforward way to add to your income. A financial spread bet through a reputable company such as cmc markets is a highly geared bet on the price of a product either going up or coming down within a specified time.

The product can be anything really. The money earning potential of the bet lies in the leverage. Because you do not have to pay the full value of the position you take with a spread bet (only a small margin or deposit is required), it is possible to leverage up to 20 times of your initial capital outlay.

2. Spread betting is Riskier than Traditional Trading

In a manner of speaking, this statement has an element of truth but it is also not universally correct. As spread trading is a leveraged product, your initial stake can be much smaller than your potential profit or loss. In other words, if the market moves in your direction, you are likely to make a lot and you can equally lose a lot if the predicted movement does not happen.

However, the mathematical risk associated with a spread bet on a share price is exactly the same as the risk associated with actually trading in the particular share.

3. Spread betting is the Same as Futures & Options

Definitely not! While there are similarities between financial spread betting and Futures & Options, they are radically different in many senses. For one, if you want to trade with Futures & Options, you need a great amount of money. With financial spread betting this is not the case at all. Which leads us to the next misconception in the list.

4. You need to A Lot of Money to Begin Financial Spread Betting

It may be true that in the early days of spread betting it was necessary to have a huge capital outlay before beginning, but that is no longer the case. Many of the leading bookmakers specializing in spread betting services only require you to have as little as £100 or $100 to open an account. Of course it will not be easy to make a fortune if you only invest a little amount but it is possible, even advisable, to begin spread betting cautiously.

5. The only Way to Learn Spread betting is by Trading with Actual Money

You need not risk losing your money if you are not familiar with the basics of spread betting. Leading providers of spread betting services such as CFD Markets allow users to create virtual or demo accounts and begin trading right away without risking any money at all.

6. Spread Betting isn’t just gambling

To be honest, spread betting is classified as gambling in the UK. However, the mechanics of spread betting put you much more in control of your destiny than ordinary gambling. Unlike gambling where the odds are set to be in favor of the house in the long run, odds play a much less important role in spread betting.

It is the actual behavior of the market which determines whether or not and by how much you are successful.

7. Spread betting Only Works with Shares and Options

As expressed at the beginning of this guide, spread betting allows you to make predictions on the price of a variety of financial products. These could be shares and options or a stock index, currency pair or tradable commodities.

8. Spread Betting is Limited to Local Markets

Providers of spread betting services strive to ensure as much variety as possible in the options they offer. You can therefore trade with global share markets as well as indices, a variety of currency pairs and the commodities of your choice. You do not have to restrict yourself to the local markets.

9. Spread Betting is not Suited for Day Trading

While long term options on spread betting are less riskier, it is still possible to make a good return with day trading options. With day trading you will hold a position after particular markets open and exit before the markets close. To make the most of day trading, ensure you keep your eyes peeled for price movements throughout the day.

10. There are a countable few people doing spread betting

Nothing could be further from the truth. In the United Kingdom alone, there are well over 50,000 who have active financial spread betting accounts with one of the leading financial spread betting bookmakers. Month by month we are witnessing more and more companies joining the fray to meet the demand for those looking for spread betting services.

Indeed, the financial spread betting market is booming. Perhaps the industry players are not spreading the word about the validity of what they practice. But again, that is why we have compiled this guide: to dispel the myths which are keeping people like you from joining the gravy train of spread betting.

11. The Spread betting Provider Wants you to Lose

Think about it, if you are a spread betting provider, what good would be a client who consistently loses? It would lead to dissatisfaction, bad press and mass exodus from the service. The provider is actually rooting for you to win consistently so you can become a regular customer.

12. You May end up Losing all your Spread betting profits through Taxes

If the fear that you will lose a big chunk of your spread betting earnings through taxes has been holding you back from starting, you have been duped. Spread betting is one of the most tax efficient forms of financial trading available, better than even Futures & Options. In the UK for instance, profits made from spread betting are exempt from both capital gains tax (CGT) and stamp duty.

13. You Have Little Options for Mitigating Losses in Spread betting
As intimated previously, there are many differences between ordinary gambling and spread betting. Spread betting offers you a number of options to hedge against losses. For instance, you can use well-placed spread bet to diversify your portfolio as well as hedge against other positions and therefore decrease your exposure and risk.

14. Providers Cheat Clients by Offering Inaccurate Market Data

This common misconception perhaps stems from those traders who are frustrated by losing more than they win. However, such a trend is likely as a result of the complexities of the market rather than any underhand dealing by the spread gambling service provider.

Exchange Profitability

There are lots of forex training programs and forex system sellers out there who are trying to sell you the hidden formula of how to trade forex successfully. However, the truth stands, there is no shortcut systems that will help transform you from a newbie trader to an advanced trader overnight. Many individuals fail not because they do not have a basic understanding of the functions of the market, but because they do not have any profitable trading systems to utilize.

Several traders who still have to learn how to trade forex have these basics, but they struggle to convert consistent profit in the long haul. At the end of this post, you will know why many traders fail to trade successfully even after years of being in the market.

Why Many Traders Fail To Trade Forex
To a lot of people, success simply means that they can later be financially stable, relax, and bid goodbye from the 9-5 daily grind that allows them to live from one paycheck to another. They are mostly physically and mentally drained as they get back from their jobs, so eventually they do not have much left to spare for their forex trading activities. That being said, to trade forex successfully you have to commit to learn and improve yourself to learn more and educate yourself.
Accept it, not everyone who ventures in forex trading reaches financial freedom that they are looking for, so to avoid being a statistic, you have to exert more effort. Learn what Forex markets are on Wikipedia.

The Lowdown On How To Trade Forex Successfully
By knowing how to trade forex the right way, you will be able to trade forex successfully. We are not saying here that forex training programs and related systems are bad, but we believe they are vital for any serious forex trader’s success in the market. Simply put, if you do not learn and apply what is in those forex trading programs and stick to your forex trading system, then you are not going to go anywhere fast and you will be wasting more money than you can ever imagine. This will make you more stuck in the rut, so to speak.

Taking Your Trading To The Next Level
In order to trade forex successfully, you have to be serious and make a commitment that you are going to make it in the next succeeding years. Traders who dabble in forex and treat them as a hobby will never ever learn how to trade forex the right way. Should you give up while in midway, you might as well quit this early and save yourself from all the stress and lost money.
For even if you trade using an automatic forex trading platform, you still must learn the ropes and fine tune yourself to the current market and its cycle. If you happen to devote and set aside a regular time in your daily life to learn and improve your knowledge of forex systems, you will eventually become the best in what you do. Learn how to trade forex now and be a successful trader in no time at all.

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