Introduction to Spread Betting

Introduction to Spread Betting
 

Spread Betting is very similar to currency trading profession only with one exception. The traders can speculate tax-free financial derivative without buying the underlying assets. Most importantly you can easily execute big lot size trade by using high leverage. Leverage is like a double edge sword. If you can use it perfectly you can make a huge profit. On the contrary, it has the potential to magnify your loss to a great extent. In order to become successful at spread betting, you must trade the market with managed risk.

As a currency trader, you have to speculate the right directions of the market. If you can determine the price movement correctly you can easily make a decent profit by using the price fluctuations. Since you will be trading with a high leverage account you can easily increase your bet size to maximize your profit. If you truly want to master the art of spread betting, you must trade the market with managed risk. No matter what you do, you will always have to lose money. Trading is nothing but dealing with the probability factors. So always be prepared to embrace losing trades. So how do the professional traders make money even after losing money? The answer is simple. They always look high-risk-reward trade setups in the currency market.

How does it work?

The idea behind spread betting is very simple. You don’t have to learn the complex mathematical formula to become successful at spread betting. Let’s give you an example to make things clear. Assume that EURUSD pair is trading at 1.2240.Your technical analysis data is indicating that this market will go up. So you have opened a long order. Prior to your trade execution, you must determine the lot size. The lot size will determine the value of each pip. If you set the value of each pip as $10, for each pip movement you will either lose or earn $ 10.After one hour the market rallied up to 1.2260 level which is 20 pips profit. So theoretically you will earn 20x$10=$200.But there is a little twist to this. Each time you open a trade you have to pay a commission to the broker which is known as the spread. Usually, the broker charges one or two pips depending on the currency pair you are trading. So your net profit will be one or two pip, less than you actual pips gain.

A Basic Stock Market Trade vs. a Spread Bet?

Though stock trading and spread betting is widely popular in the retail trading industry, people prefer spread betting due to various reason. In spread betting your profit is not subject to tax whereas in stock trading you will always have to pay a heavy tax to the government. In financial spread betting, you don’t have physically own a certain asset to make a profit. The broker will provide you the trading platform where you can speculate price movement and make significant profit or loss based on your bet size. Most importantly you will have access to high leverage trading account which is not possible stock trading. The stock traders have to invest a huge amount of money to make a decent profit to support their family. On the contrary, a small amount deposit is enough for the professional traders to make a sizeable profit from spread betting.

The Benefits and Risks of spread betting

Being an active trader in the spread betting industry you will be your boss. You don’t have to take any decision based on other people opinion. You are the prime decision maker and you determine how much profit you will make from each trade. Though the possibilities are endless in spread betting you have to consider the associated risk factors. According to statistics, almost 90% of the traders are losing money due to lack of trading knowledge and discipline. If you truly consider spread betting as your full-time profession, you must trade this market without any emotion. Under no circumstances, you should take more than 2-3% risk in each trade. Following the conservative way is the best way to secure your profit from this market. When you are dealing with such a sophisticated market, you should never invest any money which you can’t afford to lose. Emotions have no place in spread betting profession. You have to learn technical and fundamental analysis to filter out the best trades in this market. Try to develop a simple strategy which will help you to find high-risk-reward trades. The expert traders always look for 1:2 or higher risk-reward ratio since it allows them to make money even after losing more trades.

Dash Spread betting

There are some advantages to Dash Spread betting, Neo Spread Betting, and other cryptocurrencies.

The first one is Anonymity: Dash Spread bets allow you to by totally anonymous online. The information about the transactions and the balance is only known to the person who performers  Dash spread betting himself.

Another main advantage to Crypto spread betting like Neo and Dash is the fact that they are standard cryptocurrencies of their own. As opposed to Forex exchange charges, here the charges are absorbed by the punter and not by the spread better.

How do I get started?

This is a great question. In order to become a profitable trader, you must have a clear blueprint to trade the market. The novice trader jumps into the retail trading industry without knowing about the market details. First of all, you should learn about the basic factors of spread betting profession. Find a reputed broker and open a demo trading account. Use the demo trading account to develop a balanced trading system. Learn to control your emotions and try to find profitable trades by using technical and fundamental analysis. Some novice traders might find it a little bit hard at the very beginning but there is nothing to worry. Stick to the market and demo trade the market until you feel comfortable with this profession. If required, take some professional spread betting course to develop your trading skills.

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