Trying to Make Money Spread Betting

Spread BettingNow here’s a subject that is very close to my heart. If you’ve read my previous posts or my about page you will know that I used to run a spread betting website spreadbettingbeginner.com. It was where it all started for me and served me well but as with all great things the comes a time when it’s time to move on.

Now I’m not going to make any attempt to cover all the ins and outs involved in spread betting all in one blog post. I will most likely setup a separate section of the website to dedicate to what I have learned along my spread betting journey. What I will do in this post is touch upon some of the basics like what spread betting actually is and how easy it can be to both win and lose large sums of money in a short space of time.

Spread betting is a way of trading the worlds financial markets in a simple manner. There are several spread betting firms that will all be more than willing to help you out with a wealth of free information and education on the subject but be wary of what they offer you. Don’t forget that the way these companies make their money is from you so you might think that they have your best interests at heart but that won’t always be the case so just be a bit weary of them.

To make a spread bet you first need to open an account with a spread betting company. Some offer free demo accounts for a limited period and if you want to see what it’s all about then opening one of these is probably best until you get the gist of what’s going on. Once you have an account setup and funded, if it’s a live account, you’re ready to make your first trade.

What you will find is that some people use the term Spread Trading but this is the same thing as spread betting, it’s just some people like to try and convince themselves that they are not actually gambling when that’s exactly what spread betting is. You can never predict the outcome of your spreadbet with any degree of accuracy so every trade you make should be viewed as a gamble. If you look at it any other way then you may need to seek help. You can check out gamble aware for more information if you think you have a gambling problem.

So you have your account opened, funded and you don’t have a gambling problem so you can now start to try and make money spread betting. Notice I use the word ‘TRY’ as trust me making money consistently from spread betting is far from easy. When you make a trade you will have the option to buy or sell. Buying means you are betting in the price of the instrument rising, selling is the opposite and you think the price will fall. You have to choose how many pounds per point you would like to place on a trade. Generally most spread betting firms will offer £1 per point as a minimum bet size but some such as IG Index do offer £0.50 per point. FinSpreads used to offer £0.10 per point for the first 8 weeks or so but you will need to check with them if this offer is still available.

The best way to understand what a spread bet is, is by way of example. Let’s say you thin the price of BT shares are going to rise. You could then buy BT at 250p for £1 per point. If BT then rise to 300p you will make £1 for every point BT has risen. So:

Buy £1 per point in BT at 250p
BT rise to 300p, So we exit the trade at 300p
300p – 250p = 50p. Therefore BT has risen 50 points
We brought BT at £1 per point, so £1 x 50point = £50

So on this trade we made a £50 profit.

You need to be careful though as if the BT price drops to say 150p then this would mean a loss of 100 points. So at £1 per point this would mean a loss of £100.

If you are new to trading then the key thing is to take it slow and keep it small. You will need time to learn about what you are doing and develop some kind of strategy that will help you along the way with your trading.

This is a topic that I could write about for hours and hours but this blog post is really not the place. So what I will do over the next few weeks is start my spread betting/online trading section and explain more in there. In the mean time you can always contact me or post a comment if you should have any questions that I can help you with.

Risk Warning!

Spread betting may not be suitable for all investors as it has a high level of risk to your money. It’s possible to lose more than your initial investment. Only spread bet with money that you can afford to lose. Seek independent financial advice where necessary to make sure you fully understand the risks.

 

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