Secrets of Spread Betting

Want to know the secrets of how to win at spread betting?

Yes, me too!

No, OK, I'm going to reveal the secrets right now, just for you. and right from the horse's mouth.

After all, who better to find out how to win than from a spread firm Market Maker who gets to see all the winning accounts?

Luckily, I met a top boss from a spread betting firm at a dinner recently and even more luckily, he was a bit sloshed. As I was sober, I thought, 'Here's my chance' .

I was very interested in finding out what makes a spread betting winner and a loser!

I asked: "So what are the trading patterns of the people who win and what about the people that lose."

His answer was rather revealing.

He said: "The people that win don't trade as much as the people that lose!"

He seemed convinced this was the key to not losing your shirt.

The next secret he let me into was: "Winners are often those who ask for spreads on firms I've never heard of rather than the FTSE 100 companies."

Hmm. Interesting! Looks like those who've done their research on some of the smaller companies end up in the money.

And another secret.

"Winners often go flat".

He doesn't mean winners go on a diet, he means they simply close down all their trades, take profits and losses and simply have a few days without a trade on their account at all.

"It seems to refresh their brains and clear things out," he said.

He also explained that sometimes a big winner can turn into an equally big loser.

"I've seen winning accounts turn into losing accounts because the trader gets overconfident and starts playing with much bigger stakes," he told me.

What about shorters and buyers, I wondered. Which trades make the money?

"Shorters have definitely made more money since 2001," he said. "Of course that's because the markets have mainly been going down."

"In 2001 most people were long. Then moving to 2003 it was 50/50 long and short. We've moved into more people being long again now."

He also revealed that those who hung onto trades for too long tended to lose out.

"Spread betting is a short-term tool," he said. "Those holding onto positions for too long often make a loss."

"In the trade we call these positions short-term trades than went wrong!"

So maybe that'll help you before you go plunging into too many trades.

I just hope the chap I spoke to doesn't come after me for a fee for using his quotes.

One other thing to note from his comments. As most of us get it wrong his comment that most people were long now probably means....

It's time to start selling up and getting into shorts very soon!

I've cut a few positions this week, because like the man said, the losers overtrade and I've been taking profits.