I was communicating the other day with a representative from one of the spread betting firms, but I can’t tell you which one. She (I assumed from the name on the email address) divulged some information about the life expectancy of a spread bettor. I don’t mean how long we live, but how long a new spread bettor keeps it up before giving up or at least switching to a different spread betting company.
Apparently, the average client lifetime for a spread betting company is just 6 months, although this particular spread betting company (which I really can’t name) claims an average client lifetime of 12+ months.
By these standards I am positively ancient, having held accounts with a number of spread betting companies (on and off) for several years.
Another couple of facts and figures for you, according to my secret source:
Spread bettors, on average, make 40+ opening trades per month with an average stake of £4-per-point (presumably on big-ticket items like the FTSE 100 at ~6000).
It’s just a thought, but maybe if newbie spread bettors made fewer trades and practiced prudent position sizing then they wouldn’t end up as losers and would live longer (metaphorically, but maybe literally as well) than the expected 6-12 months.
On the other hand, I’m sure there are plenty of people out there who are perfectly happy trying to ‘get rich or die trying’, and perhaps the spread betting attrition rate reflects that.
Key points to consider:
- Short Client Lifespan: The claim that the average client lifespan for a spread bettor is just 6 months, or 12 months in the case of a specific company, isn’t surprising. Spread betting is a high-risk activity, and many individuals enter it with the hope of making quick profits but may exit once they realize how difficult it is to consistently profit, or after experiencing losses. It’s common for new traders to be attracted by the potential rewards, only to find the market much harder to navigate than expected.
- Frequent Trading: The figure of 40+ trades per month with an average stake of £4-per-point suggests that many spread bettors engage in high-frequency trading, which can be very risky, especially for beginners. Frequent trading often increases transaction costs and exposes traders to more volatility, which can quickly lead to losses if not managed properly.
- Position Sizing and Risk Management: The suggestion that newbies should make fewer trades and focus on prudent position sizing is sound advice. Many novice traders fail to manage risk effectively, which leads to rapid losses. Educating oneself on how to trade responsibly and with adequate risk management techniques (like limiting leverage and using stop-losses) can extend the lifespan of a spread bettor’s success in the market.
- The “Get Rich or Die Trying” Mentality: The spread betting industry, like many forms of speculative trading, can attract people with the mentality of wanting to “get rich quick.” This mentality is often detrimental because it leads to over-leveraging and impulsive decision-making, which can result in significant financial losses. The high attrition rate of spread bettors might reflect this pattern.
Conclusion:
Interestingly, while our YouTube channel boasts over 400,000 subscribers, the level of interaction on our new videos remains limited, likely because many traders end up abandoning the activity altogether.
To conclude it is probably correct that the average life expectancy of a spread bettor is relatively short (6-12 months) due to the volatile and high-risk nature of trading in itself. However, the main takeaway from this is that the importance of education, risk management, and realistic expectations cannot be understated. Beginners who make too many trades or don’t manage their positions carefully are more likely to burn out quickly, whereas those who approach spread betting with caution and discipline may have a longer tenure and possibly more success in the long run.
