Financial Spread Betting: Trading for Profit

By karlvcohen on January 22, 2011 In Currency Trading

Quite a few different financial products, in the recent year, have hit the financial markets – most of which are targeted at the retail market. One of these is financial spread trading that has soared in popularity during the last few years. Free of tax as a reason here, exists for financial spread betting. Yes, the profits that you gain from the financial spread betting would be completely tax-free and there is no stamp duty payable either! Thus, Uncle Sam will not ask you for at least 30% of your gains when the tax year is past.

Complaining and being afraid of delving into the world of financial spread trading, is what people do, having heard so many horror stories. Not realising that they control the amount of leverage and also don’t even need to utilise the leverage at all if they don’t need it – beginners may in fact be put off by the leveraged product. Deciding on a market direction and going long or short and stand to make a certain amount for each point move – that’s what as simple as it is – the Spread betting for you. Demo simulators allowing beginners to try their trading platforms and familiarise themselves with this trading product without having to risk any real money at all – is what some spread betting providers even offer. In fact demo accounts and simulators are a very good way for starters to be introduced to this trading product.

Different kinds of techniques and skills can be used in order to spread trade in an effort to make some hard gains. There exist complicated systems and strategies, but there are others as well, like the so called black box trading systems – may not even require you to learn how they work. Not even coming to know what went wrong if the system starts losing money, is a problem with these kinds of systems. Whatever you do make sure you understand how to utilise stop loss orders as this can help you minimise losses and allow you to survive down periods.

Offering bonuses and cash back offers to attract new clients is what many spread betting providers also do today. Beware of using trading platform trial offers at provider’s expense as a way to see which providers gets your business as this is what a cashback offer essentially allows you to do. Nice but useless is what cashback and bonuses are, if you are getting bad execution or you end up dealing with wider spreads.

To summarise, financial spread betting is a trading activity that is increasingly becoming a mainstream trading product. Making a living from trading and that doesn’t apply for just spread betting but also future, options, warrants, CFDs, securities or any other trading product for that matter is not easy and such expectations are likely to end up in tears – and that is what some people don’t realise when diving into the world of spread betting, falsely thinking that its an easy way to untold riches which infact is far from the truth. A lot matured market with many investors now being aware of the dangers of margin trading is something that I’d say has defintely happened over the last few years. You definitely want to invest time to learn about the markets and improve your market prediction skills – if you are looking to increase your probability of success, that is.

Find more info on spread betting tips and strategies.