Spread Betting: Make Riches Quick Or Fast Lane to the Poor House?
By Andy Richardson
The real reason why many people start spread betting is that they see in it as an easy way to make riches fast. Most see the potential of spread trading to make them lots of money while sitting in front of a computer sipping tea or coffee. This is because financial spread betting is a margin-traded instrument - in other words the gearing or leverage that spread trading allows enables you to control bigger positions than your actual available balance. So yes, financial spread betting has the potential to make you lots of money and it is perfectly feasible to double or triple your account balance; a select few have even became millionaires spread betting!
It is true, spread betting allows you to make riches quick if you can get the market direction right; of course the opposite is also a sad reality and spreadtrading can be a quick lane to the poor house if not handled sensibly. For this reason it is important to appreciate that spread betting is not for the faint-hearted and can be high risk especially in the hands of a 'gambler'. The leverage inherently makes trading more risky and this is why many spread betting companies provide users with risk management tools like stop loss orders to use while trading. A stop loss order functions by limiting losses should the market move against your position, and in so doing lowers the potential risk of spread trading. This is especially important given that your account balance could be seriously periled by one bad spread trade.
What Spread Betting Winners Do
So don't be like 80% of the herd of day traders who are mostly looking to make money, fast, with no real knowledge and no risk. As in everything in life, there is no free lunch in trading. My belief is that there is no easy road to riches via the stock markets. For the majority, it is all hard work and a full time job.
If you behave like the 80% of traders, you will end up making no money and abandon your millionaire dream much soon than you originally planned (wipe-out!). Only 20% or so of spread traders are successful in the long run. What do these traders have in common which makes them successful? They have a trading plan and system with clear entry/exit targets and are willing to cut losses early. Winners consider each and every trade carefully and learn from their mistakes.
And lastly don't be greedy. Don't expect it to be easy or consistent - if it was easy, everyone would be rich.
Most investors spread bet thinking they will make quick riches trading and become millionaires spreadbetting . Sadly, many of them are doomed to failure. We publish a comprehensive guide to financial spread betting - how to do it, have fun and hopefully make money .
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