Can you Make Money Spread Betting?
The biggest question we always get is can you make money spread betting? Can you make a living trading the financial markets? Well the answer, absolutely 100% you can make money Spread Betting.That is the whole point. A lot of people have made a lot of money through spread betting. Again, to live a balanced view you can also loose money spread betting also. We have an article on this too.
So, it is possible to make money but you have to approach Spread Betting in the right way. So many people try Spread Betting and jump right in with two feet thinking they will be able to just make some trades, earn loads of cash and then retire to the Bahamas. That isn’t the case I’m afraid.
So many people try spread betting and jump right in with two feet
The best way to think about Spread Betting is to try and see it like a business. A business needs to make a profit to survive i.e. they need to make money. So do you when you spread bet, but for a business to succeed it needs a good solid business plan. Guess what? you need a good solid plan too. You also need to stick to it religiously…
We have put together a list of top five tips to help keep you on track with your spread betting and hopefully make sure you can make some money. We will see you in the Bahamas real soon…
1. Set trading targets and always stick to them
When you are spread betting, it is always good to keep on top of emotions especially fear and greed. As with other forms of trading, you can get carried away and make snap decisions. It therefore helps to outline a trading plan, which will provide a general set of rules that you can refer to when making important spread betting decisions.
A trading plan need not be complicated and could specify things such as:
- Profit goals (per day, month, year)
- Maximum losses you are prepared to take
- Size of the trade at any one time
- Entry/exit point
Without rules, it is easy to give in to your impulses, making irrational decisions that you may later come to regret. We have put together a trading plane template and also some guidance on building your own plan. Check out the links below for more information.
2. Cut losses early, let profits run
If you want to make money spread betting you need to know when to cut your losses but also know when to let your profits run. If you make the wrong call on a trade and it hits your stop, then take the loss and move onto the next trade. If you stick to your plan and you know your plan wins more than it looses, you will make it back in time.
Sometime we need to just accept the loss and move onto the next trade
There are also a few things you should never do…
- Never add to a loosing trade
- Never move your stop
- Only ever trade with money you can afford to lose
On the last point in the list. If you are spread betting with money that if you lost would change your lifestyle or ability to maintain a certain lifestyle, then you should not be doing it.
3. Don’t trade rumours or what you want to happen
Rumours in the market place are a regular occurrence and, just like Chinese whispers, can quickly deviate from reality. By undertaking proper and timely research before placing your trades, you should feel much more confident in your positions.Always form your own opinion about every trade so that when you are ready to trade, you are confident that you have taken a valued and considered view.
Always form your own opinion about every trade then trade what you see NOT what you want to happen
A good example of this was a story of a new trader who read on the internet about something called the “Santa Rally”. This is where market prices usually rise in the month of December. The trader opened a new spread betting account and went straight in on the 1st of December at £30 per point long on the FTSE. The market dropped 60 points that day and lost the chap £1800.
4. Spread your spread betting!
It is always advisable to trade a variety of markets to spread your risk. If you place a large trade in one market, your trading account will live or die by that one market. By spreading your trades across a variety of different markets or sectors, you are diversifying your risk. Remember however not to over trade and keep focus on a few markets.
5. Keep yourself informed
Make use of all the resources available to you to maximise your understanding of the markets and Spread Betting in general. Your trades will move in tandem with the live market and by being in a position to react to market news, you will be in a much better position to open new trades or exit positions quicker than if you were not keeping up to date with market events.
In Conclusion
There are many ways you can improve your chances of making money Spread Betting. Getting some hands on experience is a great way of helping you get started with a strategy. Most brokers offer a demo account where you can trade with virtual funds to get the know the ropes. Check out the table below with link to some demo accounts with some popular brokers.
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